Growth Pains: How mobile networks will supply data capacity for 2020

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Hereby my Broadband MEA 2013 keynote presentation (delivered 20 March 2013).It's an Extended Re-Mix, rather than the limited slides required for the 15 minutes talk. Hopefully this gives a more rounded view on Growth Dynamics related to mobile data demand and supply in mobile networks as well as the Economics involved (which is often forgotten when the usual suspects gets exited about x1,000 challenges).

Take also a peek at my Blog on the topic:

http://techneconomyblog.com/2012/11/02/the-economics-of-the-thousand-times-challenge/

Enjoy!

Btw. apologies for the fairly hopeless format conversion in this presentation ( it looks better in real ppt format ;-).

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  • Maybe do a cognitive bias experiment related to growth rates?
  • Animation wise … initially I ll be showing 176% CAGR (nothing else). Then showing the demand curve, then the rest of the CAGR and the annual growth. Finally I ll show the Supply curve. Make the point that it has little point in just talking about a growth rate without specifying the reference point.
  • Growth Pains: How mobile networks will supply data capacity for 2020

    1. 1. Growth Pains: How networks willsupply data capacity for 2020Dr. Kim Kyllesbech LarsenHead of Technology Office,Group Technology.Ooredoo
    2. 2. The New Maya’s?2 March 19, 2013 Dr. Kim Kyllesbech Larsen, Broadband MEA 2013.
    3. 3. Are you worried? 90+% GROWTH CELLULAR DATA GROWTH MEA 176%! YoY (2011-2012) CELLULAR DATA GROWTH MEA 130%! GAGR (2011-2013) Exponential CELLULAR DATA GROWTH MEA 93%! YoY Growth! (2012-2013) CELLULAR DATA GROWTH MEA 90%! CAGR (2011-2017) Should you be concerned? Source: Cisco 2011 – 2017 Mobile3 March 19, 2013 Dr. Kim Kyllesbech Larsen, Broadband MEA 2013.
    4. 4. Super much more mobile data traffic Illustration MEA 2011 - 2016 Average Demanded Mbps per Sector ×2.5 versus Average Supplied Mbps Date Revenues 3 TIMES MORE SPECTRUM EFFICIENCY SUPPLY SITES SUPPLY ×30 Data Volume Note: assuming largely U900 based network grids with 70% load and 2 10 – 2 15 MHz available. Average supplied throughput is cell average. For MEA 2012 assumed to have 100 thousand Node-Bs installed which is assumed doubled to 200 thousand by 2017. Sources: Pyramid Research, Cisco VNI and various others.4 March 19, 2013 Dr. Kim Kyllesbech Larsen, Broadband MEA 2013.
    5. 5. Cisco VNI for MEA ... Penta1 byte society? 2012 = 50 PB 2017 = 860 PB 1 Million Blu-ray discs 17+ Million Blu-ray discs per month per monthPer Node-B per Day: at least you should be concerned! Ca. 100 Thousand Node-Bs Min. 200 Thousand Node-Bs Ca. ½ Blue-ray disc Ca. 4 Blue-ray discs Average Node-B throughput 6 Mbps Average Node-B throughput 37 Mbps!!!! 1A Penta Byte is 1,000,000,000,000,000 (15 zeros) Bytes Note: assuming double layer Blue-ray of 50GB capacity.5 March 19, 2013 Dr. Kim Kyllesbech Larsen, Broadband MEA 2013.
    6. 6. Growing pains...a sense of urgency? MORE & BETTER SPECTRUM REQUIRED. QUANTUM-LEAPING EFFECTIVE SPECTRAL EFFICIENCY. MANY MORE SITES REQUIRED.6 March 19, 2013 Dr. Kim Kyllesbech Larsen, Broadband MEA 2013.
    7. 7. Growth ... the ugly, the bad and the good. CAGR REFS TO YEAR 1 (THE NEW MAYA’s) 176% YoY GROWTH RATE DEMAND SUPPLY 131% ITS VERY NORMAL TO PRESENT 116% A DEMAND GROWTH RATE 107% 99% WITHOUT 91% 85% 79% 73% - REFERENCE - MENTION OF SUPPLY SIDE THOUGH SUCH A NUMBER IS IN ALL EFFECT OF LITTLE MEANING. 176% 93% 90% 83% 68% 54% 53% 42% 35% Yr1 Yr10 Be careful & critical when faced with growth rates ... The New Maya’s might be at playing at your cognitive bias.7 March 19, 2013 Dr. Kim Kyllesbech Larsen, Broadband MEA 2013.
