Crucial backhaul economics - the latest Total Cost of Ownership comparison of backhaul solutions
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Crucial backhaul economics - the latest Total Cost of Ownership comparison of backhaul solutions

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Backhaul economics have never been out of the spotlight and with millions of small cells on the horizon how will operators cope? ...

Backhaul economics have never been out of the spotlight and with millions of small cells on the horizon how will operators cope?

This presentation provides:

• The latest financial comparison of backhaul solutions
• An insight as to what options and challenges operators face next
• An overview of the total cost of ownership model used to create the analysis

Senza Fili has completed one of the most thorough analyses of backhaul technologies ever attempted.

It is based on a total cost of ownership model and compares the capex and opex of fibre, microwave and E-band point-to-point, and microwave point-to-multipoint backhaul for different configurations of LTE, 3G, and small-cell networks over a period of five years.

The model also takes into account architectural differences and, for perhaps the first time, takes aggregation benefits into account. The cost of backhaul per site and per Mb/s is compared.

The findings are summarised in the recent Senza Fili white paper ‘Crucial economics for mobile data backhaul’.

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Crucial backhaul economics - the latest Total Cost of Ownership comparison of backhaul solutions Crucial backhaul economics - the latest Total Cost of Ownership comparison of backhaul solutions Presentation Transcript

