mobile backhaul evolution
DESCRIPTION
With worldwide mobile backhaul connections increasing from 5 to 10 Mbps in 2009 to 50 Mbps by 2012, mobile operators, network equipment vendors and others must implement new strategies to cope with the influx. Fiber, copper, microwave, millimeter wave—each backhaul medium has its own advantages and limitations in terms of availability, cost to deploy, operational cost, speed/distance and regulatory considerations. What is the right strategy for today’s 3G and emerging 4G ecosystem, and is there any hope of leveraging today's backhaul assets for three (let alone five) years? In this webinar, Jennifer Pigg, Yankee Group research VP, examines the mobile backhaul solutions operators are deploying today and the emerging strategies for tomorrow.TRANSCRIPT
© Copyright 2010. Yankee Group Research, Inc. All rights reserved. Page 1April 2010Mobile Backhaul Evolution
Mobile Backhaul Evolution
Jennifer M. Pigg April 27, 2010
© Copyright 2010. Yankee Group Research, Inc. All rights reserved. Page 2April 2010Mobile Backhaul Evolution
Agenda
Drivers: Over the Edge
Cell Site Bingo
Ethernet Everywhere
Media Money
Conclusions
© Copyright 2010. Yankee Group Research, Inc. All rights reserved. Page 3April 2010Mobile Backhaul Evolution
Mobile Devices 2010
Which of the following devices do you personally own or use? (n=1,267)
7%
9%
12%
24%
27%
48%
47%
1%
2%
3%
6%
5%
9%
12%
0%
1%
2%
6%
5%
6%
7%
0% 10% 20% 30% 40% 50% 60% 70%
Mobile hotspot router
Netbook
Wireless data card modem
USB modem
Smartphone
Mobile phone
Laptop
Percent of respondents
1 2 3+
© Copyright 2010. Yankee Group Research, Inc. All rights reserved. Page 4April 2010Mobile Backhaul Evolution
How likely is it that your next personal mobile phone will be a multimedia handset with a data plan (such as the iPhone, BlackBerry Storm, G1, Nokia N97, etc.)?
8%11%18%
24%33%34%32%27%25% 8%
12%
19%
23%
26%24%25%
17%20%
21%
30%
29%
28%
26%24%26%
31%33%
27%
21%
17%
14%
10%12%11%15%13%
37%26%
17%11%
6%5%7%9%10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
13-15(n=221)
16-17(n=164)
18-19(n=133)
20-24(n=331)
25-34(n=671)
35-44(n=745)
45-54(n=664)
55-64(n=505)
65+(n=426)
Percentof
respondents
Very likely Likely Unsure Not likely Very unlikely
Future Smartphone Purchase: Likelihood Q1 2009
Base: People who own a mobile phone
© Copyright 2010. Yankee Group Research, Inc. All rights reserved. Page 5April 2010Mobile Backhaul Evolution
How likely is it that your next personal mobile phone will be a a smartphone with a data plan?
16%25%25%
37%37%41%34%
28%22%
3%
20%18%
25%27%
33%
25%28%
29%20%
21%28%
23%21%
16%
30%24%
26%
34%
17%
16%
9%10%9%
7%13%
15% 27%18%
12%6%5%1%5%7%8%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
13-15(n=73)
16-17(n=46)
18-19(n=44)
20-24(n=104)
25-34(n=209)
35-44(n=239)
45-54(n=190)
55-64(n=117)
65+ (n=74)
Percentof
respondents
Very likely Likely Unsure Not likely Very unlikely
Future Smartphone Purchase: Likelihood Jan. 2010
Base: People who own a mobile phone
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More Emphasis on Mobility for Internet Connectivity
Source: Yankee Group Anywhere Consumer: 2008 EU Web/Data Survey
n 2007 = 2,500
n 2008 = 2,535
n 2009= 13,002 (6,338 for MP3 Player)
© Copyright 2010. Yankee Group Research, Inc. All rights reserved. Page 7April 2010Mobile Backhaul Evolution
Time Spent Watching Video Q1 2009
How much time do you spend watching video on …?