    8. 8. Growth ... is the sky the limit? LIMITED? ? Technology Usage adaptation Adaptation #Users Usage per User8 March 19, 2013 Dr. Kim Kyllesbech Larsen, Broadband MEA 2013.
    9. 9. Growth ... technology adaptation. Population Availability Economics LIMITED! 2017: 45+% of MEA1 Technology adaptation #Users 2013: ca. 30% of MEA1 on 3G or better 1 Pyramid Research MEA.9 March 19, 2013 Dr. Kim Kyllesbech Larsen, Broadband MEA 2013.
    10. 10. Growth ... usage adaptation. Pricing Use Cases Cellular off-load Convenience CELLULAR TV 20 hrs. per week TV viewing Cloud ? Technology Spectral capacity Network Speed @ 1Mbps unicast stream Device performance 20 GB per Month per user Transport infrastructure 2017: 1.5 GB Cellular! LIMITED? Cellular Usage Adaptation Usage per User 2013: 300 MB Cellular! per Month per User in MEA1 1 Cisco VNI MEA10 March 19, 2013 Dr. Kim Kyllesbech Larsen, Broadband MEA 2013.
    11. 11. MEA mobile data growth. Illustration MEA ~ to CEE 2017 Penta-Byte per month 40% of USA in 2017 2013 15% of APAC in 2017 <2011 2010 Cisco VNI <2011 MEA Pyramid Research 4Q12? MEA 2Q12 2007 2Q11 2012 2Q10 2010 USA reach this MB-level in 2011 Mobile broadband uptake in %. Mega-Byte per subs per month Sources: Pyramid Research data until 2017 & Cisco VNI for MEA 2011 to 2017. Note: The Flags illustrates what year a certain value was reached by that given country compared to MEA projections.11 March 19, 2013 Dr. Kim Kyllesbech Larsen, Broadband MEA 2013.
    12. 12. MEA growth & diffusion UMTS will peak at 50% penetration. Billions of Subscriptions 50% 2G 2G remains for a 3G (too) long time LTE tying up valuable spectrum! Sources: Pyramid Research data until 2017; after 2017 authors own assessment based on technology growth and diffusion dynamics.12 March 19, 2013 Dr. Kim Kyllesbech Larsen, Broadband MEA 2013.
    13. 13. Why MEA Growth might be different? Illustration PREPAID GROWTH DYNAMICS13 March 19, 2013 Dr. Kim Kyllesbech Larsen, Broadband MEA 2013.
    14. 14. Western Europe ... They have had it! Illustration 2020 1.7 0.9 2012 2.1 1.9 0.91 1.6 0.8 2.33 5.4 81% <100% PHH DHH FBB M2M 2008 2.0 1.2 0.47 1.5 0.7 2.36 4.1 63% ~10% Icon PHH DHH FBB M2M TV PC 1.9 0.4 0.00 Mobile subs Smartphone Tablet 2.37 2.6 51% <2% People Display HH with HH with per HH per HH Fixed BB M2M PHH DHH FBB M2M Subscr. Note: HH stands for House Holds.14 March 19, 2013 Dr. Kim Kyllesbech Larsen, Broadband MEA 2013.
    15. 15. MEA ... We want connectivity! Illustration 3+ number of Displays 8+ Smartphones increase 2020 0.33 0.9 Doubling of Displays 40 Smartphones increase 2012 4.8 3.3 0.5 0.30 0.6 4.66 5.0 5% <5?% PHH DHH FBB M2M 2008 3.5 0.4 0.1 0.29 0.4 4.70 1.4 3% ~0% Icon PHH DHH FBB M2M TV PC 2.2 0.01 0.00 Mobile subs Smartphone Tablet 4.69 0.7 2% ca. 0% People Display HH with HH with per HH per HH Fixed BB M2M PHH DHH FBB M2M Subscr. Note: HH stands for House Holds.15 March 19, 2013 Dr. Kim Kyllesbech Larsen, Broadband MEA 2013.