  • www.cbnl.comNext generation thinkingCrucial backhaul economicsThe latest Total Cost of Ownership comparisonof backhaul solutions7 December 2011
  • Crucial backhaul economics – today’s agenda• Overview of the Total Cost of Ownership project - Lance Hiley• The latest financial comparison of backhaul solutions - Monica Paolini• Meeting the challenges of mobile backhaul - Monica Paolini• How VectaStar achieves cost savings in a live backhaul environment - Lance Hiley• Your questions - Q&A will be open for 10 minuteswww.cbnl.com Crucial backhaul economics webinar 2
  • Crucial backhaul economics – the challenge Lance Hiley VP Marketing Cambridge Broadband Networks Limited Objectives and overview of the Total Cost of Ownership projectwww.cbnl.com Crucial backhaul economics webinar 3
  • Crucial backhaul economicsWhy is understanding Total Cost of Ownership crucialfor backhaul market?• Operator financial focus is higher than ever• Operators demands• Capex and opex are at the forefront of the CEO’s thoughts• Potentially millions of small cells on the horizonwww.cbnl.com Crucial backhaul economics webinar 4
  • Crucial backhaul economics – the challengeObjectiveCreate a financial model tool to analyse theTotal Cost of Ownership (TCO) for popularbackhaul technologies to help networkoperator decision making.Based on:•An independent and fair analysis•Accurate cost estimates•Research from customers and vendors across continents•Industry published data by Next Generation Mobile Networks (NGMN)www.cbnl.com Crucial backhaul economics webinar 5
  • Basis: backhaul solutions and scenariosSolutions• Point-to-point (PTP) microwave• Point-to-multipoint (PMP) multipoint microwave• E-Band microwave• Leased fibre• Built fibreScenarios• LTE• 3G• LTE small cellswww.cbnl.com Crucial backhaul economics webinar 6
  • Basis: cost parametersCapex• Outdoor equipment costs• Indoor equipment costs• Network planning, site acquisition and installationOpex• Site rental fees, leased line fees• Spectrum licensing fees• Recurring operating costs (e.g. power, maintenance)Model was populated with median values across all marketswww.cbnl.com Crucial backhaul economics webinar 7
  • Basis: backhaul topologies Point-to-multipoint (PMP) topology Point-to-point (PTP) and E-band star topology RAN RAN RAN RAN RAN RAN RAN RAN RAN RAN RAN RAN RAN RAN RAN HUB RAN HUB RAN RAN RAN RAN RAN RAN RAN RAN RAN RAN RAN RAN RAN RAN RAN RAN Up to 240 RAN sites supported, depending on RAN site capacity Max 16 RAN sites supported Point-to-point (PTP) and E-band tree-and-branch topology Point-to-point (PTP) and E-band ring topology RAN RAN RAN RAN RAN RAN RAN RAN RAN RAN RAN RAN RAN HUB HUB RAN RAN RAN RAN RAN RAN RAN RAN RAN RAN RAN RAN Max 10 RAN sites supported LEVEL 1 LEVEL 2 LEVEL 3 Max 15 RAN sites supportedwww.cbnl.com Crucial backhaul economics webinar 8
  • Crucial backhaul economics – the results Monica Paolini, PhD Founder and President Senza Fili Analysis and conclusions from the Total Cost of Ownership (TCO) projectwww.cbnl.com Crucial backhaul economics webinar 9
  • TCO analysis of backhaul costs: why a long-term view matters Analysis approach • Small network that scales in size, same size assumptions across solutions • Cost assumptions are for median prices across developed and emerging markets, and are consistent across solutions • No specific allowance was made for discounts made on the basis of contract size or operator competitive position • Analysis of multiple geographic and competition environments: presentation focuses on single one, model allows to change assumptions Crucial to look at both capex and opex • Real cost of backhaul is opex - for both wireless and fiber solutions • Looking primarily at capex can be easier, but misleading – Impact of equipment costs is often overestimated But money is not everything • Non-financial considerations in many cases prevail (and rightly so) • But understanding tradeoffs makes it possible to take right decision Our analysis focuses on drivers dynamics: Costs change across regions and types of operators, drivers stay the sameJanuary 11, 2012 | 10 | Confidential - Do not distribute without permission © Senza Fili Consulting LLC
  • Capex drivers: PMP reduces the footprint, and the costs Source: Senza Fili Consulting• PMP topology: fewer equipment terminals, as single hub supports multiple RAN sites ― 15 RAN sites: 18 (15 +3) radios with PMP, 30 radios with PTP• Fewer terminals: less equipment, less sites to be installed, lower capexJanuary 11, 2012 | 11 | Confidential - Do not distribute without permission © Senza Fili Consulting LLC
  • Opex also scales with number of installed radios Source: Senza Fili Consulting• Opex cost items are constant across wireless solutions• Overall opex depends on topology: ― Number of terminals ― Aggregation gainsJanuary 11, 2012 | 12 | Confidential - Do not distribute without permission © Senza Fili Consulting LLC
  • A closer look at cost drivers PTP compared to: PMP E-band Leased fibre Capex Equipment costs, outdoor    Equipment costs, indoor   Network planning, site acquisition, installation    Opex Site rental fees, leased line fees    Spectrum licensing fees   N/A Other recurring operating costs    = higher cost than PTP; = lower cost than PTP;  = comparable cost as PTP | 13 | Confidential - Do not distribute without permission © Senza Fili Consulting LLC
  • Summary of results • PMP is the most cost effective backhaul – Overall cost savings of 49% over PTP microwave for LTE networks – 31% cheaper capex than PTP microwave – 53% cheaper opex • TCO of backhaul networks is dominated by opex – For PMP, opex accounts for 83% of TCO – For PTP and E-band, opex accounts for 76% of TCO • PMP cost effectiveness is driven by – Less equipment to be deployed, installed and maintained – Leveraging traffic aggregation gains Source: Senza Fili ConsultingOctober 4, 2011 | 14 | Confidential - Do not distribute without permission © Senza Fili Consulting LLC
  • Meeting the challenges of mobile backhaul: high traffic volumes and small cells • High data traffic loads changes the nature of mobile backhaul – Capacity density rather than coverage becomes a major issue • Small cells quickly add to backhaul costs – Need to keep equipment footprint down to contain capex and, primarily, opex • Solutions like PMP that lower amount of installed equipment are more cost effective: – Lower installation costs – Lower opex – Added benefits: faster installation, smaller footprintOctober 4, 2011 | 15 | Confidential - Do not distribute without permission © Senza Fili Consulting LLC
  • How VectaStar achieves these cost savings in a live backhaul environment Lance Hiley VP Marketing Cambridge Broadband Networks Limited How VectaStar achieves these cost savings in a live backhaul environmentwww.cbnl.com Crucial backhaul economics webinar 16
  • VectaStar Gigabit Backhaul Solution • VectaStar Access Point • All-outdoor design • Supports 8 remote terminals per sector • 150Mb/s throughput • 10.5, 26 & 28GHz ETSI • VectaStar Remote spectrum support Terminal • All-outdoor design • 150Mb/s throughput • VectaStar Radio Controller (Hub) • Aggregates and switches 8 Access points • 1U Rack mount, 10Gb/s backplane capacity • Supports 240 Remote Terminals per hub • 300Mb/s/sector capacity• VectaStar is a carrier-grade multipoint microwave solution with the capacity to handle the aggregated traffic from multiple HSPA and LTE sites• Each connection requires one radio, one visit, meaning less time and money to deploy www.cbnl.com Commercial in confidence 17
  • Case study: European LTE network •Brief: LTE backhaul for dense urban network – emphasis on performance and speed of deployment •VectaStar hubs situated on existing macro sites in dense urban setting each covering 2sq. Km •150 Mb/s peak performance – 90 Mb/s delivered to customers •Stable sub-600 μs latency •In the words of the customer: “The only other feasible alternative to (VectaStar) is leased fiber. Speed to deploy and flexibility in deployment are the key VectaStar advantages (it takes months to set-up leased fibre connections but VectaStar takes hours. It also has 25% lower TCO over 2 years!”www.cbnl.com Commercial in confidence 18
  • SummaryMultipoint microwave is a fast andcost effective way to build backhaulnetworks• Low capital requirements• Low operating costs• Fast build-out• Long deployment lifeMature VectaStar solution• Deployed across Europe, Middle East and Africa• Compatible with what operators run now and anything they’re planning for the futurewww.cbnl.com Commercial in Confidence 19
  • www.cbnl.comWatch the webinarWatch our webinar where Lance Hiley, VP Marketing at CBNL,and Monica Paolini, owner of Senza Fili, discuss the presentation,the TCO findings and take industry questions.Watch now at www.cbnl.com/resources/webinarsDownload the white paper: www.cbnl.com/resources/white-papers