Upgrade Strategies for Mass Market Mobile Broadband

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Upgrade to LTE

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  • 1. WHITE PAPER Upgrade Strategies For Mass Market Mobile Broadband
  • 2. Key Findings • The “perfect storm” of widespread 3.5G deployment, flat rate data tariffs, and availability of mobiles with internet friendly features will result in a virtual explosion of wireless broadband demand leading to spectrum exhaustion, perhaps by 2010. • The technology advances incorporated in LTE lead to increased network capacity and economic competitive advantage. • The economic advantages of high capacity LTE will be instrumental in delivering affordable, wireless broadband to the mass market, and is determined by the mass market total average capacity by minimizing the need for additional cell sites and fewer radios per cell site. • With LTE nearing commercial deployment in 2010, the window of opportunity for a legacy technology upgrade is somewhat limited. • An operator choosing an early deployment of LTE can exercise a considerable competitive advantage with the economic benefits of LTE rather than investing in interim upgrades. Introduction In 2006, many cellular operators began 3.5G network deployments (HSPA & EV-DO) and subsequently introduced very popular flat rate data tariffs. These operators now enjoy a growing subscriber data services penetration and the resulting growth in data traffic. In addition most of the devices available today feature the ability to play rich media content, access email and a number of mobile friendly sites such as Google, Yahoo, New York Times, etc. Application vendors are creating content, portals and new web browsing adapted to the mobile phone market. These market forces combine to create an explosion of data demand on their networks, with many operators reporting triple digit year-on-year growth in network data traffic The deployment of 3.5G HSPA networks were critical for the adoption of mobile broadband but faced with the mobile broadband market success, operators must now consider the upgrade paths to support the continued growth with well performing network that provides sufficient capacity to offer subscriber a great mobile broadband user experience whatever the conditions. The necessary upgrades to 3.5G networks often require increasing the backhaul capacity between the Radio Network Controller and Cell sites, UTRAN software and hardware upgrades to support higher speed HSPA, deploying a second and third carrier, additional NCs, and additional Packet Data Core capacity. Eventually, costly cell splitting will be needed in markets where the available spectrum is exhausted. The growth in data traffic continues to increase at unprecedented rates (triple digit percentage increase has been observed in many instances)1 , and many operators are already considering their options for near and long term growth. This paper studies various aspects of choosing an evolution path, with the particular focus on HSPA+ and LTE as the most common choices facing 3GPP operators. Wireless Data Boom – the Perfect Storm In the next five years wireless data service (HSPA) penetration in some markets will increase to nearly 85%, leading to massive increase in packet data traffic in the 2.1 GHz UMTS band. As shown in Figure 1, subscriber acceptance of high speed data capability will move well into the mainstream. This uptake will be enabled with feature-rich phones and smart-phones that will achieve mainstream mass-market acceptance. 1 Informa, 2008, 3G Wireless Broadband, “The Future is flat for network architecture…” 2 WHITE PAPER: Upgrade Strategies For Mass Market Mobile Broadband
  • 3. 750 10x Penetration Subs (million) 3.5G 500 UMTS 4G GPRS EDGE 250 GSM - 2007 2008 2009 2010 2011 2012 Figure 1. European subscriber migration to wireless broadband. Source: Informa Competitive pressures will lead to widespread use of simplified and flat rate tariffs, further encouraging consumer utilization. In many developed markets, feature-rich media handsets now represent over 50% of new handset sales. As shown in Figure 2, the worldwide Average Selling Price for feature-rich media phones will soon cross under the widely accepted mass market threshold of $150, with smart phones following closely. As new entrants into the ultra-premium handset market inevitably begin to migrate toward the mainstream, increasing pressure will move today’s high end smart phones into the mainstream as well. Figure 2. Mass market adoption of feature rich and smart phones. As these market forces (tariffs, phones, and networks) converge for mobile broadband, operators will increasingly experience congestion on broadband networks, with early adoption technologies such as HSPA (or EV-DO Rev. A) are faced with ever increasing demands. Operators with 5 or 10 MHz of HSPA spectrum may experience this as early as 2009 - 2010, depending on the size of their subscriber base and how the rapidly subscriber base and traffic grows. 3 WHITE PAPER: Upgrade Strategies For Mass Market Mobile Broadband