    16. 16. The mobile broadband journey! Voice revenue decline (likely faster than data revenue uptake) Messaging revenue decline (with Smartphones & OTT uptake) Cash and margin pressure from new technology introduction. Cash and margin pressure from sustaining data demand.16 March 19, 2013 Dr. Kim Kyllesbech Larsen, Broadband MEA 2013.
    17. 17. The Ugly: Telco-OTT Challenge ... Illustration LEGACY VOICE WEU LEGACY MESSAGING Between 2011 - 2021 WEU MEA Between 2011 - 2021 Between 2011 - 2021 -30% -50% -15% MEA Between 2011 - 2021 +20%? * Sources: Pyramid Research (until 2017) and other analyst projections. (*) It is hard to believe that SMS revenues will grow in MEA. Will depend a lot on Smartphone penetration and mobile data deployment.17 March 19, 2013 Dr. Kim Kyllesbech Larsen, Broadband MEA 2013.
    18. 18. Mobile broadband…feels like this?18 March 19, 2013 Dr. Kim Kyllesbech Larsen, Broadband MEA 2013.
    19. 19. The Good: mobile data revenue growth ... ×180 WEU Illustration Between 2011 - 2021 180 Million Subs ×2.5 On very dense networks BUT MEA Between 2011 - 2021 based on 1800/2100 grids 1.6 Billion SubsOn fairly coarse networks ×5 based on 900 grids DATA VOLUME Comfortable & sustainable Network Challenges (The Bad?) Network Basis for coping with to be overcome Future Growth. to cope with Future Growth. Sources: Pyramid Research (until 2017) and other analyst projections.19 March 19, 2013 Dr. Kim Kyllesbech Larsen, Broadband MEA 2013.
    20. 20. Capacity fundamentals CAPACITY Ci = BANDWIDTH Bi × EFFICIENCY Ei × CELLS Ni MHz Mbps per MHz per Cell # Business as Usual New spectrum New technologies New macro × (VERY) COSTLY BaU (COSTLY) VERY COSTLY Innovation Re-farming Improvements Small-cells × COMPLEX + EFFICIENT BaU (COSTLY) (VERY) COSTLY Radical Spectrum sharing Spectrum sharing Site sharing COMPLEX BUT EFFICIENT EFFICIENT Leapfrog Network Capacity & Quality within Financial KPIs20 March 19, 2013 Dr. Kim Kyllesbech Larsen, Broadband MEA 2013.
    21. 21. Spectrum fundamentals SPECTRUM ACQUISITION SPECTRUM RETENTION SPECTRUM PERFECTION21 March 19, 2013 Dr. Kim Kyllesbech Larsen, Broadband MEA 2013.
    22. 22. MEA state of mobile broadband 2020 CAPACITY Ci = BANDWIDTH Bi × EFFICIENCY Ei × CELLS Ni MHz Mbps per MHz per Cell # Demand in 2020 to 2012 ratio (Cisco VNI for MEA). 50 × (CAGR 63%) Supply in 2020 to 2012 ratio 4–8× 1.5 × 2- 5× Macro-based 9 – 60 × Low & high Incl. LTE, but × ( Ksmall-cell >1) × frequency blend efficiency blend Incl. small-cells 2012 Utilization Compensated Demand (i.e., directly comparable to Supply) 10 – 20 × 2020 Mobile Broadband Networks in MEA likely to cope with expected demand BUT ONLY WITH MUCH MORE SPECTRUM & MANY MORE SITES NOTE: It should be well understood that there is a possible disconnect between demand & supply and that to make the two comparable the utilization needs to be considered.22 March 19, 2013 Dr. Kim Kyllesbech Larsen, Broadband MEA 2013.
    23. 23. Spectrum acquisition & retention .23 March 19, 2013 Dr. Kim Kyllesbech Larsen, Broadband MEA 2013.
    24. 24. Spectrum perfection Illustration LTE TDD UMTS GSM Mobile Data Mobile Data Mobile Data Capacity overlay & 10MHz 10MHz 75 (40) MHz Small Cells NOT macro-option 4 – 7.5 +2600MHz (NEW) +2100MHz (NEW) 1800MHz REFARM 900MHz REFARM +800MHz (NEW) TYPICAL OPERATOR SPECTRUM POSITION IN MEA NOTE: I am assuming that E-GSM @ 900MHz has been implemented.24 March 19, 2013 Dr. Kim Kyllesbech Larsen, Broadband MEA 2013.
