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Wireless Network Optimization (2010)

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  • 1. Addressing Wireless Network Optimization Opportunities Marc Jadoul September 2010
  • 2. Preamble “ Life was so much easier when Apple and BlackBerry were just fruits. 2 | Mobile Optimization Services | September 2010 Anonymous quote on Twitter All Rights Reser ved © Alcatel-Luce nt 2010 ”
  • 3. Mobile Data Traffic is Booming Total Mobile Network Data Traffic, World Market, 2008 to 2014 20,000 Africa 15,000 Middle East Latin America (Petabytes) North America 10,000 Asia-Pacific Eastern Europe Western Europe 5,000 0 2008 2009 2010 2011 2012 2013 2014 Several regions of the world will transfer more mobile data per month in 2014 than they did for the entire year of 2008. Source: ABI Research (2009) 3 | Mobile Optimization Services | September 2010 All Rights Reser ved © Alcatel-Luce nt 2010
  • 4. New Services and Devices Boost Mobile Broadband Adoption Mobile data-users growth rate 2008 to 2012 Video +419% Games +197% Music +286% Ringtones +127% Browsing +204% Messaging +98% Source: Pyramid Research (3/2009) Market Average iPhone Users 13.1% 84.8% Accessed news or info via browser 6.1% 58.6% Accessed web search tools 4.6% 30.9% Watched mobile TV and/or video 1.4% 20.9% Watched on-demand Video 4.2% 49.7% Accessed social network site or blog 6.7% 74.1% Listened to music on mobile phone Source: M:Metrics, Inc. (2008) 4 | Mobile Optimization Services | September 2010 All Rights Reser ved © Alcatel-Luce nt 2010
  • 5. Smartphones and Laptops Drive Mobile Data Usage While handsets and cellular modems accounted for 95% of the world’s mobile data traffic in 2008, mobile computing devices with embedded cellular/4G modems will represent more than 52% of global mobile data traffic by 2014. Source: ABI Research (2009) Monthly Data Consumption per Subscriber Monthly Data Consumption per Subscriber (Smartphones) (Notebooks, Netbooks, Smartbooks, …) 8.0 18.0 7.0 16.0 6.0 14.0 (Gigabytes) (Gigabytes) 5.0 12.0 10.0 4.0 8.0 3.0 6.0 2.0 4.0 1.0 2.0 0.0 0.0 2010 2011 2012 2013 2014 2015 2016 2010 2011 2012 2013 2014 2015 2016 Source: Rysavy Research (2010) Source: Rysavy Research (2010) 5 | Mobile Optimization Services | September 2010 All Rights Reser ved © Alcatel-Luce nt 2010
  • 6. Video and Internet Drive Demand for Mobile Data Capacity Mobile Network Data Traffic by Traffic Type, World Market, Forecast: 2008 to 2014 20,000 Web/Internet 15,000 VoIP (Petabytes) Video Streaming/TV Audio Streaming Source: ABI Research (2009) 10,000 5,000 0 2008 2009 2010 2011 2012 2013 2014 “ They don’t even realize how much data they’re using. 6 | Mobile Optimization Services | September 2010 All Rights Reser ved © Alcatel-Luce nt 2010 ” Gene Munster, senior analyst at Piper Jaffray
  • 7. User Demand will soon Surpass Network Capacity Average Demand vs. Average Capacity per User 14.0 12.0 (Gigabytes) 10.0 8.0 Demand 6.0 Capacity 4.0 2.0 0.0 2010 2011 2012 2013 2014 2015 2016 Source: Rysavy Research (2010) “ What we have done and continue to do is have a buffer of capacity above what our demand is at any given point in time. When we see consumer demand begin to feed into that capacity, we scurry out there to add more capacity. This is a very simple concept and something we have done religiously over the year. 7 | Mobile Optimization Services | September 2010 Dick Lynch, CTO at Verizon Wireless All Rights Reser ved © Alcatel-Luce nt 2010 ”
  • 8. Bandwidth Hungry Low ARPU Services are Bypassing the Telco Value Chain “ Top 3% of smartphone users are consuming 40% of all smartphone data, while they represent less than 1% or AT&T’s total postpaid customer base. They are consuming 13 times the data of an average smartphone user. Ralph de la Vega, AT&T Mobility and Consumer Markets ” “ We can’t give the content providers a completely free ride and continue to give customers the [service] they want at the price they expect. John Petter, Managing Director of BT Retail’s consumer business ” “ There is not a single Google service that is not reliant on network service.We cannot offer our networks for free. 8 | Mobile Optimization Services | September 2010 René Obermann, CEO of Deutsche Telekom All Rights Reser ved © Alcatel-Luce nt 2010 ”
  • 9. Challenge #1 Offering Bandwidth at the Lowest Cost 95 percent of mobile data traffic is best effort Internet. The issue is how can operators handle that traffic at the lowest cost with acceptable quality. Gabriel Brown, Heavy Reading (2010) Traffic Operator Quantity revenue & traffic Voice dominant decoupled Revenues Data dominant Time Source: Heavy Reading (2009) 9 | Mobile Optimization Services | September 2010 All Rights Reser ved © Alcatel-Luce nt 2010
