WCDMA Base Station: Embracing the
       New Generation



         Analyst: Frances Guan
                In-Stat
        ...
Table of Contents
Executive Summary..........................................................................................
Executive Summary

Intensive competitions, stagnant revenue growth and enormous investments to the
network bring operators...
available material, was used as well, only when this information was deemed to be from a
reliable source.



Definition of...
Worldwide WCDMA Network Deployment

As shown in Table 1 and Figure 1, there are 139 WCDMA systems deployed worldwide so
fa...
×1000            Estimated                             Forecast                        2006 - 2011
                2005   ...
160
                                                                       137
                         140
              ...
Base Stations

                  2,500,000

                  2,000,000

                  1,500,000

                  1,...
Base Stations

                200,000

                150,000

                100,000

                 50,000

       ...
North
                                         ROW            America
                                         10%        ...
North
                                               ROW               America
                                           ...
Europe

Western Europe is the real “home” of WCDMA, and this region is expected to have the
largest number of WCDMA base s...
Deployed Base Stations                                                                               '06 - '11
Units      ...
Base Stations

      700,000
      600,000
      500,000
      400,000
      300,000
      200,000
      100,000
         ...
of 2006, the percentage of new generation WCDMA base station has reached to 60%
(Table 9 and Figure 14),
Table 9.     Adop...
Global 3G market is stepping into a fast development period. Subscribers' requirement for
network performance is becoming ...
Benefits for Operators by the New Generation WCDMA Base Station

Operators usually evaluate the performance of base statio...
Figure 17.   CAPEX and OPEX Breakdown


 Maintenance                                                       13%
           ...
Figure 19.   OPEX Breakdown


                                   Manpower
                                     5%
        ...
carried on IP network. Thus IP transmission in RAN will substitute TDM, SDH and
MSTP and serve for both data and voice ser...
by eMobile and will support roll out of eMobile’s nationwide UMTS/HSDPA network with its
new generation WCDMA base station...
Public
   Announce


                           1Q05                4Q05        1Q06             3Q06


      First
    Ad...
Figure 22.         Market Share of Vendors by Unit Shipment of the New Generation WCDMA
                   Base Station by...
35                                                                  3330           33
        30                          ...
2005         Market Share       2006         Market Share
    Huawei                 11             21.6%            23   ...
Operator                   Country or Region                  Supplier
 Vodafone                     Germany,Portugal,UK,S...
HSDPA, etc.

In its HSDPA network deployment in Germany, Portugal, Spain, UK, etc., after a strict
technology certificatio...
HWL is a late telecom entrant but early 3G services provider, rolling out 3G networks
internationally since early 2003. As...
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Transcript of "WCDMA Base Station: Embracing the New Generation"

