NLOS Wireless Backhaul for Small Cells - TCO Comparison with Optical Fiber

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Mobile network operators (MNOs) are increasingly focused on meeting the explosive demand for data services. Deploying small, below-the-clutter cells is another technique to solve the capacity ‘hot …

Mobile network operators (MNOs) are increasingly focused on meeting the explosive demand for data services. Deploying small, below-the-clutter cells is another technique to solve the capacity ‘hot spot’ problem as well as to provide service in ‘coverage holes’ in mobile networks that were designed primarily to carry voice traffic. However, there are technical and economic constraints that prevent network operators from deploying small cells: backhaul is one such constraint. This paper describes the value proposition of BLiNQ’s NLOS wireless backhaul solution and compares its total cost of ownership to that of optical fiber.

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  • 1. NLOS Wireless Backhaul forSmall Cell Base StationsTotal Cost of Ownership Comparisonwith Optical FiberBy Frank RayalVP, Product ManagementBLiNQ Networks Inc.WHITEPAPEROctober 22, 2010
  • 2. Table of ContentsIntroduction .................................................................................................................................................. 3Mobile Backhaul Options .............................................................................................................................. 3BLiNQ Networks Solution Overview ............................................................................................................. 5Cost of Spectrum........................................................................................................................................... 6Comparative Analysis to Fiber Backhaul ....................................................................................................... 8Conclusion ................................................................................................................................................... 11NLOS Wireless Backhaul for Small Cell Base Stations: 2Total Cost of Ownership Comparison with Optical Fiber
  • 3. IntroductionMobile network operators (MNOs) are increasingly focused on meeting the explosive demand for dataservices. Deploying next generation systems, acquiring additional spectrum and offloading data trafficfrom the mobile network are a few ways that MNOs have used to increase the offered capacity.Deploying small, below-the-clutter cells is another well tried technique that has been used repeatedly tosolve the capacity ‘hot spot’ problem as well as to provide service in ‘coverage holes’ in mobile networksthat were designed primarily to carry voice traffic.The mobile Internet, and corresponding data traffic, is expected to further increase the requirement forsmall cell deployment as no one solution can single-handedly meet the capacity demand forecast.However, there are technical and economic constraints that prevent network operators from deployingsmall cells: backhaul is one such constraint. BLiNQ Networks recognizes that eliminating the ‘backhaulproblem’ would provide MNOs a decisive tool in their quest to scale network performance to meet thedemands of the mobile Internet.BLiNQ’s product portfolio comprises solutions specifically targeted at backhaul applications for smallcells that are deployed below the building clutter as would be the case in urban areas where capacitydemand is highest and coverage requirements are hardest to meet. The products provide high capacitypoint-to-multipoint links in a non-line-of-sight deployment configuration. Furthermore, the productsimplement interference detection and mitigation techniques to reduce interference in the backhaulnetwork thereby gaining capacity and performance.This paper describes BLiNQ’s value proposition for wireless operators and compares the total cost ofownership of NLOS wireless backhaul to that of optical fiber.Mobile Backhaul OptionsDifferent backhaul options have been used for wireless base stations. Each option has its economic andtechnical