    25. 25. Spectrum re-farming and migration dynamics. Illustration Customer and Technology migration dynamics 100% 80% LTE 60% No 2G adds 40% 3G 20% 2G 2G buy-out 0% TIME Decline growth Spectrum management dynamics LTE 2G 3G 2G LTE 3G 800 MHz 900 MHz 1800 MHz 2100 MHz NOTE: The above is not an emerging MEA example. Also not ethat spectral re-farming to UMTS requires that there is multiples of 5MHz available.25 March 19, 2013 Dr. Kim Kyllesbech Larsen, Broadband MEA 2013.
    26. 26. Spectrum efficiency MODERNIZATION 4 MULTIPLEXING GAIN ANTENNA INNOVATION CUSTOMER MIGRATION YOUR NETWORK ON LATEST & GREATEST TECHNOLOGY ? IF YOUR CUSTOMERS ARE NOT! … SO WHAT!26 March 19, 2013 Dr. Kim Kyllesbech Larsen, Broadband MEA 2013.
    27. 27. Need for (small) cells … Oh yes! CAPACITY Ci = BANDWIDTH Bi × EFFICIENCY Ei × CELLS Ni MHz Mbps per MHz per Cell # 2011 Simplified Illustration Supplied (max) 2×10 MHz HSPA+ 42 DC Urban “hot” zone DL ca. 10 Gbps @ 2.1GHz DL 0.97 / UL 0.34 1,000 Macro Cells1 UL ca. 3 Gbps ×15 ×4 LTE ×1.5 LTE ×2.5 LTE 2020 LTE Demand 2×20 MHz LTE 2x2 (cat. 3) Urban “hot” zone @ 1800MHz DL 1.45 / UL 0.86 Up-to 2,500 Cells 2 DL 100 Gbps + 2x20 MHz +1,500 on-top UL 30 Gbps @ 2.6GHz of exiting network Small cells required!!! CAGR ca. 35% 2 Femto-cell off-load!!! 1 Urban “hot” zone cell is defined as a cell with a range less than 500 meter, 2 Assuming 70% load as design rule.27 March 19, 2013 Dr. Kim Kyllesbech Larsen, Broadband MEA 2013.
    28. 28. MEA needs for MHz & SitesHow many new sites?IF Maximum 2 25 MHz 1 Economics cannot allow for Eff: 0.8 – 1.5 Mbps/MHz/Cell these site numbers if macro! Assuming Cisco VNI for MEA Uncertainty 50k sites & 2 yrs. Demand for small cells and alternative off-load techniques How much additional MHz? IF  Never more than 200K sites  Eff: 0.8 – 1.5 Mbps/MHz/Cell  Assuming Cisco VNI for MEA  Uncertainty 10 MHz & 2 yrs. Realistic for operators to acquire additional 2×40 MHz Also highly likely to be blend of low & high frequencies. 1 This could for example correspond to 2x10 MHz @ 900MHz & 2x15 MHz @ 2100MHz.28 March 19, 2013 Dr. Kim Kyllesbech Larsen, Broadband MEA 2013.
    29. 29. Economics of providing lots of capacity BANDWIDTH Bi × EFFICIENCY Ei × CELLS Ni MHz Mbps per MHz per Cell # 4–8× TCO 1.5 × TCO 2 – 5+ × TCO • New Spectrum. +++ • Modernization. ++ • Macro Cell Splits. +++ • Spectral re-farming. n • Higher order MiMo. ++ • Small Cell ++ • Accelerated customer ++ • Beam forming (AAA). ++ deployment. migration (re-farm). • Cognitive Radio. + • Cellular + WiFi + • Carrier Aggregation. n • Carrier Aggregation. n hybrids. • Spectrum Sharing. -- • Coordinated Multi- n • Off-loading to WiFi & - Point (coMP) Tx/Rx. Femto-cells. • Spectrum Sharing. -- • Network Sharing -- HIGH CAPEX (NEW SPTRM) BaU / HIGHER CAPEX HIGH TO VERY HIGH CAPEX HIGH OPEX (MKT INVEST) LOW OPEX EXPOSURE. HIGH TO VERY HIGH OPEX NOTE: TCO nomenclature is the following: (+++) VERY HIGH, (++) HIGHER, (+) HGH, (n) neutral, (-) LOW TCO / POS NPV & (--) VERY LOW TCO / POS NPV.29 March 19, 2013 Dr. Kim Kyllesbech Larsen, Broadband MEA 2013.