  1. 1. WCDMA Base Station: Embracing the New Generation Analyst: Frances Guan In-Stat February 2007
  2. 2. Table of Contents Executive Summary........................................................................................................ 3 Methodology.................................................................................................................... 3 Definition of the New Generation WCDMA Base Station ............................................. 4 Introduction ..................................................................................................................... 4 Development of WCDMA Market.................................................................................... 4 Worldwide WCDMA Network Deployment ................................................................. 5 Worldwide WCDMA Subscriber ................................................................................. 5 Contract Award of WCDMA Network.......................................................................... 6 Global Deployment of WCDMA Base Station ............................................................... 7 WCDMA Base Station Deployment Overview ............................................................ 7 Geographic Distribution of WCDMA Base Station...................................................... 9 What is the New Generation WCDMA Base Station ................................................... 14 Evolution of WCDMA Base Station .......................................................................... 14 Features of the New Generation WCDMA Base Station .......................................... 15 Benefits for Operators by the New Generation WCDMA Base Station..................... 17 Future Evolution of the New Generation WCDMA Base Station .............................. 19 Main Suppliers of the New Generation WCDMA Base Station .................................. 20 Vendors and Their products ..................................................................................... 20 Market Share of WCDMA Market by Contract Award............................................... 23 Main Operators Who Have Adopted the New Generation WCDMA Base Station .... 25 Main Operators ........................................................................................................ 25 Business Case ......................................................................................................... 26 Conclusion .................................................................................................................... 28 2
  3. 3. Executive Summary Intensive competitions, stagnant revenue growth and enormous investments to the network bring operators many risks. So the challenges in front of operators are how to catch subscriber by more attractive services and how to cut down the cost. Now operators are realizing that a network with better performance and reduced operational cost is more and more crucial. Since the beginning of 2006, operators are committed to upgrading their network. 3G deployment will enter into a fast growing phase. Among the 3G technologies, WCDMA has a faster development: there are 139 WCDMA networks and over 300 thousands WCDMA base stations were deployed worldwide. Now most WCDMA operators are upgrading their network to HSDPA. Where is the demand, where is the driver to innovate. With limited performance, the first generation WCDMA base station launched around 2001, can no longer satisfy operator’s requirements. To meet these requirements of operators, many WCDMA system suppliers, such as Huawei, Ericsson, Nokia, etc. have launched their new generation WCDMA base station products since 2005. Featured with efficient integrated digital power amplifier, multi-carrier TRX, High-performance HSPA, open architecture, multi-band and IP transmission, the new generation WCDMA base station can bring benefits of large capacity and coverage, smoothing upgrading and CAPEX/OPEX cut down to operators. These new products are winning the acceptance of the industry. By far, the new generation WCDMA base station has been adopted in 74 contracts worldwide. From the aspect of technology evolution, a new generation base station product will be released in 3 to 5 years. Since the first launch of WCDMA network in 2001, now its base station product is embracing a new era: the era of the new generation WCDMA base station. Methodology This report was produced using primary and secondary data from a number of known reliable sources. Equipment manufacturers and wireless carriers have participated in the generation of the data presented in this report during face-to-face and phone interviews. Information from company annual reports, company web sites, as well as other publicly 3
  4. 4. available material, was used as well, only when this information was deemed to be from a reliable source. Definition of the New Generation WCDMA Base Station System vendors have their own roadmaps on the development of their WCDMA base station products. By learning their understanding on the technology evolution, this report defines that the new generation WCDMA base station has technology improvements featured with efficient integrated digital power amplifier, multi-carrier TRX, High-performance HSPA, open architecture, multi-band, and IP transmission. Introduction Since the first launch of UMTS in Japan in 2001 by NTT Docomo, services such as mobile TV, video streaming and mobile email are commonplace and the public awareness of 3G network has got great progress. The challenge facing the mobile telecommunication industry today is how to improve the end-user experience by appealing services through a series of technology innovation. On one hand, operators are committed to meeting the demand by developing attractive services through upgrading their networks, 2G to 3G, for example; on the other hand, operators are concerned their investment