advantages and disadvantages. These options can be summarized as follows: 1- Leased-lines: Provide a dedicated channel and symmetric data rate. A leased line, in the form of copper T1/E1 line, have data rate of 1.544/2.048 Mbps. Although leased lines have been widely used in mobile backhaul, they are increasingly becoming unsuitable for the following reasons: a. Multiple T1/E1’s are required per cell site to support the capacity requirements of 3G (e.g. HSPA) and 4G (LTE) cell sites. Figure 1 shows the peak throughput for UMTS evolution. Although these are peak rates at the physical layer and highly unlikely to be reached in practice, the number of required leased lines will increase correspondingly. b. T1/E1 lines are leased at rates that can easily reach $1,000 per month per line (pricing depends on location and service provider). This makes the annual cost of backhaul for a single 3G/4G base station extremely high. c. Leased lines are fundamentally a TDM technology (Time Domain Multiplexing) while recent 3G and 4G base stations are based on Ethernet/IP technology. A special interfaceNLOS Wireless Backhaul for Small Cell Base Stations: 3Total Cost of Ownership Comparison with Optical Fiber
  • 4. (e.g. pseudowire) is required in this case which further adds cost to leased line backhaul deployments. The above reasons make leased lines an unattractive method to backhaul 3G/4G wireless base stations. Industry experts concur that leased lines will play a limited role in backhauling future wireless base stations. Figure 1 UMTS Evolution Peak Data Rates. 2- Microwave Backhaul: Microwave backhaul typically operates at frequencies above 6 GHz (typically 11-42 GHz) and requires line-of-sight between the two backhaul nodes. It is also a point-to-point solution. Microwave backhaul can provide high data rates starting from a few hundreds of Mbps and functions over relatively long range. It has been used significantly for mobile backhaul applications particularly by non-incumbent operators and those in emerging markets as microwave backhaul is quick to deploy and offers a competitive business case. Unfortunately, traditional microwave is not suitable where a base station is mounted below the surrounding building clutter: in non-line-of-sight conditions obstacles between the two backhaul nodes (e.g. buildings, trees, etc.) attenuate the power received by the remote node and distort the signal such that communication is not possible. Traditional microwave is not an option in backhauling small cell sites where clearance of the first Fresnel zone is not possible. 3- Fiber Backhaul: Fiber, where present, offers ample bandwidth: it meets the capacity requirements of next-generation wireless base stations. However, fiber can be expensive to provide in areas where it is not already available. The cost of installing fiber (trenching, right-of- way) can be prohibitive in exactly the same areas where small base stations are required such as in the dense urban core, as shown in Table 1. The cost of leasing fiber is also high and can range from several hundred dollars to over $1,000 per month. Additionally, fiber deployment time can be lengthy resulting in delays in bringing a new cell site on air.NLOS Wireless Backhaul for Small Cell Base Stations: 4Total Cost of Ownership Comparison with Optical Fiber
  • 5. Table 1 Typical Cost of Fiber. Aerial $4.5-$11.5 Deployment Costs Rural $10-$30 (per meter; Includes right of way and Trenching Suburban $30-$100 renovation construction works) Urban $80-$230 Fiber Cost (per meter; includes cable, $5-$12 connector, & testing)In summary, fiber is the only feasible alternative to backhaul small cell sites as it has none of thetechnical issues of traditional microwave and offers higher capacity than leased lines. However, thebusiness case for fiber is not always competitive, particularly in areas where fiber is not available. Inaddition to economics, the current lack of alternative solutions to fiber provides a significantcompetitive advantage to incumbent operators: they have the incentive to expand fiber networks at theexpense of competing MNOs. Table 2 Applicability of Backhaul Options to Compact Base