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Storming the cell tower: Cable MSOs move mobile backhaul to the forefront

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More than ever, the wireless backhaul business represents a towering opportunity for North American cable operators.

More than ever, the wireless backhaul business represents a towering opportunity for North American cable operators.

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  • 1. Storming the Cell Tower:MSOs Move Mobile Backhaul tothe Forefront© Ciena Confidential and Proprietary
  • 2. Mobile Backhaul: Towering opportunity for N.A. MSOsGlobal Mobile Data Traffic Forecast  North American Mobile Internet Traffic (Peak Period)  Source: Sandvine, October 2010  More mobile data volume = more mobile backhaul capacity 2 © Ciena Confidential and Proprietary
  • 3. Backhaul is Booming! Number of macro cell sites Smartphones increasing – 3.8M globally by 2015 Wirelessspurring higher carriers More wireless service providersconsumption of continuing to connecting to same towers multimedia upgrade their services Carriers deploying small cells to networks fill coverage gaps 3 © Ciena Confidential and Proprietary
  • 4. Mobile backhaul services revenue (North America)Growth projected to accelerate in 2014 Source: Infonetics Technology 14 Other 12 SatelliteAnnual Revenue $B 10 SONET/SDH Ethernet 8 PDH 6 4 2 0 2011 2012 2013 2014 2015 Ethernet will account for >80% of all backhaul services revenue by 20154 © Ciena Confidential and Proprietary
  • 5. Mobile backhaul still a small subset of MSO revenueAbout 7 percent of U.S. cell sites under contract Early U.S. MSO Mobile Backhaul Activity Source: Heavy Reading, June 2011 8 90 Ann. Rev. ($M) # of Towers (1000’s) (Estimates) 7 80 6 70 60 5 50 4 40 3 30 2 20 1 10 0 0 MSOs served 18K towers as of June ‘11, generating $250M+ in ann. revenue. BH = Bright House Networks CV-OL = Optimum Lightpath (division of Cablevision)5 © Ciena Confidential and Proprietary
  • 6. But, that’s about to changeCombined MSO revenue could approach $1 billion by 2015 Projected Growth of U.S. Cable Mobile Backhaul Business Source: Heavy Reading, June 2011 50 1000 # of Cell Towers (1000’s) Backhaul Rev. ($M) 45 900 40 800 35 700 30 600 25 500 20 400 15 300 10 200 5 100 0 0 2010 2011 2012 2013 2014 2015 MSO industry will capture as much as15% of the U.S. mobile backhaul market by 20156 © Ciena Confidential and Proprietary
  • 7. Rapid shift to Ethernet in backhaul domainContributing Factors: Outcome: Mobile Backhaul Connections: North America 2010 & 2015• Accelerating migration from TDM to packet technology 2010 2015• Fiber and packet radios Total cell sites 289,000 345,000 replacing copper 3G/LTE cell sites 163,000 345,000• Network operators increasingly Total cell sites served by Ethernet 39,000 327,000 backhaul adopting Ethernet Ethernet-served cell sites – copper 1,200 3,000• Swift adoption of small-cell Ethernet-served cell sites – 8,000 80,000 technology (not counted here) microwave Ethernet-served cell sites – fiber 20,000 182,000 Ethernet-served cell sites – HFC 10,000 62,000 95% of cell sites will be served Source: Heavy Reading, July 2011 by Ethernet by 2015 7 © Ciena Confidential and Proprietary
  • 8. The Emergence of Small-Cell Technologies Going where macro-cells can’t go Fifty-eight percent of operators  Why? Small cells can fill coverage plan to deploy 3G small cells by the gaps and boost capacity for voice, end of 2011 (Infonetics Research). data, and video traffic • 42 operators intend to deploy LTE micro/pico cells • About 40,000 4G small cells will be deployed in the U.S. by 2015 (Heavy Reading) • Vendors will ship 4 million base stations each year by 2015 (ABI Research) Trend toward higher cell site density creates a natural opportunity for MSOs 8 © Ciena Confidential and Proprietary