  • 4. 3GPP LTE Technology Advances The 3GPP Release 8, layer 1 specification was finalized in January 2008, while the upper layers’ specifications are anticipated to be completed later in 2008. The high performance LTE air interface extends the technological innovation for the 3GPP operator with the most advanced features built-in from the start, rather than added on to an existing radio technology. This avoids the performance dilution that results from legacy mobiles unable to accommodate the new performance features. Some of the distinguishing characteristics of LTE include • Orthogonal Frequency Division Multiple Access : Spectral Efficiency and improved coverage • Advanced Antenna Technology : MIMO and Beam Forming • Higher Order Modulation : up to 64-QAM for higher data rates • Scalable Bandwidth : 1.4 MHz – 20 MHz, scale for growth and incremental migration of existing spectrum use to LTE • Frequency Selective Scheduling : increases efficiency • All IP to the mobile : uncompromised by legacy support • Semi-Flat architecture : simplifies network and allows for easier, most cost effective scaling • Lower overhead burden : increases effective efficiency • Quality of Service : built in from the start • Low Latency : Improve user satisfaction and enables latency sensitive applications to function better (e.g. gaming) • Multimedia Broadcast Multicast Service (MBMS) : designed for dramatically improved and efficient video distribution with a Single Frequency Network Peak data rate performance comparison The performance enhancing features of 64-QAM, MIMO, and broadband spectrum deliver exceedingly high peak data rates. In any cellular network, actually achieving the peak data rate requires a particularly beneficial signal environment to deliver on their perspective performance gains. Typically, a small percentage of subscribers are in locations suitable for the peak rates, while the remainder can achieve receive something less. A typical measure of the cellular environment is a Signal to Noise Ratio called C/I. 2x2-MIMO and 64-QAM typically require an environment which exhibits a 10 dB C/I ratio in order to deliver best results. A more important measurement for the remaining 95% of subscribers is the average sector throughput for a typical cell site. Figure 3 depicts actual measurement of C/I in 4 major urban and suburban markets, with populations ranging from 1.5 to 10.5 million. Here we observe only a few percent of mobiles report such “C/I” sufficient for either 64-QAM or 2x2 MIMO. As a result, the high performance features of HSPA+ will benefit only few subscribers (typically 2-5% per cell) hence provide little cell capacity improvement. 4 WHITE PAPER: Upgrade Strategies For Mass Market Mobile Broadband
  • 5. Figure 3. 2x2 MIMO and 64-QAM limited by environmental conditions.. UMTS Release Antenna Technology Bandwidth Type Qty 5 MHz 10 MHz 20 MHz R6 HSPA SIMO 1x1, 1x2 14.4 -- -- R7 HSPA+ MIMO 2x2 28.8 -- -- R7 HSPA+ 64-QAM SIMO 1x1, 1x2 21.6 -- -- R8 LTE MIMO 2x2 43 86 173(1) R8 LTE MIMO 4x4 82 163 326(1) Table 1. DL Peak Data Rates, Mbps (1) 3GPP TR 25.912 V7.2.0 For the best MIMO performance, a rich multi-path signal environment is required, and varies widely with location. A typical location would be when the mobile device has a direct line of sight path to the transmitter and a nearby reflecting building. When conditions suitable for MIMO exist, then two non-correlating data streams can be effectively delivered to the mobile, with data rates approximately doubling. The economic value of these sustaining innovations is determined by the effect on total average capacity for an entire mass market, and not just the benefits delivered to the fortunate few. The average sector throughput is the metric to assess economic potential and the one that operators should be concerned about as it has a direct impact on their network CAPEX and OPEX. 5 WHITE PAPER: Upgrade Strategies For Mass Market Mobile Broadband