Stations. Leased Line LOS Microwave Fiber Capacity    NLOS Operation Not Applicable  Not Applicable Fiber is the only feasible alternative to backhaul next generation wireless base stations.BLiNQ Networks Solution OverviewBLiNQ’s solution comprises a point-to-multipoint (PMP) backhaul solution that operates in non-line-of-sight conditions (NLOS). The solution operates in time domain duplex access mode (TDD) in licensedband frequencies below 6 GHz. Spectrum in bands such as 2.3 GHz, 2.5 GHz and 3.3-3.8 GHz is availableat relatively low prices. The solution combines the latest innovations in physical and medium accesslayer techniques to provide high capacity backhaul links for compact base stations. Managed AdaptiveResource Allocation (MARA), a key BLiNQ intellectual property which comprises interference reductionto increase capacity, provides valuable contributions to the operator’s business case. Table 2Table 3outlines some of the key features of BLiNQ’s solution and summarizes their impact on the operator’sbusiness case. Table 3 BLiNQ Solution Features and Contribution to Operators Business Case. Feature Description Impact on Business Case Interference Maps interference between backhaul Reduce operational expenditure by Detection clusters and provides RF and field shortening the design cycle and providing operation engineers with valuable tools for troubleshooting the network. tools for speedy deployment and network planning. Interference Eliminates co-channel interference Reduce capital expenditure requirements Mitigation between interfering links in different for spectrum acquisition. backhaul clusters. OFDMA/NLOS OFDMA physical layer provides a 1- Reduce opex by allowing deploymentNLOS Wireless Backhaul for Small Cell Base Stations: 5Total Cost of Ownership Comparison with Optical Fiber
  • 6. high-speed robust link in NLOS in hard to reach areas, particularly conditions by using narrow-band where fiber is not available. carriers to span a wide-bandwidth 2- Shorten ‘time to air’ for new cell sites frequency channel. and provide faster revenue generation. Spatial Doubles the link capacity over single- Reduce capex by doubling the spectral Multiplexing / antenna systems and increases the efficiency: requires half the spectrum to MIMO robustness of the communication backhaul the same amount of data channel. without MIMO. SON Allows the backhaul network to Reduce opex requirements related to reconfigure itself as the network of initial deployment, on-going maintenance compact base stations grows. and troubleshooting. Point-to- Backhaul multiple compact base Reduce capex and opex by reducing the Multipoint stations to one central location. number of hub sites to backhaul data into the core network. Sub 6 GHz Operates in TDD mode in bands such Reduce capital expenditure for spectrum Licensed as 2.3 GHz, 2.5 GHz and 3.3-3.8 GHz. acquisition. Spectrum Small Form Low-weight (< 3.5 kg), small footprint Reduce operational expenditure Factor (20x30 cm) allows for a one-person associated with installation, deployment install within 30 minutes on light and maintenance. poles and other small structures.Cost of SpectrumAs stated, BLiNQ solutions operate in sub-6 GHz licensed bands which have several technical advantageswhich include: 1- Robust propagation channel that is not affected by environmental factors such as rain and fog, and less affected by physical obstacles such as buildings and trees. 2- Controlled interference environment given that all transmitters belong to the same wireless operator allowing frequency planning.Most importantly, in the last few years, several sub 6-GHz bands have become available for use by fixedaccess networks, primarily WiMAX. As such, there is an abundance of such bands available in areaswhere fixed access networks did not gain traction: dense urban cores of developed markets wheretoday’s 3G services are most utilized.On a worldwide basis, spectrum in the 2.3, 2.5 and 3.3-3.8 GHz bands have fetched very low valuationsin recent years, especially when compared with prime access spectrum which is characteristically FDD insub 2.1 GHz bands (700 MHz, 800/900 MHz, 1700 MHz, 1800/1900 MHz and 2.1 GHz). Table 4 samplesthe results of recent spectrum auctions and shows that prime spectrum bands for backhaul in 2.6 and3.x GHz are typically priced at around $0.01-$0.03 per MHz-PoP, sharply lower than prime pairedspectrum for access bands which typically fetch over $0.5 per MHz-PoP, or over 25 times the price.Table 4 lists some specific licenses and their corresponding prices.NLOS Wireless Backhaul for Small Cell Base Stations: 6Total Cost of Ownership Comparison with Optical Fiber