11%13%13%9%
28%
43%
24%
63%
7%
19%17%16%
25%
29%
35%
14%
4%
9%10%
11%
13%
8%
23%
5%
8%
14%13%15%
14%
7%
14%6%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
TV (live TV)(n=1,132)
TV (VOD)(n=368)
TV (programsrecorded on
DVR) (n=511)
Online (on acomputer)(n=1,204)
Video gameconsole (n=689)
Handheld gameconsole (n=408)
Digital audioplayer or MP3
(n=581)
Mobile phone(n=1,079)
Percentof
respondents
At least once a day At least once a week At least once a month Less than once a month
Base: People with each device
© Copyright 2010. Yankee Group Research, Inc. All rights reserved. Page 8April 2010Mobile Backhaul Evolution
Time Spent Watching Video Q1 2010
How much time do you spend watching video on …?
5%
14%16%12%16%
31%
41%
20%
74%
8%
9%
18%18%
20%
24%
34%
37%
13%
5%
4%
8%16%13%
13%
8%
26%
5%
6%
10%
14%12%
17%
14%
7%15%
4%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
TV (live TV)(n=1,231)
TV (VoD)(n=371)
TV (programsrecorded on
DVR) (n=606)
PC/laptop(n=1,244)
Video gameconsole(n=800)
Handheldgame console
(n=473)
Digital audioplayer or MP3
(n=593)
Mobile phone(n=994)
Retail set-topbox (n=764)
Percentof
respondents
At least once a day At least once a week At least once a month Less than once a month
Base: People with each device
© Copyright 2010. Yankee Group Research, Inc. All rights reserved. Page 9April 2010Mobile Backhaul Evolution
Agenda
Drivers: Over the Edge
Cell Site Bingo
Ethernet Everywhere
Media Money
Conclusions
© Copyright 2010. Yankee Group Research, Inc. All rights reserved. Page 10April 2010Mobile Backhaul Evolution
Operational Cost Structure for Mobile Must Change
© Copyright 2010. Yankee Group Research, Inc. All rights reserved. Page 11April 2010Mobile Backhaul Evolution
• 80% of network operational costs for the MNO are attributable to the RAN
• But… the RAN is continually changing:TDM PacketSONET/SDH EthernetTDMA/CDMA
UMTS/GSM/LTEMNO A MNO A+B+C
• A single MSO can be running three base stations from a cell site:
• GSM – Voice, low-speed data• EDGE – Higher-speed data• UMTS – Very high-speed data
Where Are the Costs?
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Projected Cell Site Growth Worldwide
Number of Cell Sites in 2009 Five-Year CAGR
United States 245,100 7.5%
South America 119,880 8%
Europe 601,020 6%
Middle East and Asia 1,219,000 6%
Africa 59,400 8%
Australia/New Zealand 33,075 5%
© Copyright 2010. Yankee Group Research, Inc. All rights reserved. Page 13April 2010Mobile Backhaul Evolution
A Brief History of Cell Site Penetration in the U.S. and What Has To Change
264.7
183.7
104.3
22.75.60.913
0
50
100
150
200
250
300
1985 1990 1995 2000 2005 2010
U.S. Cell Sites (in 000's)
Source: CTIA and Yankee Group, 2009
2009 value = 245
• The voice offload model was the safe solution in 2008, but service providers, particularly wireline, cannot support parallel backhaul models and the resulting opex for another five years.
• Service providers are demanding strict SLAs, which are essential for IP voice and converged voice/data/video mobile networks.
• One-way jitter or 1-3 ms• One-way latency 3-5 ms• 99.999% availability• Multiple SLAs and flows per user site
• The MNOs are looking to low-cost, simple, ubiquitous Ethernet for next-generation backhaul via dark fiber, MPLS, or SONET today, and MPLS-TP or PBB-TE in 2010 and beyond.
© Copyright 2010. Yankee Group Research, Inc. All rights reserved. Page 14April 2010Mobile Backhaul Evolution
How Much Backhaul Do You Need To Support LTE?
10 Mbps backhaul 2009
50 Mbps Backhaul in two years
© Copyright 2010. Yankee Group Research, Inc. All rights reserved. Page 15April 2010Mobile Backhaul Evolution
The Backhaul Challenge
• Yankee Group research shows that mobile network operators in the U.S. spent $6.7 billion on backhaul in 2009. This was for 245,000 cell sites supporting, on average, just under 10 Mbps of backhaul capacity.
• Globally, over $25 billion was spent in backhaul services in 2009.
• In 2012, there will be more than 300,000 cell sites in the U.S., each supporting, on average, 100 Mbps. If we were to just keep throwing T1s at the problem, this would result in a backhaul bill of $82 billion. The monthly average cost per site, per mile, would be about $23,000, compared to today’s average of $2,100.