  • 10. Bandwidth Hungry Low ARPU Services May Eventually Lead to Reduced Quality of Experience “ From about 17:30 onwards using the BBC iPlayer becomes impossible. It's fine during the day but come the evening, it's a no go. BT Customer (source: TG Daily, June 2009) ” “ AT&T has installed a massive Wi-Fi hotspot in Times Square to reduce the mobile data traffic congestion. The carrier continues to be challenged by serious traffic congestion as a result of high-bandwidth demand on its network due to excessive data usage by the ” iPhone customers. Source: Zack’s Investor Research, May 2010 10 | Mobile Optimization Services | September 2010 All Rights Reser ved © Alcatel-Luce nt 2010
  • 11. Challenge #2: Optimizing Network Performance and Quality of Experience Device RF Capacity Backhaul CPU/DCN & & Signaling Bandwidth load Apps Airtime Volume, Signaling, and Airtime all contribute to customer’s experience There is a growing role for traffic optimization, in-network analytics and network intelligence across network layers and devices to coordinate with smart policy control practices for traffic management and user knowledge. Source: Strategy Analytics (2009) 11 | Mobile Optimization Services | September 2010 All Rights Reser ved © Alcatel-Luce nt 2010
  • 12. What are the Alternatives for a Network Operator? 1 Doing nothing Adding new overlays on the existing SFR architectures doesn’t scale. Add an overlay network to Alcatel-Lucent is working with a large support new services and try European Tier-1 with 14 overlays to increase revenue growth. looking for help to reduce costs. 2 Transforming the network Migration can reduce costs by up to 30%. Migrate legacy networks to But the business case is complex, an IP-based architecture to requires major capital investment and enable new revenues and the implementation cycle may be long. service delivery at lower cost. 3 Optimizing the network Optimize the existing network Optimization means reducing costs, improving QoE, increasing utilization assets to drive down costs by and improving performance. 5%-10% and free up cash for It can payback in as little as 3 months re-investment. and free up cash for re-investment. 12 | Mobile Optimization Services | September 2010 All Rights Reser ved © Alcatel-Luce nt 2010
  • 13. Challenge #3: Cost Effective Operations and Migration from Legacy to All-IP “ I’m paying millions per year to my equipment vendor inmaintenance fees, and I have the feeling that I’m paying for […] that haven’t been used for years. Tier-1 Service Provider ” TDM voice switch utilization decreases as subscribers abandon their fixed lines and move onto mobile & VoIP. Frame Relay and ATM ports are dropping below the 50% utilization mark as traffic is migrated onto IP infrastructure. To lower cost of ownership of their legacy networks, operators are putting stronger focus on utilization and consolidation. 13 | Mobile Optimization Services | September 2010 All Rights Reser ved © Alcatel-Luce nt 2010
  • 14. Transforming Your Mobile Business time 3 Operation and Service Transformation 1 2 Network Network Optimization Transformation voice > data data > voice The way forward depends on your market conditions, network infrastructure and services roadmap 14 | Mobile Optimization Services | September 2010 All Rights Reser ved © Alcatel-Luce nt 2010
  • 15. Optimization — What does it Mean? ‘Optimization’ means: reducing costs, improving QoE, increasing utilization and boosting performance while positioning the network for growth or evolution towards a HLN architecture. 15 | Mobile Optimization Services | September 2010 All Rights Reser ved © Alcatel-Luce nt 2010
  • 16. Optimization Savings Can Be Sizable Wireless GW Toll Bypass Consolidation RF Cost Reduction Optical BH 19-35% Capacity Gain Cost Reduction 37-38% 10-20% 18-63% TDM Hubbing Cost Reduction 10-52% Ethernet BH Cost Reduction Optical 56% Bandwidth Data Cash Recovery Flow Savings Overall savings: 10-63% 15-25% $2.5M/Yr Source(s): actual cash flow savings from Alcatel-Lucent optimization project customers 16 | Mobile Optimization Services | September 2010 All Rights Reser ved © Alcatel-Luce nt 2010
  • 17. Keeping Transformation Costs under Control OPEX required for network migration costs Flatter CAPEX required for network modernization Id e al t ran sit io OPEX n Shorter time Current network Transition network Target network Balancing transformation investments is a major concern for MNOs 17 | Mobile Optimization Services | September 2010 All Rights Reser ved © Alcatel-Luce nt 2010