  • 7. Table 4 Results of Recent Spectrum Auctions. Country Year Band (MHz) Type Average Cost Comment (per MHz-PoP) Germany 2010 2500 – 2700 Paired €0.023 Access band Germany 2010 2600 Unpaired €0.021 Prime backhaul band Germany 2010 800 Paired €0.73 Prime access band Germany 2008 3500 Paired €0.005 Prime backhaul band Italy 2008 3500 Paired €0.019 Prime backhaul band USA 2008 700 Paired $0.7 Prime access band USA 2006 1700 Paired $0.54 Prime access band India 2010 2300 Unpaired $0.17 Access or Backhaul India 2010 1900 Paired $0.39 Prime access band Greece 3500 Paired €0.043 Prime backhaul band Poland 3700 Paired €0.003 Prime backhaul band Table 5 List of Selected Frequency Licenses. Country Operator Frequency Band Channel Size Price Germany Vodafone 2.6 GHz 2x5 MHz € 18,948,000 Germany Vodafone 2.6 GHz 1x5 MHz € 9,051,000 Germany Clearwire 3.5 GHz 2x21 MHz € 20,000,000 USA Verizon 700 MHz 2x11 MHz $4,741,807,000 UK UK Broadband 3.5 GHz 2x20 MHz £7,000,000 Netherlands WorldMax 3.5 GHz 20 MHz € 4,000,000 Austria WiMAX Telecom 3.5 GHz 2x28 MHz € 40,700,000 Greece Cosmotel 3.5 GHz 2x14 MHz € 20,475,000 Poland Clearwire 3.6 GHz 2x14 MHZ PLN 1,400,000 Canada Several 3.5 GHz 2x25 MHz $11,240,615The cost of spectrum is an important factor in calculating the total cost of ownership. National orregional licenses can be obtained, depending on national regulations. Therefore, it is possible topurchase a license for regions with major cities (where mobile backhaul is desired) while foregoinglicenses in regions where population is less dense (where fixed access networks can be more valuablefor lack of Internet connectivity alternatives).Based on the prices above, licenses for 10 MHz of spectrum can cost as low as a few hundred thousanddollars or as high as twenty million dollars for a nation-wide license in a developed market. Theselicenses are typically issued for twenty years.The cost of spectrum must be included in the TCO calculations for a valid comparison with fiberbackhaul. The cost of spectrum must then be spread over all the backhaul units deployed in a market. Tosimplify the calculations, we focus on determining the number of wireless backhaul nodes that lead tobreakeven in total cost of ownership with fiber backhaul.NLOS Wireless Backhaul for Small Cell Base Stations: 7Total Cost of Ownership Comparison with Optical Fiber
  • 8. Comparative Analysis to Fiber BackhaulWe focus our analysis on comparing two fundamental cases: 1- Deployment of compact base stations with fiber backhaul (base case). 2- Deployment of compact base stations with NLOS wireless backhaul solution.For the purpose of this analysis, fiber is assumed to be available close to the desired site location, hence,only a nominal setup fee will be incurred by the wireless operator. The majority of expenses areoperational expenses related to leasing the fiber cable as shown in Table 6. Table 6 Cost of Operating a Fiber Backhaul Connection. Setup Fee $1,500 One-time fee to setup a fiber connection. Average cost of leasing fiber for 10 Mbps capacity in urban Monthly Expense $1,000 area.The assumptions for NLOS solution are outlined in Table 7. Table 7 Capital and Operational Expenditure Assumptions for NLOS Product. Capital Expenditure Backhaul $1,800 Includes backhaul module, antennas, cables and other ancillary Module elements. Installation $350 Used for Hub or Remote Backhaul Module installation. Accounts for field services to prepare and install the unit on a pole. RF Engineering $150 Per link charge for RF engineering design services to ensure proper deployment and configuration of NLOS wireless link. Implementation $250 Per link charge used to cover project management and other Services