  • 6. Cell Shrinkage Unlike shared carrier technologies (like CDMA and WCDMA), LTE is effectively immune to cell shrinkage or “breathing” as normally observed as traffic increases spread spectrum technologies. This can lead to larger footprint and fewer cell sites, as well as increase the likelihood of existing cell site reuse. The Importance of Down Link Sector Throughput The total sector throughput is simply the total number of bits delivered to all users in a sector. The somewhat clover-shape of a cell site coverage has relatively few subscribers close to cell tower that can get the highest data rates, while most subscribers are dispersed further from the tower and achieve lower data rates. Although the advanced technologies of 64-QAM and 2x2 MIMO with LTE are not yet deployed, we can gain much insight by examining the simulation of typical conditions. Using a typical reference scenario2 , LTE is expected to deliver nearly twice the sector throughput that operators currently expect. As wireless broadband reaches the mass market, the LTE solution will require significantly less radio resource than legacy technologies to meet the demand. Expensive cell splitting more likely to be avoided and thus giving a sustainable competitive advantage to an LTE operator. Figure 4. DL Average Sector Throughput2, Mbps. Source: Motorola LTE Improvements to Downlink Throughput and Capacity While also utilizing MIMO and 64QAM, LTE brings a number of improvements that have a direct impact on the user experience of all users in a cell: • Better multi-path signal handling capability than CDMA technologies. • No intra-cell interference, as each sub-carrier is uniquely assigned. • Interference cancellation is better for reduced inter-cell interference. • Mitigates the cell shrinkage vs. loading phenomena of CDMA technologies. • More efficient Multicast, Broadcast. • Lower control overhead than CDMA. • Frequency Selective scheduling for additional flexibility and efficiency. Performance results based on 2GHz, full buffer data, 1.732km intersite distance, 3km/hr, MMSE receivers, 2 2x2 MIMO (HSPA 1x2), and 20 dB penetration loss 6 WHITE PAPER: Upgrade Strategies For Mass Market Mobile Broadband
  • 7. The Importance of Uplink Performance 3.5G and 4G cellular networks are frequently uplink limited, either by the maximum range of a handset for coverage limited cells or by the uplink radio interface in capacity limited cells. These are just two factors that determine the effective cell size, number of carriers, and number of cell sites deployed. As network loading increases, that is number of subscribers in the cell, the shared carrier of spread spectrum CDMA technologies will undergo cell shrinkage (or breathing) from which LTE is largely immune. The cause of the shrinkage is simply more subscribers on the same carrier introduces more RF noise in the cell, reducing Signal-to-Noise ratio. This means a stronger signal is required to get the same data rate as when fewer subscribers are active. Since this is usually accomplished by a shorter range from the tower, the cell effectively shrinks. With LTE, each subscriber has unique use of the assigned individual tones during a time slot. There is no cell shrinkage phenomenon because of shared carriers as with spread spectrum CDMA technologies. Also, LTE will launch with sophisticated uplink interference cancellation methods built into the air interface, further increasing the uplink spectral efficiency and capacity by reducing the apparent noise levels. As subscribers and operators become more sophisticated in the use of wireless broadband, usage patterns change accordingly. In historical voice dominated networks, a roughly balanced uplink and downlink were desirable. With the rise of peer-to-peer communication, social networking, and user generated content, the uplink and downlink traffic profiles become more balanced, and this is readily supported with the 3.5G technologies. The uplink performance will increase in importance as these social networking activity moves to the mobile realm. Recent handset introductions make shooting, editing and sharing videos directly from your mobile easier than ever before 3. Economic Competitive Advantage Total Cost of Ownership As wireless broadband reaches the mass market, the impact of average throughput or capacity becomes apparent. As subscriber penetration and usage transitions from early adopter stage to mass market penetration, the additional capacity delivered by LTE will yield significant competitive advantage. The early adopter stage is characterized as a predominantly laptop, data card and USB dongle subscriber. The data demands may be high, but the subscriber penetration