© Copyright 2010. Yankee Group Research, Inc. All rights reserved. Page 16April 2010Mobile Backhaul Evolution
Agenda
Drivers: Over the Edge
Cell Site Bingo
Ethernet Everywhere
Media Money
Conclusions
© Copyright 2010. Yankee Group Research, Inc. All rights reserved. Page 17April 2010Mobile Backhaul Evolution
Ethernet: Compelling Economics
• Ethernet service average • $40 per month per Mb
• T1/E1 (1.54/2.048 Mbps) average cost• $200-$800 per month • U.S. average slightly over $300 per
month
• 3G cell sites have smaller coverage footprint than 2G
• More cell sites with higher backhaul speeds mean greater impact on opex
• Ethernet bandwidth can be allocated remotely
• Increments as small as 1 Mb• No lag time, no on-site visit
© Copyright 2010. Yankee Group Research, Inc. All rights reserved. Page 18April 2010Mobile Backhaul Evolution
Example: 500-Node Network
10 Mbps or equivalent to
500 sites
Backhaul Cost Per Month: One Site
Backhaul Cost Per Month: 500 Sites
Backhaul Cost Per Year: 500
Sites
7 T1s @ $300 per month per
T1$2,100 $1,050,000 $12,600,000
Ethernet @ $75 per month
per Mb$750 $375,000 $4,500,000
Ethernet @ $40 per month
per Mb$400 $200,000 $2,400,000
For a 500-node network, Ethernet saves the MNO between 65% and 80% in bandwidth costs per year
© Copyright 2010. Yankee Group Research, Inc. All rights reserved. Page 19April 2010Mobile Backhaul Evolution
Ethernet Mobile Backhaul Services
• Requirements: • Synchronization
— ITU SyncE — IEEE 1588
• Ethernet OAM —EEE 802.1ag Connectivity Fault Management (CFM) — ITU Y.1731 performance monitoring
• Emulation support: pseudo-wires• Support for not only TDM circuits, but frame/cell services
• Ethernet mobile backhaul architecture alternatives• Virtual private LAN service (VPLS) • Multiprotocol label switching (MPLS) • Ethernet transport • All connect to the MPLS core network
© Copyright 2010. Yankee Group Research, Inc. All rights reserved. Page 20April 2010Mobile Backhaul Evolution
Poll
How far into the Mobile Network will we push MPLS?
© Copyright 2010. Yankee Group Research, Inc. All rights reserved. Page 21April 2010Mobile Backhaul Evolution
Agenda
Drivers: Over the Edge
Cell Site Bingo
Ethernet Everywhere
Media Money
Conclusions
© Copyright 2010. Yankee Group Research, Inc. All rights reserved. Page 22April 2010Mobile Backhaul Evolution
Backhaul Media Breakdown: 2009
0%10%
20%30%
40%50%
60%70%
80%90%
100%
North America Europe Worldw ide
Microw ave
Fiber
Copper
© Copyright 2010. Yankee Group Research, Inc. All rights reserved. Page 23April 2010Mobile Backhaul Evolution
Regional Considerations as Drivers
• Availability of spectrum
• License costs
• Regulatory environment
• Labor costs
• General accounting practices
• Availability of fiber and copper infrastructure
• Ability to hold onto the copper infrastructure
© Copyright 2010. Yankee Group Research, Inc. All rights reserved. Page 24April 2010Mobile Backhaul Evolution
Lease vs. Own Strategies
• Incumbents: Leverage existing resources where possible, deploy new where necessary
• Challengers: Capital constrained and limited footprint; build out microwave or lease copper and fiber facilities
• Rural (both incumbent and challenger): Greater reliance on microwave backhauling to fiber rings where available
© Copyright 2010. Yankee Group Research, Inc. All rights reserved. Page 25April 2010Mobile Backhaul Evolution
A Rural Challenge
• What we expect to see in innovative implementation while waiting for the impact of the Broadband Regulatory Act
• Daisy-chain and Tree microwave implementations giving way to more stable, recoverable ring implementations
• High-speed copper DSL implementations supporting increased femto and Wi-Fi implementations
© Copyright 2010. Yankee Group Research, Inc. All rights reserved. Page 26April 2010Mobile Backhaul Evolution
MNO Dominant Backhaul Strategies
MNOs have a dominant, but not exclusive, strategy
• Leased Lines• Vodafone UK • T-Mobile
• 3 • SFR (France)
• Microwave• Orange • Paltel (Africa)
• Clearwire Telecom (Middle East) • Hi Link Telecom (Middle East)
• Sprint (Canada) • WIND Mobile (Canada)
• Maxis (Malaysia) • Digicell
• Fiber• Verizon • PTC
• DoCoMo • China Mobile
© Copyright 2010. Yankee Group Research, Inc. All rights reserved. Page 27April 2010Mobile Backhaul Evolution
Copper
• T1s widely available
• DSL targeted at mobile backhaul from many including: ALU, Actelis, Hatteras, Positron
• As speed increases on the copper, four things have been common in the past:
• Move to asymmetrical send/receive speeds to give more bandwidth to downstream data
• Increase the number of copper pairs• Increase the likelihood of electromagnetic fields (EMF) interference impacting
other pairs in the cable• Pairs had to be conditioned pairs
• Despite the news of its demise, copper technology has improved to the point where it is a viable, robust, available and inexpensive solution for mobile backhaul
© Copyright 2010. Yankee Group Research, Inc. All rights reserved. Page 28April 2010Mobile Backhaul Evolution
Copper (cont.)