on network construction and operation. Generally, expenditure on base station takes about 30% to 40% of total cost in network construction, so base stations with high-performance and reduced CAPEX (cost of capital) and OPEX (cost of operation) are crucial in the deployment of network. In GSM system, new generation GSM base station with improved performance has been released every 4 or 5 years, since the first commercial system was released in Europe in 1991. Similarly, the first generation WCDMA base station, released in 2001, can not meet the requirement of higher performance with low cost. At present, the mainstream vendors of the industry are delivering the new generation WCDMA base station gradually. Therefore, after 2005, the revolution of WCDMA RAN (Radio Access Network), including base station, is coming. Development of WCDMA Market Cellular operators are taking effort to roll out 3G systems. While among 3G mobile technologies, WCDMA is the most popular and used widely in Europe, Asia Pacific, Africa Middle East and North America. 4
  5. 5. Worldwide WCDMA Network Deployment As shown in Table 1 and Figure 1, there are 139 WCDMA systems deployed worldwide so far, making up 70% 3G deployment, with 121 commercial and 18 non commercial networks. While 62 CDMA2000 1X EV-DO systems were deployed in the last several years, with 57 commercial and 5 non commercial networks. In 2005, 35 new WCDMA systems were deployed, as well as 7 new CDMA2000 1X EV-DO systems. In terms of the number of deployments, WCDMA has a large advantage, but most carriers with WCDMA deployments are now in the process of upgrading them to HSDPA. Table 1 Worldwide 3G Deployment per Technology and Commercialization Western Eastern North South Middle Asia Regions Africa Europe Europe America America East Pacific Total Total CDMA2000 1xEV-DO 3 1 6 16 17 1 13 57 CDMA2000 1xEV-DO 2 0 0 0 0 0 3 5 - Not Commencial 62 WCDMA 5 60 24 1 0 5 26 121 WCDMA- Not 0 4 6 1 0 2 5 18 Commencial 139 Total 10 65 36 18 17 8 47 201 201 Source: In-Stat, 02/07 Figure 1 Worldwide 3G Deployment per Technology and Commercialization WCDMA- Not Commencial CDMA2000 9% 1xEV-DO 28% CDMA2000 1xEV-DO - Not WCDMA Commencial 61% 2% Source: In-Stat, 02/07 Worldwide WCDMA Subscriber WCDMA subscribers make up the largest group of 3G subscribers. By 2011, In-Stat believes that WCDMA subscribers will grow to near 500 million, with a CAGR of 26.3% from 2007 to 2011 (Table 2 and Figure 2). Table 2. WCDMA Subscriber (In Thousand) 5
  6. 6. ×1000 Estimated Forecast 2006 - 2011 2005 2006 2007 2008 2009 2010 2011 CAGR Subscriber 44,400 100,610 195,486 273,485 376,315 434,268 498,105 26.3% Growth rate 126.6% 94.3% 39.9% 37.6% 15.4% 14.7% Source: In-Stat, 02/07 Figure 2. WCDMA Subscriber (2005-2011) In thousand 600,000 140% 500,000 120% 100% 400,000 80% 300,000 60% 200,000 40% 100,000 20% 0 0% 2005 2006 2007 2008 2009 2010 2011 Subscriber Growth rate Source: In-Stat, 02/07 Contract Award of WCDMA Network The trend in cellular infrastructure contract awards is a good indicator of cellular equipment demand and cellular handset demand. When cellular service providers are awarding new contracts to equipment makers, this is an indication that the cellular provider is either updating its equipment, expanding its coverage and/or capacity, or all of the above. Figure 3 indicates that 63 WCDMA contracts were awarded in 2005 with a growth rate of 31.3% compared with that of 2004. By 2006, the contract awards reaches to 137, this is more than the total number of 2004 and 2005. Figure 3. Global WCDMA Contract Award 6
  7. 7. 160 137 140 120 100 80 63 60 48 40 20 0 2004 2005 2006 Source: In-Stat, 02/07 Global Deployment of WCDMA Base Station WCDMA Base Station Deployment Overview It is clear that the majority of base stations deployed were GSM. It is not surprising since GSM had the most worldwide subscribers in worldwide. With 3G networks spreading in worldwide, CDMA and WCDMA base station were strongly required. While WCDMA shows a faster growth. From 2006 to 2011, WCDMA base station grows at the CAGR of 17.4% (Table 3). Table 3. Worldwide Total Deployed Base Station and Forecast (Units) Deployed Base Stations '06 - '11 Units 2005 2006 2007 2008 2009 2010 2011 CAGR CDMA 200,054 220,083 238,406 247,826 254,328 258,146 261,288 3.5% y/y growth 10.0% 8.3% 4.0% 2.6% 1.5% 1.2% GSM 1,018,287 1,088,306 1,137,507 1,163,048 1,216,036 1,246,016 1,251,914 2.8% y/y growth 6.9% 4.5% 2.2% 4.6% 2.5% 0.5% PDC 59,898 55,860 51,029 46,597 42,530 41,296 41,315 -5.9% y/y growth -6.7% -8.6% -8.7% -8.7% -2.9% 0.0% WCDMA 231,287 302,762 389,808 491,128 562,574 620,404 676,499 17.4% y/y growth 30.9% 28.8% 26.0% 14.5% 10.3% 9.0% Total 1,509,526 1,667,011 1,816,751 1,948,599 2,075,468 2,165,862 2,231,015 8.1% y/y growth 10.1% 10.4% 9.0% 7.3% 6.5% 4.4% 3.0% Source: In-Stat, 02/07 Figure 4. Worldwide Total Deployed Base Station per Technology (Units) 7
  8. 8. Base Stations 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0 2005 2006 2007 2008 2009 2010 2011 CDMA GSM PDC WCDMA Source: In-Stat, 02/07 WCDMA has run the full gamut, from wild hype and excessive license fees to disappointment and failure. Currently the expectations for the technology have approached more realistic levels than that of any emerging technology with a solid future. Without a doubt, WCDMA is growing faster than any technology before it, so it shouldn’t come as a surprise that demand for WCDMA infrastructure will increase in the future. In-Stat believes that a greater number of base stations will be required to meet wireless data coverage expectations than originally anticipated. Due to WCDMA is used in different brands in different countries, many more base stations are required at either the 1.8 GHz and 900 MHz bands. Another factor that is leading to increased demand for WCDMA infrastructure is the increasing use of wireless data services, because WCDMA can offer faster data speeds than