in the low single digits. Mass market inevitably means handset oriented, with subscriber penetration by wireless broadband approaching 85% , early in the next decade 4. When the average data traffic for mass market subscribers is low, a much of the network remains coverage limited, that is cell sites are not operating near the capacity of the radio interface. As traffic builds, then a significant portion of the network becomes capacity limited, with additional radio carriers deployed to handle the traffic load. After spectrum limits are reached, additional cell sites are deployed. The inflection point from coverage limited to capacity limited will of course vary by market, spectrum, radio technology, tariff plans, etc. Legacy CDMA based technologies may exhibit this inflection at 1 – 2 GBytes / month for an average subscriber, while 4G OFDM technologies may exhibit some signs with at 4 GBytes / month. A significant economic advantage delivered by LTE capacity is the ability to meet the growing wireless broadband demand. 3 Motorola Z10, http://www.motorola.com/mediacenter/news 4 Informa, Future Mobile Broadband, 2nd Edition 7 WHITE PAPER: Upgrade Strategies For Mass Market Mobile Broadband
  • 8. Figure 5. Total Cost of Ownership Inflection Source : Motorola Window of Opportunity The pending launch of LTE will cause operators to consider their CapEx spend cycle, and how that can determine their position when a competitor deploys LTE. The window of opportunity to capitalize on interim upgrades may be limited by availability and subscriber mix of suitable devices in the near term, and the inevitable launch of LTE in the longer term. Upgrade cost Operators with significant legacy equipment may discover a significant Capital Expenditure is needed for an interim upgrade. This may be due to legacy hardware unable to handle the MIMO or 64-QAM high speed data rate features. New ancillaries (possibly additional duplexers and cabling for MIMO, for example) may also complicate the value proposition, especially if a competitor adopts LTE sooner rather than later. There are also core network upgrade implications to consider. Most core networks will continue to require upgrade to handle the capacity with advancing 3.5G and 4G traffic demands. The Evolved Packet Core network is much more efficient and scalable to deploy than the 2G/3G derived GPRS core elements (RNCs, SGSNs, GGSNs, etc.). This is because the EPC is optimized around broadband data network technologies (vs. ATM, etc.). The increase in backhaul requirements are compounded once spectrum is exhausted and operators resort to cell-splitting. 8 WHITE PAPER: Upgrade Strategies For Mass Market Mobile Broadband
  • 9. The LTE upgrade CapEx cycle appears to have complexities and considerations comparable to most network technology upgrades, but it provides much better forward looking prospects as we move into the mass market wireless broadband era. Spectrum for LTE Licensed Spectrum acquisition presents a serious barrier to entry for many potential competitors, hence the fierce competition for available allocations. Currently, many 3GPP operators world wide have 5 MHz to 15 MHz allocations of Full Duplex spectrum in the 2.1 GHz band. The rising demand for wireless broadband may very well fill this spectrum just as LTE becomes available. A spectrum crunch in 2009 – 2011 will increase the urgency for LTE in new spectrum (2.5 – 2.6 GHz, AWS, 700 MHz) or of LTE refarming existing GSM/CDMA spectrums, further extending wireless broadband into the mass market. As shown in Figure 5, operators with a relatively rapid migration of subscribers from GSM to HSPA may be the first to exhaust their 2.1 GHz capacity Figure 7. Operators with rapid HSPA penetration and limited spectrum are early candidates for LTE. Figure 5. Operators in the upper left with the most subscribers, least spectrum, and rapid upgrade from GSM will be highly motivated for LTE sooner rather than later Eventually, GSM will be replaced by more capable 3GPP technologies, and LTE presents a unique opportunity for in-band migration made possible by the scalable bandwidth of LTE. If as little as 1.4 MHz of GSM can be refarmed, a baseline LTE system can be deployed. Multimode GSM/LTE mobiles can then facilitate the migration of voice traffic to the all-IP LTE with each incremental transition providing an increase in both capacity and performance. Initial mobile devices will likely be multi-mode, multi-band data cards and USB devices subject to operator demand. Based on mobile chipset availability, Data devices should be available in 2010. Multi-band, Multi-mode mobiles supporting LTE are also subject to operator demand. Migrating voice services from 2G to LTE is dependent on VoIP / IMS uptake by operators. Other spectrum suitable for LTE includes the world wide roaming possibility afforded by 700 MHz spectrum in the U.S. and later in Europe, plus the refarmed 900MHz / 1800MHz spectrum in Europe. 9 WHITE PAPER: Upgrade Strategies For Mass Market Mobile Broadband