• Actelis just introduced a solution offering 20 Mb over 2 pair
• Reduced pairs means reduced hardware costs, footprint, increased density per rack unit
• Will benefit from femto growth
• Does not sacrifice EFM performance, i.e., maintains ANSI T1.417 compliance
• In a lab test of “DSL Phantom Mode” this month, Bell Labs achieved downstream transmission speeds of 300 Mbps over distances up to 400 meters (or 100 Mbps at 1 km) on a single pair. Will not emerge as a product until 2012
© Copyright 2010. Yankee Group Research, Inc. All rights reserved. Page 29April 2010Mobile Backhaul Evolution
Poll
How long will it be before we have no more than 5 percent of base stations connected via copper backhaul?
© Copyright 2010. Yankee Group Research, Inc. All rights reserved. Page 30April 2010Mobile Backhaul Evolution
Trenching Fiber
• Costs include: right-of-way, construction, site reconstruction, fiber cable, connectors
Cost Per foot Per mile
Rural $12 $63,360
Metro $30 $158,400
Urban $42 $221,760
© Copyright 2010. Yankee Group Research, Inc. All rights reserved. Page 31April 2010Mobile Backhaul Evolution
Microwave Costs
Microwave backhaul systems $4k to $50k depending on capacity and degree of redundancy
Antennas, cable and power$4k to $10k per link based on antenna size, radio configuration and tower height
Installation $3k to $8k including cabling, etc.
Maintenance Not trivial – 5-10% of equipment costs per year
Licenses Varies widely – can be below $200 per month in U.S. or over $2,000 per month in western Europe
Site lease for antenna space Up to $700 per month
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Microwave Start-Up Costs
Source: Ceragon
© Copyright 2010. Yankee Group Research, Inc. All rights reserved. Page 33April 2010Mobile Backhaul Evolution
Agenda
Drivers: Over the Edge
Cell Site Bingo
Ethernet Everywhere
Media Money
Conclusions
© Copyright 2010. Yankee Group Research, Inc. All rights reserved. Page 34April 2010Mobile Backhaul Evolution
Adding It Up: Lower-Cost Mobile Backhaul
• Linear or near-linear growth in backhaul expense is not an option. Within the next five years, service providers will have to:
• Transition from TDM to packet-based backhaul• Transition to fiber backhaul and microwave• Simplify backhaul connectivity with Ethernet• Unify voice and data, particularly for wireline mobile backhaul
• A focus on capex will not result in the least-cost network. Focus instead on:
• Operational costs (management, provisioning, spectrum licensing) • Network design and architecture. Keep the low RAN flexible and the high
RAN aggregation nodes scalable and robust. • Business decisions. Share. Leverage someone else’s fiber, flexibility and
economies of scale; use managed and outsourced RAN services.
© Copyright 2010. Yankee Group Research, Inc. All rights reserved. Page 35April 2010Mobile Backhaul Evolution
Thank You
www.yankeegroup.com
Jennifer Pigg, Research VP
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Upcoming Yankee Group webinar:Evolving Service Provider Business ModelsTuesday, May 25, 2010 | 11 a.m. ETRegister at www.yankeegroup.com