Small Cell Economics

5,528 views

Published on

I enjoyed giving my "Small Cell Economics" presentation at the Small Cell MENA Conference in Dubai (October 7th, 2013). You will (or might) find this one particular provoking (even for me) but please bear in mind that the last thing I want is for you to think that Small Cells doesn't work or can be a great tool ... rather I like you to work on how to solve some of the problematic scaling issues in large-scale small cell networks.

Published in: Technology, Health & Medicine

Small Cell Economics

  1. 1. Small Cells Economics Small Cells MENA October 7th & 8th Dubai, UAE Dr. Kim Kyllesbech Larsen Group Technology Ooredoo Group
  2. 2. Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 20132 Small-cell networks addressed in this talk. Other types are pretty cool but for a different time & place. have inter-cell distances between ca. 50 meter and 300 meter. are structurally planned & coordinated. & are based on licensed as well as unlicensed bands.
  3. 3. Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 20133 Best places for small 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. @ Work (2 – 4 Cells) @ Home (2 – 3 Cells) On the Go @ Home (1 – 2 Cells) On the Go 00:00 10:00 12:00 22:0017:006:00 8:00 voicedata Small Cells 14:00 Femto Cell Femto Cell Up-to 80% of all cellular data traffic generated in no more than 3 cells. Illustration
  4. 4. Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 20134 Data traffic trend to be considered. 47% 37% 16% Home Work Mobile “SepNet” “SmallNet” and/or “FemtoNets” “CorpNet” “SmallNet” Source: Detailed data mining study, T-Mobile Netherlands 2011. SepNet = Separate network (i.e., not integrated) CorpNet = Corporate (work-based) network. SmallNet = Operator controlled heterogeneous network. Mobile Data Traffic Distribution Illustration Between 40% - 50% of all traffic occurs at Home, Other 35% to 40% at Work, & lastly no more than 20% is Mobile. Migration paths:
  5. 5. Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 20135 Cellular Data Mobility Illustration 31 2 3 4 3 3 2 2 2 1 1 1 1 0 5 10 15 20 25 30 35 100% traffic 80%+ traffic Number Cells Engaged per User Mobile data usage Dongle-likeSmartphone-likehandset-like Up-to 80% of all cellular data traffic generated in no more than 3 cells.
  6. 6. Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 20136 Heuristics for data usage Users mobile data traffic is highly localized : 80% @ 3 Cells. The more extreme usage the higher the localization : → 1 Cell. No more than 20% of data traffic is associated with 4+ cells.
  7. 7. Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 20137 Cellular range distribution. Illustration Small Cell Domain UMTS2100 Small-Cell potential (large-scale) - Outdoor off-load. - Indoor off-load. - Cell split replacement - Capacity addition - “Surgical” coverage Small-Cell potential (small-scale) - Coverage solutions. - Villages. - Residential areas.
  8. 8. Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 20138 Cellular range dynamics. Illustration NYC Den Haag Houston Leeds LA Chicago Berlin Hamburg London Houston 0.20 0.40 0.60 0.80 1.00 0 2,000 4,000 6,000 8,000 10,000 City Pop Density (pop/km2) GSM900 GSM1800 UMTS2100 Effective Cell Range In km Small Cell Domain
  9. 9. Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 20139 The structure of cells. Below illustrates conventional cell planning, small cells can be much more irregular in their grid placement. Illustration WiFi 20 MHz @ 2.4 GHz Pico cell – omni directional LTE 20 MHz @ 2.6 GHz Pico Cell – omni directional LTE 20 Mhz @ 1.8 GHz Macro Cell – 3-sectored* 1 km 1km ca. 30 AP Lowest power ca. 700 Mbps ca. 12 AP Low – medium ca. 300 Mbps ca. 15 AP* High power ca. 400 Mbps NOTE: Some caution should be taken in direct comparison between the above simulations as system specs are not exactly the same (e.g., radiating power levels, spectral effi, etc).. 4+ thousand pops lives there 16+ thousand pops work there 60+ thousand pops visits per day
  10. 10. Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 201310 How small is a small cell? Illustration Rural / Nation-wide 700 MHz to 900 MHz Pico – Macro Urban – Suburban: Up-to 2100 MHz Small Cells (SC) 1.8 To 2.6 GHz Throughput & Capacity Sub-urban to Rural Range 10+ km Range 300m – 1.0km Femto 1.8 To 5.0 GHz SC Range 50m - 300m Structured & planned & coordinated Femto Cell: can be unstructured & unplanned & uncoordinated Femto Range Up-to 50m NOTE: Depicted coverage or interaction range illustrations are not to scale. Also targets for Small Cell & Femto deployments (small-scale)
  11. 11. Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 201311 Small cell fundamentals Illustration macro The Backhaul challenge. The Interference challenges. Planning & Optimization complexity. Small Cell off-loading strategies. What to look out for! Maybe only capacity & coverage alternative. Might have favorable TCO economics. New business models to emerge. Small Cell benefits. macro macro macromacro Small cell Small cell Small cell Small cell Small cell Small cellSmall cellSmall cell Illustration
  12. 12. Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 201312 Capacity fundamentals. CAPACITY Ci = BANDWIDTH Bi MHz × EFFICIENCY Ei Mbps per MHz per Cell × CELLS Ni # Business as Usual New spectrum New technologies New macro × Innovation Re-farming Improvements Small-cells × Radical Spectrum sharing Spectrum sharing Site sharing VERY COSTLY (VERY) COSTLY EFFICIENT (VERY) COSTLY COMPLEX + EFFICIENT COMPLEX BUT EFFICIENT BaU (COSTLY) BaU (COSTLY) Leapfrog Network Capacity & Quality within Financial KPIs COSTLY BUT EFFECTIVE Right frequency large BW → might delay or slow proliferation of small-cells!