  • 10. Upgrade Strategy and Benefits of Early LTE Deployment LTE Business modeling The choices an operator makes in managing the evolution to mass market wireless broadband will have a profound impact on their future prospects, especially given the highly competitive nature of wireless. As an example, we suggest a model based on London demographics for an operator with approximately 2 Million subscribers, with most at a 2G or 2.5G genre of application sophistication, that is, namely voice. Over a period of a few years, the wireless broadband penetration will rise to 85%. For modeling purposes, consider the average subscriber data demands along 3 scenarios: reaching either 1Gbyte, 3 GByte, and 5 GByte per month in 2011, 10% of that traffic happening in any busy hour. Fifteen MHz of 2.1 GHz spectrum is allocated. Figure 8. Example operator model with demographics and broadband data growth. Consider four possible strategies for the evolution of this network. 1. Stay with full speed HSPA and deploy 3 carriers, adding cell sites as needed 2. Deploy HSPA and mobiles with Receive Diversity 3. Deploy HSPA followed with upgrade to HSPA+ (mobiles in 2010). 4. 5 MHz of HSPA (Rx.Div) + 10 MHz LTE for in-band migration. The results have significant implications, and summarized in a four chart illustration showing cell site proliferation. The vertical scale indicates the number of cells sites required over time as subscriber penetration increases and data traffic per user also increases. The initial conditions are a single carrier already deployed at 2.1 GHz providing basic coverage across the market. The first case illustrates a simple deployment of up to 15 MHz spectrum. 3.5G technologies alone are unable to support average user traffic of 3 or more GByte per month. The second case shows a definite reduction in cell site proliferation with the widespread deployment of mobiles with receive diversity. The introduction of mobiles with receive diversity early in the broadband ramp- up increases the average sector throughput to 3.4 Mbps. Deferring the introduction of mobiles with receive diversity would reduce network capacity, as legacy mobiles still require service. The improvement to capacity reduces cell site proliferation of capacity limited cell sites, and assumes that receive diversity handsets (in addition to data cards) are deployed early in the subscriber uptake of 3.5G. 10 WHITE PAPER: Upgrade Strategies For Mass Market Mobile Broadband
  • 11. The third case illustrates the effect of filling the subscriber base during the growth phase with legacy mobiles. While HSPA+ mobiles are introduced in 2010, the legacy devices dilute overall network performance and results in the unwanted proliferation of cell sites. The presence of the low data rate legacy mobiles diluting network capacity results in the odd curve. The full benefits of HSPA+ are realized as those devices are replaced with newer mobiles. The final case represents an in-band migration strategy that minimizes investment in the legacy technology, with the forward looking investment focused on LTE. LTE is then introduced in 10 MHz of spectrum, and working in tandem with the 3.5G assets, meets the traffic demand while minimizing cell sites proliferation. Figure 9. Cell Sites vs time for 4 network evolution scenarios. With the cost of site (both OPEX/CAPEX) in large urban area being sometimes as high as 10x the cost of the equipment deployed, one can easily imagine, even on the most pessimistic data growth scenario, how the cost of cell splitting will impact operators on 3.5G technology compared to operators that would have upgraded to 4G LTE. Modeling the market forecasts of data uptake suggests that in many markets the 2.1 GHz spectrum may be exhausted just as LTE arrives in 2010 5 . The deployment of LTE in newly acquired spectrum will largely eliminate the cell site proliferation shown above. Motorola recommendations The convergence of compelling mobiles suitable for wireless broadband and internet access, widespread acceptance of competitive tariffs, and the inevitable consumer demand for mobile broadband sets the stage for unprecedented uptake in wireless data traffic, and the expected spectrum capacity crunch in 2009 – 2011. Operators can best position themselves by 1. Maximizing the capacity of their 3.5G assets by upgrading to full speed infrastructure and mobiles, `utilize available 2.1 GHz spectrum, and deploy mobiles with Receive Diversity early in the 3.5G uptake phase. This will reap most of the capacity improvements and minimize capital expenditure during the mass market development. 5 Informa WCIS, Motorola modeling, and private discussions with operators 11 WHITE PAPER: Upgrade Strategies For Mass Market Mobile Broadband
