M kelley 4_gwe


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M kelley 4_gwe

  1. 1. Build, Buy or Rent<br />Backhaul Strategies for 4G<br />Mark Kelley<br />Formulate Wireless<br />
  2. 2. Build, buy or rent?- Strategic Network Planning for Wireless Backhaul<br />4GWE Conference<br />Los Angeles, CA<br />5 October, 2010<br />
  3. 3. Wireless Network Business <br />Wireless business remained strong through the recession<br />In late 2008 and early 2009, US Economy (GDP) declined over 6% each quarter…but…<br />US Wireless subscriber growth continued adding 14 million new subs in 2009 and on track to do the same this year (Frost and Sullivan)<br />ARPU has grown 2% in this period, data ARPU up 25% (Aberdeen)<br />WSJ – 13 July, 2010 – “Prepare for the Tower Surge”<br />For investors seeking a defensive play in a time of economic shakiness, operators of cell towers stand out in the landscape. <br />
  4. 4. ç<br />Wireless Subscriber Growth<br />Source: Visant Strategies<br />
  5. 5. Annual Base Station Growth<br />Source: Visant Strategies<br />
  6. 6. Technology Deployment<br />Source: Visant Strategies<br />
  7. 7. New network weak link: backhaul<br />Backhaul is Achilles heel of 3G and 4G networks<br />Today’s typical BTS has 4-9 T1s (approximately 15 Mbps max)<br />Some estimates are that 20% of existing BTSs may be “under provisioned”<br />>50% by 2015<br />Cause of manysmartphone driven capacity issues<br />Example : single 3-sector WiMAX BTS<br />3 x 10 MHz, 7 Mbps peak traffic/sector = 21 Mbps <br />Will grow when second BTS added<br />In 2005 – 3 x 1XRTT, 5 Mbps max<br />LTE <br />High use BTSs expected to require 100-300 Mbps by 2015<br />With 3 carriers/site will exceed 1 Gbps/tower<br />
  8. 8. Backhaul Penetration <br />TDM still holds the lions share of backhaul traffic – leased copper is close to 70% of today’s backhaul (source – ABI)<br />This will migrate to a split approach before becoming all IP by the end of the decade<br />
  9. 9. Fiber Connection: Slowly Increasing<br />
  10. 10. Growth of 4G<br />
  11. 11. Build or pay as you go: T1/E1<br />T1 prices have dropped precipitously<br />(up to) $1500 down to <$500 today<br />Still at >$100/ Mbps<br />Linearly increasing cost with capacity – no “volume discount”<br />Limit of many towers/rooftops => DS3<br />Still – it’s TDM 2G, not ideal for 3G, really not ideal for 4G Ethernet/IP<br />
  12. 12. Upgrading carrier backhaul alternatives:<br />Fiber installation<br />Cost/time depends on distance and topology<br />Cost effective where it’s easy/short (<500M)<br />Prohibitive and time consuming in suburbs, exurbs, and rural<br />But – virtually unlimited capacity<br />Microwave<br />Reusable gear can provide up multi-Gbps<br />Cheaper/faster to deploy, shorter ROI<br />Both are complex with multi-service (Ethernet, TDM) protocols, and both are used ideally<br />Roll your own: self deploy<br />
  13. 13. Increasing complexity of backhaul<br />Exploding bandwidth <br />>50Mbps/cell site<br />Multi protocol<br />2G (voice, TDM), 3G (some data, TDM/IP), 4G (IP)<br />Costs<br />T1s don’t scale to tomorrow needs<br />Huge CAPEX for re-piping backhaul to 80% of cell sites on legacy networks<br />Summary – 2010 backhaul <br />
  14. 14. Ideal Solution – Shared backhaul<br /> Tower model – shared critical component<br />Many carriers see the network as the business<br />Excellent viewpoint – emphasizing network quality<br />But every carrier shares tower resources <br />Higher quality can be maintained, at lower cost<br /> Five towers in the same location? <br />Neutral host – splits costs, passes savings<br />Complexity eliminated by focused effort of experts<br />Costs lowered by sharing fat pipe of hybrid fiber/microwave network<br />
  15. 15. Conclusions<br />Carriers today spend $1300 (average) monthly on backhaul OPEX at each cell site<br />The carrier business model is highly sensitive to OPEX<br />The expected backhaul throughput requirements over 10 years (2005 – 2015) increase from 5 Mbps to 50 Mbps – but the cost cannot change<br />Technology and network backhaul sharing can provide the means to meet the speed/latency/quality need, and maintain the cost<br />