EDGE and sometimes at a lower price. Both O2 in the UK and NTT DoCoMo are reporting that they get more than 25% of their ARPU from data portion of their WCDMA subscriber’s bills with faster growth than that from voice services. This increased data ARPU translates into increased WCDMA capacity required, which means more cellular base stations required. Table 4 shows a stable incremental demand for WCDMA base station. Table 4. Worldwide New Deployed Base Station per Technology (Units) New Deployed Base Stations '06 - '11 Units 2005 2006 2007 2008 2009 2010 2011 CAGR CDMA 20,758 27,321 25,797 19,531 17,148 13,194 11,856 -15.4% y/y growth 31.6% -5.6% -24.3% -12.2% -23.1% -10.1% GSM 91,286 98,251 80,367 69,555 61,701 51,609 45,309 -14.3% y/y growth 7.6% -18.2% -13.5% -11.3% -16.4% -12.2% PDC 26 27 21 5 0 0 0 -100.0% y/y growth 5.1% -22.3% -77.7% -100.0% WCDMA 67,036 66,877 83,145 99,311 76,608 68,067 71,526 1.4% y/y growth -0.2% 24.3% 19.4% -22.9% -11.1% 5.1% Total 179,105 192,476 189,330 188,402 155,457 132,870 128,691 -7.7% y/y growth 7.5% -1.6% -0.5% -17.5% -14.5% -3.1% Source: In-Stat, 02/07 Figure 5. Worldwide New Deployed Base Station per Technology (Units) 8
  9. 9. Base Stations 200,000 150,000 100,000 50,000 0 2005 2006 2007 2008 2009 2010 2011 CDMA GSM PDC WCDMA Source: In-Stat, 02/07 Geographic Distribution of WCDMA Base Station Over view Europe remains to be the largest WCDMA market. Figure 6 shows that In 2005 Europe made up 50% deployed WCDMA base stations, followed by Japan 30%. But Asia will witness a fast growth of WCDMA base station deployment. As indicated in Figure 7, after 2008 incredible grown in Asia will like cause the number of WCDMA base stations there to exceed those in Western Europe. Figure 6. Geographic Distribution of WCDMA Base Station Deployment 2005 Asia (excluding North Japan) ROW America 8% 4% 8% Japan 30% Europe 50% Source: In-Stat, 02/07 Figure 7. Geographic Distribution of WCDMA Base Station Deployment 2011 9
  10. 10. North ROW America 10% 10% Asia (excluding Europe Japan) 33% 30% Japan 17% Source: In-Stat, 02/07 Asia, North America and Europe went ahead of other regions in terms of WCDMA infrastructure deployment in 2005, presenting near 94% (Figure 8) of new WCDMA base station deployment. While at 2011, there is a break of WCDMA infrastructure deployment in Japan and North America, for the operators will be fully using the network by launching various mobile applications and waiting for the demand following up. But 2011 sees the widely spread of WCDMA infrastructure in Asia, which takes 54% (Figure 9) in new WCDMA base station deployment. Figure 8. Geographic Distribution of New Deployment of WCDMA Base Station 2005 North Asia ROW America (excluding 6% 23% Japan) 26% Europe Japan 25% 20% Source: In-Stat, 02/07 Figure 9. Geographic Distribution of New Deployment of WCDMA Base Station 2011 10
  11. 11. North ROW America 11% 6% Europe 20% Asia Japan (excluding 9% Japan) 54% Source: In-Stat, 02/07 North America WCDMA is the fastest growing technology in terms of total macro base station deployment. This shouldn’t be surprising, because before 2004, none of these base stations existed in the Americas. It is anticipated that most of the growth will occur in 2006 and 2007 since Cingular deployed a token number of WCDMA base stations in 2004. Table 5. Total North America Base Station Deployment (Units) Deployed Base Stations '06 - '11 Units 2005 2006 2007 2008 2009 2010 2011 CAGR CDMA 83,140 84,734 85,370 83,800 81,734 79,488 77,091 -1.9% GSM 96,375 97,206 96,100 96,489 97,620 95,481 95,664 -0.3% PDC 0 0 0 0 0 0 0 n/a WCDMA 17,594 31,213 43,216 51,451 57,516 61,945 65,472 16.0% Total 197,109 213,153 224,686 231,739 236,870 236,914 238,227 2.2% Source: In-Stat, 02/07 Figure 10. Total North America Base Station Deployment (Units) Base Stations 250,000 200,000 150,000 100,000 50,000 0 2005 2006 2007 2008 2009 2010 2011 CDMA GSM PDC WCDMA Source: In-Stat, 02/07 11
  12. 12. Europe Western Europe is the real “home” of WCDMA, and this region is expected to have the largest number of WCDMA base stations deployed until 2008. Eastern European deployments are similar to those in Western Europe, although the transition to WCDMA is still much an unknown. Table 6 Total Europe Base Station Deployment (Units) Deployed Base Stations '06 - '11 Units 2005 2006 2007 2008 2009 2010 2011 CAGR CDMA 2,030 2,468 4,187 6,034 6,751 7,626 8,661 28.5% GSM 458,065 469,827 486,556 492,352 513,767 521,380 514,839 1.8% PDC 0 0 0 0 0 0 0 n/a WCDMA 116,026 137,587 160,128 187,874 206,052 217,579 228,091 10.6% Total 576,120 609,882 650,871 686,260 726,570 746,585 751,592 4.3% Source: In-Stat, 02/07 Figure 11 Total Europe Base Station Deployment (Units) Base Stations 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 2005 2006 2007 2008 2009 2010 2011 CDMA GSM PDC WCDMA Source: In-Stat, 02/07 Japan Japan has always been a unique market when it comes to cellular technology, in that PDC is deployed in Japan but nowhere else in the world. Japan’s PDC network was very overloaded, so when WCDMA came along, it was a natural transition from the PDC network. In a short period of time, Japan has gained more WCDMA subscribers than every where else in the world combined, and the rate of adoption continues to grow. Table 7. Total Japan Base Station Deployment (Units) 12