services related to implementing and deploying the product. Operational Expenditure Pole Lease $30 Monthly charge to lease space on a pole to mount the NLOS Hub and Remote Backhaul Modules. Support & 15% Annual percentage of solution price. Covers product software Software updates & support. Field Operations $50 Annual charge per node to cover expense of field operations personnel. This is a marginal cost as Field Operations are also required for compact base stations. Flat Rate Power $7 Monthly cost incurred to provide electrical power to the backhaul node. Backhaul Costs $1,500 Monthly cost to provide fiber backhaul service at the hub site. Assumes hub sites are selected where fiber is already available.For all financial calculations, we assumed a 2% inflation rate and a 12% weighted average cost of capital(WACC).The cost of operating fiber backhaul to a single compact base station site is shown in Table 8 based onthe assumptions presented in Table 6.NLOS Wireless Backhaul for Small Cell Base Stations: 8Total Cost of Ownership Comparison with Optical Fiber
  • 9. Table 8 Example of Total Cost of Ownership for Fiber Backhaul. Year 1 Year 2 Year 3 Year 4 Year 5 Total Net Present Value 13,500 10,929 9,953 9,064 8,255 51,700Figure 2 shows the number of nodes (compact base stations) where the NLOS wireless backhaul solutionis deployed to achieve total cost of ownership breakeven with fiber backhaul. For instance, given 4:1PMP ratio (four compact base stations backhauled to one NLOS hub module) and $20 million cost ofspectrum license (20 years), it requires 172 compact base stations to achieve breakeven in the total costof ownership.As expected, the number of breakeven nodes increases with lower PMP ratio. So, for the sameparameters, it requires 472 nodes to achieve breakeven with fiber, while it requires only 144 nodes forbreakeven in 6:1 configuration. Figure 2 Number of Nodes to Achieve Breakeven in the 5-year TCO with Fiber Backhaul.Table 9 shows the 5-year total cost of ownership for the NLOS and the fiber backhaul option fordifferent number of nodes assuming $20m cost of a spectrum license (over 20-year period). Table 9 Five-Year Total Cost of Ownership Comparison. Number 5 Year TCO ($m) NLOS Wireless Backhaul vs. Fiber of Nodes 2:1 3:1 4:1 6:1 Fiber 2:1 3:1 4:1 6:1 100 9.11 7.91 7.31 6.71 5.17 -76% -53% -41% -30% 200 13.23 10.83 9.63 8.43 10.34 -28% -5% 7% 19% 300 17.34 13.74 11.94 10.14 15.51 -12% 11% 23% 35% 400 21.45 16.65 14.25 11.85 20.68 -4% 19% 31% 43% 500 25.57 19.57 16.57 13.57 25.85 1% 24% 36% 48% 600 29.68 22.48 18.88 15.28 31.02 4% 28% 39% 51% 700 33.79 25.39 21.19 16.99 36.19 7% 30% 41% 53%NLOS Wireless Backhaul for Small Cell Base Stations: 9Total Cost of Ownership Comparison with Optical Fiber
  • 10. 800 37.91 28.31 23.51 18.71 41.36 8% 32% 43% 55% 900 42.02 31.22 25.82 20.42 46.53 10% 33% 45% 56% 1000 46.13 34.13 28.13 22.13 51.70 11% 34% 46% 57% 1100 50.25 37.05 30.45 23.84 56.87 12% 35% 46% 58% 1200 54.36 39.96 32.76 25.56 62.04 12% 36% 47% 59% 1300 58.47 42.87 35.07 27.27 67.21 13% 36% 48% 59% 1400 62.59 45.79 37.38 28.98 72.38 14% 37% 48% 60% 1500 66.70 48.70 39.70 30.70 77.55 14% 37% 49% 60%The cost allocation for the total cost of ownership is shown in Figure 3. The main expense related to theNLOS solution is the cost of spectrum. The second leading expense is the cost of backhauling traffic fromthe NLOS hub modules to the core network. In this comparative analysis, we conservatively assumedthat fiber would have to be leased. However, this cost can be reduced substantially if fiber is alreadyavailable at the hub site. For example, co-locating a hub site with an existing macro base station wherebackhaul is already available can result in significant reduction in the total cost of ownership.Alternatively, using LOS microwave backhaul may result in cost reduction over fiber in many instances. Figure 3 Cost Allocation for BLiNQ Backhaul Solution at Breakeven with Fiber Backhaul.NLOS wireless backhaul solutions offer a competitive business case in comparison to fiber backhaul dueto several considerations: 1- Use of low-priced spectrum assets for use in backhaul application results in a low breakeven number of nodes versus fiber backhaul. 2- High-capacity links allow backhaul of multiple base stations to a single hub. This provides two advantages: a. Lower capital expenditure and simpler network design, implementation and deployment effort.NLOS Wireless Backhaul for Small Cell Base Stations: 10Total Cost of Ownership Comparison with Optical Fiber