  • 18. Cost Reduction through Network Optimization Two key areas Methods to reduce costs OPEX savings Modernize RAN by swapping out legacy Radio Astute radio network planning Up to Indoor coverage solutions Sites RAN sharing / site sharing / outsourcing 50% Low power solutions From TDM/ATM to optimal combination of new technologies (Ethernet, packet Mobile microwave, …) aggregation Assess “owning vs leasing” model Up to and Service discrimination enabling better backhaul resource management 65% Consolidate backhaul and core transport over IP and optics Source(s): Alcatel-Lucent, Bell labs (2009) 18 | Mobile Optimization Services | September 2010 All Rights Reser ved © Alcatel-Luce nt 2010
  • 19. The Need for a Partner that Understands Your Business Increased adoption of smart phones, social networking technologies, and the continued transitions to a unified IP infrastructure will drive market demand for highly skilled network consulting and integration services capabilities. Source: IDC (2009) Leveraging a network of skilled consultants, supported by Bell Labs innovations and tools, Alcatel-Lucent has the global reach, deep communications network capabilities, and program management experience to support service providers from vision to execution. 19 | Mobile Optimization Services | September 2010 All Rights Reser ved © Alcatel-Luce nt 2010
  • 20. Alcatel-Lucent Optimization Solution 1 Business Consulting Services Helping service providers to identify cost saving and value creation opportunities and translate them into a profitable executable plan. 2 Network Quality Assessment & Optimization Services Exploiting existing Network assets while delivering the performance that meets customers’ quality and operational standards in access, switching, transport, wireless, enterprise LAN/WAN and data networks. 3 Network Consolidation & Evolution Services Consolidating and aligning multiple and disparate Network assets and their operations processes to realize a reduction of operating costs and a safer evolution. 4 Mobile Backhaul Services Consulting, design, integration, deployment and maintenance services to meet operator business goals and plans on time and within budget. 20 | Mobile Optimization Services | September 2010 All Rights Reser ved © Alcatel-Luce nt 2010
  • 21. Alcatel-Lucent Value Proposition Maintain customer satisfaction in the face of Exploding data traffic Unpredictable applications New, bandwidth-hungry multi-media devices Optimize the network by Preventing congestion and identifying additional capacity needs Consolidating assets while preparing for growth and/or evolution Improving end to end QoE and Network performance KPIs Benefit from Alcatel-Lucent’s Global experience in Fixed and Mobile Data End-to-End mobile and fixed network solutions: access, backhaul, core and applications Consult, Design, Integrate, Optimize, Migrate and Managed Services Free up more cash from operations with quick payback projects to fund future programs or contribute to EBITA growth KPIs Global Competence: Bell Labs, IPTC, GNEIC and Network Design & Optimization Centers 21 | Mobile Optimization Services | September 2010 All Rights Reser ved © Alcatel-Luce nt 2010
  • 22. Alcatel-Lucent Key Differentiators Focus on customer’s economics Total Cost of Ownership, not only CAPEX Ability to take commitments On KPIs, Schedule and Financials Multi-vendor capabilities “Broadband” Services focus Combining Alcatel-Lucent and Multi-Vendor Network System expertise Methodology and tools Leveraging Bell Labs, in-house tools and global Partnerships End-to-End focus Targeting Quality of Experience & IP Strong customer references With the ability to duplicate these best practices Worldwide 22 | Mobile Optimization Services | September 2010 All Rights Reser ved © Alcatel-Luce nt 2010
  • 23. Why Work with Alcatel-Lucent? Expertise Execution Business Value Applications experience Flexible and scalable Master one of churn Multi-skills (radio, service delivery main factors by backhaul, core) expert Detailed snapshot on identifying the path to engineering teams your current network maximize capacity Multi-networks capacity Get solutions to prevent experience Analysis formalized congestion Multi-vendor experience through assessment Drive down OPEX report with through operations Technology maker recommendations for efficiency enhancement expertise thanks to actions unparalleled R&D skills Anticipate network’s and resources Local follow-up of extension decisions and recommendations’ therefore improve Applications implementation CAPEX control Optimal results in network optimization and capacity control through partnering with Alcatel-Lucent 23 | Mobile Optimization Services | September 2010 All Rights Reser ved © Alcatel-Luce nt 2010
  • 24. www.alcatel-lucent.com www.alcatel-lucent.com 24 | Mobile Optimization Services | September 2010 All Rights Reser ved © Alcatel-Luce nt 2010