  13. 13. Deployed Base Stations '06 - '11 Units 2005 2006 2007 2008 2009 2010 2011 CAGR CDMA 22,042 26,315 32,117 34,846 37,844 38,708 38,708 8.0% GSM 0 0 0 0 0 0 0 n/a PDC 58,620 54,544 49,656 45,191 41,124 39,890 39,889 -6.1% WCDMA 70,047 78,411 89,707 97,999 107,001 112,332 112,332 7.5% Total 150,710 159,270 171,479 178,037 185,969 190,931 190,929 3.7% Source: In-Stat, 02/07 Figure 12. Total Japan Base Station Deployment (Units) Base Stations 200,000 150,000 100,000 50,000 0 2005 2006 2007 2008 2009 2010 2011 CDMA GSM PDC WCDMA Source: In-Stat, 02/07 Asia (Excluding Japan) Asia, excluding Japan but including China, has experienced a huge amount of growth in these last few years, but even in China, the growth has slowed. WCDMA has taken hold in China, but the battle for 3G in China continues. China has not to give out 3G licenses, although the cellular operators continue to “trial” 3G technology, including CDMA2000 and WCDMA, and many use these technologies, even if not licensed. Table 8. Total Asia (excluding Japan) Base Station Deployment (Units) Deployed Base Stations '06 - '11 Units 2005 2006 2007 2008 2009 2010 2011 CAGR CDMA 53,973 63,215 69,757 73,949 75,990 77,488 78,628 4.5% GSM 316,917 339,663 345,881 346,794 358,056 365,027 366,144 1.5% PDC 0 0 0 0 0 0 0 n/a WCDMA 17,598 34,084 61,105 107,505 137,718 167,182 202,409 42.8% Total 388,488 436,962 476,744 528,247 571,764 609,697 647,180 8.2% Source: In-Stat, 02/07 Figure 13. Total Asia (excluding Japan) Base Station Deployment (Units) 13
  14. 14. Base Stations 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 2005 2006 2007 2008 2009 2010 2011 CDMA GSM PDC WCDMA Source: In-Stat, 02/07 What is the New Generation WCDMA Base Station Evolution of WCDMA Base Station The first generation WCDMA base station was released in 2001, which is based on 3GPP R99/4 standard. It adopts independent analog linear power amplifier and narrowband transceiver, supports limited HSDPA performance and a proprietary interface between baseband unit and radio unit. In addition, in Americas, Japan, and Europe, other frequency bands besides 2.1GHz were also, adopted, such as 1.7GHz ,1.9 GHz 850 MHz, 900 MHz. While with the increasing concerns of operators on the cost and performance of base station and network quality and reliability, and different requirements to the frequency band, the conventional WCDMA base station can no longer satisfy operator’s requirements for better network performance. The launch of 3GPP R5/R6 standards has paced the road to the new generation WCDMA base station. CPRI (The organization of Common Public Radio Interface, initiated by Ericsson, Huawei, NEC, Nortel and Siemens) and OBSAI (The organization of Open Base Station Architecture Initiative, initiated by Nokia, LG and Samsung) also contributes to tech innovation. The technology breakthroughs drive the new generation WCDMA base station to come out: The adoption of new technologies improves the power amplifier efficiency up to 30% from 9%; the high-performance ASIC strengthens the processing ability of base band, which can realize high-performance HSPA. With these technologies, the new generation WCDMA base station will have advantages in smaller size, more efficient power amplifier, less power consumption, higher reliability, lower cost and smooth evolution. The new generation WCDMA base stations were used more and more widely. The new generation WCDMA base station made up 9.2% in the 1st half 2005. While by the 2st half 14
  15. 15. of 2006, the percentage of new generation WCDMA base station has reached to 60% (Table 9 and Figure 14), Table 9. Adoption of the New Generation WCDMA Base Station Unit 01/05-06/05 Share 07/05-12/05 Share 01/06-06/06 Share 07/06-12/06 Share New Generation WCDMA Base Station 2,900 9.2% 6,700 18.9% 11,400 36.2% 21,200 59.7% Conventional WCDMA Base Station 28,600 90.8% 28,800 81.1% 20,100 63.8% 14,300 40.0% Source: In-Stat, 02/07 Figure 14. Adoption of the New Generation WCDMA Base Station 100% 80% 60% 40% 20% 0% 01/05-06/05 07/05-12/05 01/06-06/06 07/06-12/06 Conventional WCDMA Base Station New Generation WCDMA Base Station Source: In-Stat, 02/07 Features of the New Generation WCDMA Base Station Efficient Integrated Digital Power Amplifier New power amplifier technology, which is becoming more and more mature, brings power consumption savings, higher density, larger capacity and better stability. The adoption of DPD (Digital Pre-Distortion) coupled with Doherty technology improves the power amplifier efficiency up to over 30% from about 9%. Multi-carrier TRX Both network coverage and capacity should be taken into long-term consideration in 3G network construction. In the new generation WCDMA base station, each TRX supports two or more carriers, saving equipment cost greatly and facilitating future upgrades. High-performance HSPA 15
  16. 16. Global 3G market is stepping into a fast development period. Subscribers' requirement for network performance is becoming higher and higher, thus operators begin to focus on the bit rate of wireless data service. The new generation WCDMA base station can support HSPA (High Speed Packet Access , which realizes high speed downlink transmission with HSDPA and uplink transmission with HSUPA, thus can support more subscriber access and provide high data rate services Open Architecture Distributed base station, a latest industrial focus, speeds up network deployment and saves construction cost greatly. Distributed base station accords with open architecture based on open CPRI or OBSAI standard, which standardize the interface between baseband unit and radio unit. Multi-band Besides the IMT-2000 core frequency bands, the new generation base station also supports other WCDMA frequency bands, including 1.7 GHz, 1.9 GHz, 850 MHz and 900 MHz. The open internal interfaces enable a rapid introduction of new frequencies. IP transmission The new generation WCDMA base station is also featured with IP transmission between RNC (Radio Network Controller) and base station. Compared with TDM, ATM, and MSTP, IP technology can help to reduce network cost for best-effort services, such as some data services. Figure 15. Comparison between the New Generation WCDMA Base Station and Conventional WCDMA Base Station Conventional Base Station New Generation Base Station Standalone Analog Linear PA Integrated Digital PA Single-carrier TRX Multi-carrier TRX Limited HSDPA Performance High-Performance HSPA Proprietary Architecture Open Architecture Single-band Multi-band Pure TDM/MTSP/ATM IP Transmission Source: In-Stat, 02/07 16