  • 9. MSOs face challenges in serving backhaul marketBut, they aren’t insurmountable Challenge How MSOs OvercomeCompetitive • Incumbent providers remain • Better reach (res. footprint) formidable players in the • Local market knowledge backhaul market • Fiber closer to cell towersFinancial • Cable operators must install • Wider microwave radio adoption even more fiber to meet the • High-cap transport = lower cost/bit backhaul bandwidth demand • Fiber/tower proximity • Reducing cost of bandwidthTechnical & • Cable providers must meet • Faster Ethernet adoptionOperational mobile carriers growing • MEF standards/certifications bandwidth, reliability, and • CableLabs collaboration performance demands 9 © Ciena Confidential and Proprietary
  • 10. The Changing Face of Mobile Backhaul TechnologySteady migration to packet servicesTDM PDH/SONET/SDH MSC PDH/SONET/SDH HYBRID Packet Network MSC PACKET Packet Network MSC 2007 2011 2015 10 © Ciena Confidential and Proprietary
  • 11. The Case for Carrier EthernetLower TCO for Mobile Backhaul  More efficient any-to-any connectivity • Fewer protocol layers  provisioning, management, restoration • Lower: equipment cost, people cost, complexity risk, reroute complexity / time • Smooth migration path from legacy backhaul to LTE • Compatible with metro transport (e.g. P-OTS) User-IP (User IP hidden from backhaul network) Transport-IP MME eNB S-GW L2 CE/MPLS-TP Backhaul Network 11 © Ciena Confidential and Proprietary
  • 12. The Case for Carrier EthernetDe-Costing LTELTE Backhaul Issues LTE Backhaul Solutions Complex protocol stack Simple protocol stack MNO user IP Full suite of sync choices Transport IP backhaul Application enablement <10 msec latency Mobile broadband, cloud Provisions and restores faster Service turn-up speed 30% incremental savings 12 © Ciena Confidential and Proprietary
  • 13. Ethernet OAM*Superior visibility, manageability, and control vs. Layer 3 solutions Packet/Frame Loss Packet/Frame DelayLayer 2 OAM standards have been Packet/Frame Sequence Packet/Frame Delayavailable longer Variation Link TraceProven Ethernet OAM Tools: Loopback Continuity Check Fault• Turn-up Acceptance and SLA Detection Test Conformance Testing Connectivity Verification Fault Fault Lock• SLA Monitoring & Metrics Recovery Notification Remote Defect• Service Heartbeats Indication (RDI) Availability• Enhanced troubleshooting, rapid Status Fault Isolation Fault Verification Remote network discovery Monitoring Configuration Remote Loopback Alarm Indication (AIS) Link Fault Signaling Link Error Threshold Layer 2 solutions enjoy more  Remote Failure Indication Synchronization (dying gasp) sophisticated and field-proven OAM; more deterministic behavior 13 © Ciena Confidential and Proprietary *Operations, Administration, and Maintenance
  • 14. Layer 2 or Layer 3 for Mobile Backhaul?The facts speak for themselves  A Layer 2 Carrier Ethernet solution – whether based on fiber or packet radio – permitsService • Ciena client strong levels of control and • Standard costs – Ciena solutionProvider • Standard costs – L3 solution* robust functionality, making it • Ciena solution: 30% lower TCO a truly cost-efficient mobileExample backhaul solution. *Provided by client Scale the network quickly • Heavy Readings Quarterly Achieve lowest cost per bit Market Market Tracker (August 2010) • SP deployment plan survey Match connectivity with data Input • 2/3 will use L2 in their 4G backhaul access networks demands Avoid costly network over- provisioning 2/3 will use Layer 2 in their 4G backhaul access networks14 © Ciena Confidential and Proprietary
  • 15. MSO Case Study - U.S. provider of entertainment,information and communications services• Mobile backhaul deployment began in 2009• Approximately 6,000 cell sites connected throughout the U.S.• Cell sites connected to backhaul network using Cienas CESD portfolio Technical Criteria •QoS supports differentiated services •Policy Enforcement •Line-Rate Throughput •Integrated enhanced OAM capabilities15 © Ciena Confidential and Proprietary
  • 16. Conclusion Number of cell sites will continue to increase to keep pace with mobile voice, data, and video service growth Wireless service providers will continue upgrading their networks Cable operators can help wireless providers meet these urgent needs Mobile backhaul is a strategic entry point into the larger Ethernet business services market Leading MSOs rely on Ciena’s True Carrier Ethernet to capitalize on the growing demand for mobile backhaul and Ethernet Business Services 16 © Ciena Confidential and Proprietary