  13. 13. Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 201313 Capacity fundamentals. 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. CAPACITY Ci = BANDWIDTH Bi MHz × EFFICIENCY Ei Mbps per MHz per Cell × CELLS Ni # Demand in 2020 to 2012 ratio (Cisco VNI for MEA). 50 × (CAGR 63%) Supply in 2020 to 2012 ratio 9 – 60 × 4 – 8 × Low & high frequency blend 1.5 × Incl. LTE, but efficiency blend 2 - 5 × Macro-based × ( Ksmall-cell >1) × 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 SMALL CELLS BIGGEST BANG
  14. 14. Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 201314 Economics of a macro rooftop site. Illustration Note: the above is based on WEU cost distribution. Differences are likely to occur for other markets / regions.
  15. 15. Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 201315 The small cell TCO “competition” Macro Cellular Sectorization. Macro overlay / co-location of new capacity. A Macro cellular cell split. Abundance of bandwidth at Low frequencies (i.e., APT700).
  16. 16. Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 201316 Economics of a small cell network. Cost breakpoints in #small-cell nodes to Macro, Overlay and Sector Cost. For Mature Market Economics *. Illustration * Note: the above is based on WEU cost distribution. Differences are likely to occur for other markets / regions. Incremental macro cost Up-to 20 Small Cell Nodes have better Capex compared to a macro-cellular rooftop. Up-to 10 Small Cell Nodes have better Opex economy compared to a macro-cellular rooftop.
  17. 17. Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 201317 Small cell cost scaling challenged - Capex. 1 For mature market economics, cost-structure and typical price levels.. 2 his is equivalent to no more than 50 hours of technical labor in US not considering materials. civil works equipment + antenna transport Core Macro-site Annualized Capex 100 per unit 50 Node Small-Cell network Annualized Capex <2 per unit Equipment1 US$ 30k Macro Equipment. US$ 6k annualized Capex. < US$ 120 annualized Capex < US$ 600 per Small-cell Node. Civil Works1 Similarly Small-cell CW should be < US$ 1,200 per Small-cell Node 2 Feasible ? LARGE SCALE SMALL-CELL DEPLOYMENT REQUIRE a QUANTUM-LEAP in ECONOMICS of scale & DEPLOYMENT INNOVATION. Illustration
  18. 18. Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 201318 Small Cell cost scaling challenges – Opex. Macro-site Annual Opex 100 per unit 50 Node Small-Cell network Annual Opex <2 per unit Rental1: Macro lease of US$ 10k pa would require Small-cell node unit lease to be no more than < US$ 200 per anno! Transport1: Macro transport cost of US$ 8.5k pa would require Small-cell nodal transport solution should be better than < US$ 170 per anno or < US$ 15 per month (@25-50Mbps) rental O&M transport energy OPEX SCALING is one of the BIGGEST CHALLENGES for LARGE-SCALE SMALL-CELL NETWORK DEPLOYMENT. Illustration Feasible ? 1 For mature market economics, cost-structure and typical price levels.
  19. 19. Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 201319 TCO challenges & possible solutions. • Wireless backhaul (Sharing?) • Low cost xDSL or Cable (QoS issue?) • Fiber connectivity (availability?). Backhaul Scaling. • Aggressive price reductions. • CW: Sharing with other operators. • CW: Strategic partnerships. RF Equipment & Civil Works. • Securing strategic locations early. • Strategic Partnerships. • Sharing with other operators. Site Lease Cost. • Self Optimized Networks. • Small Cell outsourced operations. • Independent SC business model. Operations.
  20. 20. Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 201320 What to be passionate about! Small-Cell Networks are great remedies for surgical capacity & coverage additions. Small-Cell Networks tend to economical scale well up-to about 20+ nodes* & for inter-cell distances below 300 meters. Large-scale Small-Cell Networks (>50+ Nodes*) have many economical & physical challenges to be addressed. Small-Cell Network TCO might appear excessive! often it is only way to deliver demanded capacity & coverage. Note (*):The size of Small-Cell Networks in terms of Nodes and whether a particular size is economical (in comparison to Macro Cell) will ultimately depend on the local cost structure and pricing levels of active equipment.
  21. 21. Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 201321 Oh BTW a little teaser ;-) Can small cells be meaningful in emerging markets? Myanmar • Fixed lines% <1% → hardly any fixed BB infrastructure. • Mobile% <10% → less than 2,000 Base Stations. • Internet% <2% → very poor international BW available. • Electrification ca. 20%+ & with large grid stability issues. Infrastructure • Top-100 cities with ca. 25% of population. • More than 70% of population lives in rural areas. • Number of villages exceed 67+ thousand. – Many without electricity. Small Cells can compete with Tower Economics (easier actually than Roof Top). More cost efficient provision of capacity in urban areas. Small Cell Networks with Macro Cellular Backhaul (via high towers) more economical
  22. 22. Dr. Kim Kyllesbech Larsen Follow Dr. Kim on Twitter @KimKLarsen Blog: www.TechNEconomyBlog.com Presentations: http://www.slideshare.net/KimKyllesbechLarsen Acknowledgement: I am indebted to my wife Eva Varadi for her great support and understanding during the creation of this presentation.

×