  17. 17. Benefits for Operators by the New Generation WCDMA Base Station Operators usually evaluate the performance of base station from the aspects of coverage, capacity, future evolution and cost saving. Coverage and capacity The sector and carrier indexes usually present the performance of coverage and capacity of a base station product. The first generation base station usually support 3 1 TRXs three sectors and one carrier per sector , and then 3 2 TRXs. But the new generation products are more integrated, which can support 3 4 or 6 2 TRXs, even more, which expands the coverage and capacity greatly. TCO (Total cost of ownership) saving Because of the costly investment of 3G network roll-out, reducing the TCO of network is a significant challenge for operators. Thus, to cut capital expenditure (CAPEX) and operational expenditure (OPEX) more and more becomes the main concern of an operator in both deployment and operation phases. Figure 16. TCO Breakdown TCO CAPEX OPEX Purchasing Deployment Operation Maintenance • Equipment • Site acquisition • Operation • Hardware & Software • Accessory • Installation & • Site rental Commissioning • Manpower • Antenna • Leased line • Civil works • Transportation Source: In-Stat, 02/07 17
  18. 18. Figure 17. CAPEX and OPEX Breakdown Maintenance 13% OPEX 73% Operation 60% Deployment 13% CAPEX 27% 14% Purchasing 0% 20% 40% 60% 80% 100% Source: In-Stat, 02/07 Equipment purchasing and network deployment make up the main part of CAPEX. Featured with smaller size, larger capacity and coverage, distributed base station, software expansion and upgrade, etc, the new generation WCDMA base station can help to reduce cost of sites acquisition, installation, civil works, transportation, etc. in the network deployment phase. Figure 18. CAPEX Breakdown Transportation Equipment 5% 20% Civil works 30% Accessory 20% Installation Site Antenna 10% acquisition 5% 10% Source: In-Stat, 02/07 It is expected that OPEX makes up 70% in TCO. So operators more and more concern about the operational expenditure. By boosting the power amplifier’s efficiency with advanced technologies from 10% to over 30%, the new generation WCDMA base station consumes much less power; integrated design enables less site space, which helps to cut down the site rental which is a long-term expenditure for operators; smaller size and light weight, and network expansion or upgrade by software download, dramatically cut .the operational cost; IP transmission can reduce the leased line; high reliability and remote upgrade by software download can also save the expenditure of maintenance. 18
  19. 19. Figure 19. OPEX Breakdown Manpower 5% Operation Hardware & 15% Software 10% Leased line Site rental 30% 30% Power consumption 10% Source: In-Stat, 02/07 Note: The breakdown of CAPEX and OPEX will vary from network to network Future evolution When deploying the network, operators always hope the network can support or can be upgraded smoothly to support future services. The key challenge for 3G operator is to attract the maximum number of subscribers as well as high-end subscribers by various 3G applications. The new generation WCDMA base station supports HSPA technology to boost downlink and uplink data speeds and capacity, which enables the delivery of multimedia services as well as enhanced differentiated services in the future, such as mobile TV, mobile HD VOD (Video on Demand), Internet access, video surveillance, etc., which can improve the user experience significantly. In addition, the new generation WCDMA base station will save TCO for operators: remote capacity provisioning by software licensing will expand base station capacity without costly site visit, allowing a smooth capacity expansion. Future Evolution of the New Generation WCDMA Base Station Further cut down power consumption In the future, technology innovation will help to reduce power consumption. It is said that in the future 50% power consumption of the “new generation WCDMA base station” will be cut down. All-IP network With the development of IP technology, services that require high-level QoS can be 19
  20. 20. carried on IP network. Thus IP transmission in RAN will substitute TDM, SDH and MSTP and serve for both data and voice services. In the future, the current hybrid IP solution will evolve to all-IP transmission. Modular The macro base station will realize fully modular in the future. All parts of the base station can be developed independently. Distributed base station is a case of module base station with independent RRU (Remote Radio Unit) and BBU (Base Band Unit). In the future, the RRU part of distributed base station will be smaller, which can be deployed more flexible. RRU can be set beside the antenna with much less RF (Radio Frequency) cables, which can reduce civil work, engineering cost and the loss of signal through the feeder, thus it is possible to enlarge the coverage then need more than 10% less base stations. MIMO & OFDM In the era of beyond 3G, MIMO (Multiple-Input Multiple-Output) and OFDM (Orthogonal Frequency Division Multiplexing) technologies will be used in the RAN. By these more advanced technologies, base station can support much higher transmission speed up to 100Mbit/s, larger capacity, better reliability as well as. Main Suppliers of the New Generation WCDMA Base Station Vendors and Their products Huawei Huawei launched the new generation WCDMA base station products firstly in February. 2005 with the new products of BTS3812E/3812A, BBU3806C, RRU3801C, BTS 3803C,, etc. Since the first adoption by STC (Saudi Telecom Company) in March 2005, its new generation WCDMA base station products have been adopted in 37 networks and used in Saudi Arabia, Portugal, Bulgaria, Poland, New Zealand, UAE, Indonesia, Hong Kong, Spain, Japan, etc. In November 2005, Huawei became one of the five approved UMTS suppliers of Vodafone Global Supply Chain. In August 2006, Vodafone selected Huawei to construct part of its UMTS/HSDPA commercial network in Spain. Huawei will deliver several thousands new generation WCDMA base stations to deploy the UMTS/HSDPA UTRAN network in certain key cities of Spain. In July 2006 Huawei was selected as 3G equipment provider to deploy Japan's first-ever All IP-based HSDPA radio access network 20