  • 11. b. High flexibility in placing hub modules in locations where fiber or LOS microwave backhaul is readily available to backhaul the aggregate traffic of multiple base stations to the core. 3- Quick and simple deployment and activation of compact base stations to address coverage holes and capacity hotspots leads to higher revenue generation and greater customer satisfaction. This upside measure was not factored into the business case. 4- Implementation of frequency detection mitigation techniques allow high spectrum utilization which leads to lower upfront capital expenditure to secure what is relatively low priced spectrum.ConclusionCompact base stations are a key element in the design of mobile data networks. Due to the highcapacity of these base stations and since they are deployed below clutter, traditional wireless (LOSmicrowave) and wireline (e.g. leased line) backhaul techniques are no longer an option, leaving fiber asthe only feasible method of backhaul. BLiNQ’s intelligent non-line-of-sight wireless systems provide aneconomically competitive solution to fiber backhaul: a relatively low number of wireless backhaul nodesare required to achieve cost breakeven with fiber backhaul (in the low hundreds). The savings in totalcost of ownership can be significant, exceeding 30% for typical deployment scenarios. The financialmodel demonstrates that some of the main costs associated with backhaul include spectrum cost andthe cost of backhaul to the core network. For this reason, BLiNQ solutions implement interferencedetection and mitigation techniques that minimize the amount of spectrum required for the backhaulnetwork and make use of low-cost spectrum in sub-6 GHz band which has been deemed less desirablefor access applications. Furthermore, BLiNQ products provide high-capacity point-to-multipoint links tomaximize the aggregated data at the backhaul hub site and reduce the cost of transport to the corenetwork.NLOS Wireless Backhaul for Small Cell Base Stations: 11Total Cost of Ownership Comparison with Optical Fiber
  • 12. AcronymsCBTS Compact Base Transceiver StationFDD Frequency Domain DuplexHSPA High Speed Packet AccessLOS Line of SightLTE Long Term EvolutionMARA Managed Adaptive Resource AllocationMIMO Multiple Input Multiple OutputMNO Mobile network operatorsNLOS Non Line of SightOFDMA Orthogonal Frequency Division Multiple AccessPMP Point to MultipointPoP PopulationTCO Total Cost of OwnershipTDD Time Domain DuplexTDM Time Domain MultiplexUMTS Universal Mobile Telecommunication SystemsWACC Weight Average Cost of CapitalBLiNQ Networks Inc.400 March Road, Suite 240Ottawa, ON K2K 3H4 CanadaMain: 613-599-3388info@blinqnetworks.comwww.blinqnetworks.comBLiNQ Networks was founded in June 2010 after the acquisition of intellectual property and wireless assets fromNortel Networks. BLiNQ is a pioneer of wireless backhaul solutions that fundamentally change the way mobileoperators deliver mobile broadband services in urban areas. BLiNQ uses cost-effective sub-6 GHz spectrum andunique and patent-pending Managed Adaptive Resource Allocation (MARA) technology to provide network-levelintelligence, self-organizing network capabilities, and eliminate interference challenges to maximize spectralefficiency. BLiNQ is headquartered in Plano, TX with research and development facilities in Ottawa, Canada. Formore information, please visit information presented herein is to the best of our knowledge true and accurate and is subject to change without notice. Nowarranty or guarantee expressed or implied is made regarding the performance or suitability of any product. All product orservice names are the property of their respective owners. © BLiNQ Networks Inc. 2010. All Rights Reserved.NLOS Wireless Backhaul for Small Cell Base Stations: 12Total Cost of Ownership Comparison with Optical Fiber