  • 12. 2. Operators that exhaust their 2.1GHz spectrum should consider supporting their mass market wireless broadband demand with early adoption of LTE in the 2.6 GHz UMTS expansions band and other bands (700 MHz or AWS bands). 3. Operators with large 2.1 GHz spectrum assets could consider in band deployment of LTE. Competitive advantage favors an early move to LTE While some operators may not consider LTE until after 2012, a significant competitive advantage can accrue to the operator that pursues an early migration to LTE. In addition to high broadband data rates that subscribers always chase, and the enormous capacity, the first moving early adopter of LTE will benefit by have a significant portion of subscriber data delivered via LTE, thus avoiding spectrum exhaustion and the resulting cell splitting to handle capacity needs. This is illustrated with a large urban and suburban market example, a theoretical operator with 10 MHz of FDD spectrum at 1.9 GHz. Investigations comparing various technologies are examined. All external inputs are held constant (that is, subscriber price sensitivity, traffic demand, subscriber penetration, cell site acquisition and development costs, spectrum allocation, etc). The principle observations : • Reflects consumer price sensitivity – existing subscriber penetration with wireless broadband increases with lower tariffs. • Networks based on legacy technologies resort to cell splitting to manage total traffic demand. • The LTE operator has an incentive to decrease wireless broadband tariffs to maximize the discounted cash flow – up to the point of cell splitting. In practice, the LTE operator would pick up considerable market share by exercising the economic advantage of LTE. This increased market share would change the discounted cash flow proposition to a different and optimum price point. Figure 10.. LTE Competitive Advantage. Source : Motorola modeling 12 WHITE PAPER: Upgrade Strategies For Mass Market Mobile Broadband
  • 13. In this figure, the Net Present Value (discounted cash flow, vertical scale, in $Millions) vs. Tariff (horizontal scale, in $/Month) in the upper left chart illustrates the incentive and competitive advantage for the LTE operator. The sweet spot here is a $30 for a flat rate tariff. Under these conditions, legacy CDMA technologies are not competitive with 4G OFDMA LTE. Conclusions A number of key observations now appear obvious. 1) Wireless Broadband adoption is booming due to the convergence of widespread 3.5G Networks and attractive tariffs. 2) Wireless Broadband will penetrate the mass market coinciding with the deployment of main stream feature rich phones and smart phones. 3) Legacy technology upgrades will offer incremental capacity improvements, most of which can be achieved with the deployment of mobile receive diversity. 4) LTE offers a much stronger technology base (radio and network architecture) for a wireless broadband data environment that can grow much more efficiently (TCO) as broadband adoption climbs 5) Several strategies are available for operators to evolve their networks. Early adoption of the LTE scenario seems to offer the best forward looking opportunity. 6) The economic advantages of an early move to LTE for meeting the mass market demand will give significant competitive advantage. For more information on Motorola LTE and how LTE can help you gain a competitive advantage, please talk to your Motorola representative. 13 WHITE PAPER: Upgrade Strategies For Mass Market Mobile Broadband
  • 14. motorola.com Part number WP-UPGRADE STRATEGIES. Printed in USA ,01/09. MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office. All other product or service names are the property of their respective owners. ©Motorola, Inc. 2009. All rights reserved. For system, product or services availability and specific information within your country, please contact your local Motorola office or Business Partner. Specifications are subject to change without notice.