  21. 21. by eMobile and will support roll out of eMobile’s nationwide UMTS/HSDPA network with its new generation WCDMA base station products. In Oct 2006, Huawei signed a WCDMA contract with Etisalat, and would supply over one thousand new base stations for it. This WCDMA network will be the largest and first IP-based HSDPA network in Middle East and North Africa. Huawei’s innovative WCDMA base stations make it to become a leading WCDMA system vendor and lead the trend of the industry. Ericsson Ericsson formally announced its new generation WCDMA base stations to the public in Feb. 2006 with the products of RBS 3206, RBS 3303, RBS 3214/RBS 3518, etc. But the first large scale usage for these products is much earlier in the contract with Cingular in Nov. 2005. In the biding for Cingular WCDMA network in America, Ericsson won with its high performance new base station products and deployed thousands of new generation WCDMA base stations for Cingular. By far its new generation WCDMA base stations have been used in 28 networks in North America, Australia and Europe, etc. Ericsson is considered as the largest WCDMA system supplier in the world, but it is facing challenges in the intensive competitions. Other system vendors, such as Huawei, Nokia Siemens, Alcatel Lucent, etc. are catching up. For example, Huawei launched its new generation WCDMA base station products several months earlier and is very aggressive in terms of new markets breaking in; Nokia and Siemens also hope to domain this market by their combination. Nokia Nokia launched its new WCDMA base station product, Flexi, in Nov. 2005 and gained three contracts for Flexi in 2nd half of 2006: with TIM Hellas in Greece on Aug. 2006 (network expansion), with Vivatel in Bulgaria on Sept. 2006 new contracts . Table 10 Public Announce and First Adoption for the New Generation WCDMA Base Station Products of Vendors Public Announce of New Generation First Adoption for New Generation Company WCDMA Base Station Products WCDMA Base Station Products Huawei 2005.02 2005.03 Ericsson 2006.02 2005.11 Nokia 2005.11 2006.08 Source: In-Stat, 02/07 Figure 20. Public Announce and First Adoption for the New Generation WCDMA Base Station Products of Vendors 21
  22. 22. Public Announce 1Q05 4Q05 1Q06 3Q06 First Adoption Source: In-Stat, 02/07 Table 11. Networks Adopt the New Generation WCDMA Base Station Products by 2006 Networks Adopt the New Generation Company WCDMA Base Station Products Market Share Huawei 37 50.0% Ericsson 28 37.8% Nokia 9 12.2% Total 74 100.0% Source: In-Stat, 02/07 Figure 21. Market Share of Vendors by Networks Adopt the New Generation WCDMA Base Station Products by 2006 Nokia, 12.2% Huawei, Ericsson, 50.0% 37.8% Source: In-Stat, 02/07 Table 12. Market Share of Vendors by Unit Shipment of the New Generation WCDMA Base Station by 2006 Company Shipment Market Share Huawei 18,600 44.0% Ericsson 17,800 42.1% Nokia 5,900 13.9% Source: In-Stat, 02/07 22
  23. 23. Figure 22. Market Share of Vendors by Unit Shipment of the New Generation WCDMA Base Station by 2006 Nokia 13.9% Huawei 44.0% Ericsson 42.1% Source: In-Stat, 02/07 Market Share of WCDMA Market by Contract Award Indicated in Table 13, Ericsson, Nokia, Siemens and Huawei are leading WCDMA system suppliers. Ericsson makes up 24.8% market in 2004, 2005 and 2006 in terms of contract award, followed by Nokia 21.2%, Huawei 20.4% and Siemens 18.8%. Table 13. Market Share of Vendors by Contract Award 2004 2005 Year-to-year 2006 Total Company Contract Market Contract Market Growth Contract Market Contract Market Awards Share(%) Awards Share(%) Rate(%) Awards Share(%) Awards Share(%) Ericsson 8 16.7% 21 32.3% 162.5% 33 24.1% 62 24.8% Nokia 12 25.0% 11 16.9% -8.3% 30 21.9% 53 21.2% Siemens 12 25.0% 8 12.3% -33.3% 27 19.7% 47 18.8% Huawei 4 8.3% 14 21.5% 266.7% 33 24.1% 51 20.4% Alcatel 6 12.5% 3 4.6% 33.3% 4 2.9% 13 5.2% Others 6 12.5% 8 12.3% -22.2% 10 7.3% 24 9.6% Total 48 100.0% 65 100.0% 35.4% 137 100.0% 250 100.0% Source: In-Stat, 02/07 Note: Motorola OEM Huawei in its WCDMA awards. Figure 23. Contract Award of Vendors 23
  24. 24. 35 3330 33 30 27 25 21 20 14 15 12 12 11 10 10 8 8 8 6 6 4 3 4 5 0 2004 2005 2006 Ericsson Nokia Siemens Huawei Alcatel Others Source: In-Stat, 02/07 Figure 24. Market Share of Vendors by Contract Award in 2004, 2005 and 2006 100% 7.3% 12.5% 12.3% 2.9% 90% 4.6% 80% 12.5% 24.1% 8.3% 21.5% 70% 60% 25.0% 12.3% 19.7% 50% 40% 16.9% 21.9% 30% 25.0% 20% 32.3% 10% 24.1% 16.7% 0% 2004 2005 2006 Ericsson Nokia Siemens Huawei Alcatel Others Source: In-Stat, 02/07 Table 14 and Figure 25 show the market share by new contract award in 2005 and 2006. Huawei wins most contracts in new WCDMA market with a market share of 32.9% by contract award. Table 14. New Contract Award and Market Share in 2005 and 2006 24
  25. 25. 2005 Market Share 2006 Market Share Huawei 11 21.6% 23 32.9% Ericsson 17 33.3% 14 20.0% Nokia 6 11.8% 13 18.6% Siemens 6 11.8% 9 12.9% Alcatel 2 3.9% 3 4.3% Others 9 17.6% 8 11.4% Total 51 100% 70 100% Source: In-Stat, 02/07 Figure 25. New Contract Award and Market Share in 2006 Others, 11.4% Alcatel, 4.3% Huawei, 32.9% Siemens, 12.9% Nokia, 18.6% Ericsson, 20.0% Source: In-Stat, 02/07 Note: New contracts exclude network expansion projects. Main Operators Who Have Adopted the New Generation WCDMA Base Station Main Operators With more and more demand of high-speed data services and under the pressure of reducing TCO, operators realize that the RAN equipments are essential to the quality and cost control toward wireless network. Since the launch of new generation WCDMA base station products, many operators have adopted the new base stations in the network deployment, for these base station products can better meet their requirements. Table 15. Main Operators Who Signed Contract for the New Generation WCDMA Base Station 25