    30. 30. Best place for small cells … at peoples home? Illustration Up-to 80% of all cellular data traffic generated in no more than 3 cells. data voice 00:00 6:00 8:00 10:00 12:00 14:00 17:00 22:00 Femto Cell Small Cells Femto Cell @Home On the @ Work On the @Home (1 – 2 Cells) Go (2 – 4 Cells) Go (2 – 3 Cells) NOTE: WiFi is just a bridge to better cellular small-network systems become main stream with controlable spectrum assets and E2E Customer Experience Management.30 March 19, 2013 Dr. Kim Kyllesbech Larsen, Broadband MEA 2013.
    31. 31. Economics of small cells? * Extension of existing infrastructure more economical than new Small-Cell Network (if the choice is there!) TCO Breakpoint 1ca. 20 Small-cell Nodes (compared to new macro-site!) * Note: the above is based on WEU cost distribution. Differences are likely to occur for other markets / regions, 1 Based on WEU cost structure.31 March 19, 2013 Dr. Kim Kyllesbech Larsen, Broadband MEA 2013.
    32. 32. Small cells scaling challenges - Capex Illustration Equipment 100 per unit <2 per unit 30k Macro Equipment Core transport 6k annualized Capex equipment Feasible < 120 annualized Capex + antenna ? < 600 per unit Small-cell Node civil works Similarly 50 Node Small-cell CW should be Macro-site Small-Cell network < 1,200 per unit Small-cell Node 1 Annualized Capex Annualized Capex LARGE SCALE SMALL-CELL DEPLOYMENT REQUIRE a QUANTUM-LEAP in ECONOMICS of scale & DEPLOYMENT INNOVATION. 1 this is equivalent to no more than 60 hours of technical labor in US not considering materials.32 March 19, 2013 Dr. Kim Kyllesbech Larsen, Broadband MEA 2013.
    33. 33. Small cells scaling challenges - Opex Illustration Rental: 100 per unit energy <2 per unit Macro lease 10k require Small-cell node unit lease to be O&M no more than transport Feasible < 200 per anno! rental ? Transport: Macro transport 8.5k require Small-cell node unit transport Macro-site 50 Node solution to be better than Annual Small-Cell network < 170 per anno. Opex Annual Opex OPEX SCALING is one of the BIGGEST CHALLENGES for LARGE-SCALE SMALL-CELL NETWORK DEPLOYMENT.33 March 19, 2013 Dr. Kim Kyllesbech Larsen, Broadband MEA 2013.
    34. 34. What should we be passionate about SPECTRUM PERFECTION, PERFECTION & PERFECTION. EARLY SITE DENSITY PLANNING CRUCIAL FOR SUSTAINING GROWHT1 BE RADICAL ADAPTING INNOVATIVE CAPACITY ENHANCING STRATEGIES 1 See Refs by Iris Barcia & Simon Chapman (Keima Wireless, http://www.slideshare.net/zahidtg/radio- challenges-and-opportunities-for-large-scale-small-cell-deployments34 March 19, 2013 Dr. Kim Kyllesbech Larsen, Broadband MEA 2013.
    35. 35. MEA 2020 cellular data challenges. MOBILE BROADBAND NETWORKS WILL BE THE MAIN GATEWAY TO INTERNET. LACK OF ECONOMICAL HIGH QUALITY TRANSPORT INFRASTRUCTURE COULD SLOW DOWN BROADBAND GROWTH. EVEN WITH SPECTRUM AVAILABILITY & PACED TECHNOLOGY MIGRATION CELLULAR SITES WILL INCREASE DRAMATICALLY ACROSS MEA COMING YEARS.35 March 19, 2013 Dr. Kim Kyllesbech Larsen, Broadband MEA 2013.
    36. 36. Thank you!Dr. Kim Kyllesbech Larsen

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