  26. 26. Operator Country or Region Supplier Vodafone Germany,Portugal,UK,Spain Ericsson,Huawei eMobile Japan Ericsson,Huawei Mobily Saudi Arabia Ericsson,Huawei Saudi Telecom Company Saudi Arabia Ericsson,Huawei Natrindo Telepon Selular Indonesia Ericsson,Huawei KPN Netherlands Ericsson Cingular Wireless USA Ericsson Telstra Australia, USA Ericsson T-Mobile Hungary Ericsson Swisscom Switzerland Ericsson Rogers Communication Canada Ericsson Bite Lithuania Ericsson Xfera Moviles Spain Ericsson PCCW HongKong Huawei B-Mobile Brunei Huawei Econet Wireless New Zealand Huawei GloBul Bulgaria Huawei Optimus Portugal Huawei P4 Poland Huawei Excelcom Indonesia Huawei ANTEL Uruguay Huawei UTS Netherlands Antilles Huawei Indosat Indonesia Huawei Utel Ukraine Huawei TIM Hellas Greece Nokia Telkomsel Indonesia Nokia Vivatel Bulgaria Nokia Indosat Indonesia Nokia T-Mobile USA Nokia Ukrtelecom Ukraine Nokia Source: In-Stat, 02/07 Business Case Vodafone Vodafone is the largest mobile operator in the world with a significant presence in Europe, the Middle East, Africa, Asia Pacific and the United States. In the intensive competitions, Vodafone sees opportunities in 3G and considers 3G as its growth platform. As a leading 3G operator, Vodafone concludes 3 KSFs (Key Success Factor) in its future growth: Capacity increase Lower marginal cost 3G/HSDPA enabling DSL-style data experience To achieve these goals, Vodafone has very strict criteria toward RAN equipment supply. It is a must that the equipments to be adopted have very high performance, for example, supporting large capacity and coverage, saving TCO and realizing high performance 26
  27. 27. HSDPA, etc. In its HSDPA network deployment in Germany, Portugal, Spain, UK, etc., after a strict technology certification, Vodafone adopts the new generation WCDMA base station products provided by Ericsson and Huawei. The reasons why Vodafone prefers these innovative base station products are: the feature of higher performance HSDPA can help Vodafone to build world-class HSDPA; lower power consumption, distributed and integrated base station can significantly reduce capital and operational cost, which can help Vodafone to keep competitiveness in the rivalrous environment. In the equipment evaluation, it is said that the new generation products benefit in following aspects: Capacity: With 3 4 or 6 2 TRXs per new base station, capacity has been improved 50% to 150%. Coverage With higher sensibility and more TRXs, coverage has been improved over 30 . Power consumption Power consumption has been cut down 30% to 50% by adopting new PA technologies, which saved electricity bill for 30% to 50%. Distributed deployment By using distributed base station about 30% site rent has been saved. Distributed base station was flexible in network deployment Vodafone realizes that the base station technology evolution can help him to maximize the benefits offered to customers and improve its competitive position in the marketplace. eMobile eMobile, a new comer to mobile communication in Japan, obtained a WCDMA commercial license in Nov. 2005. As a new mobile operator, eMobile wishes to catch high-end business market segment with the demand for high-speed data services, so eMoblie need RAN equipment with high-performance HSDPA; and because of lack of existing network resource, such as equipment room, to save cost of network deployment, and fully use of the IP network of its mother company eAccess (a famous ADSL service provider in Japan), eMobile attaches importance to IP transmission in the RAN. In the network deployment, eMobile adopts Huawei and Ericsson’s new generation base stations, because these new generation products have much better performance and smaller size which can minimizing space and cost. Especially, all-IP networks will significantly save the TCO for eMobile . Hutchison Whampoa Limited (HWL) 27
  28. 28. HWL is a late telecom entrant but early 3G services provider, rolling out 3G networks internationally since early 2003. As far, HWL has been successfully operating 3G networks in Australia, Austria, Denmark, Hong Kong, Ireland, Israel, Italy, Sweden and the United Kingdom. Now Hutchison is planning to upgrade its network to HSDPA in 2007. Because of providing 3G services very early, HWL has been being committed to solid profitable growth by tight cost control. From the beginning of network deployment, HWL has been very keen on reducing capital and operational expenditure. So in the network upgrade and deployment in the future, HWL is likely to adopt the new generation WCDMA base station with higher performance and lower cost. Conclusion To attract more subscribers and improve ARPU, operators have to deliver more attractive services, such as VOD, streaming video, mobile gaming etc. which need larger bandwidth.and have more requirements to the network and base station products. Now operators are more concerned about the performance and TCO of RAN equipment. This demand side drives the technology innovation by equipment vendors. Huawei, Ericsson, Nokia, etc have launched their new generation WCDMA base station products. The new base station products can support larger capacity and coverage, reduce power consumption and cut down the network construction and operation cost for operators, which meets the requirement of high quality and low cost of operators. From the aspect of technology evolution, base station technology breakthroughs happen in every 3 to 5 years. The first generation WCDMA base station was launched from 1999 to 2001. Now WCDMA base station is embracing a new era: the era of a new generation. 28

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