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Small cell networks why & when to care!

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My Wi-Fi & Small Cell MENA presentation delivered 27th of October 2014 in Dubai.

If you want a copy don't hesitate to contact me and don't miss out on my blog either www.techneconomyblog.com ... which have a lot more prose around the nice pics! ;-)

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Small cell networks why & when to care!

  1. 1. Small-Cell Networks Why & When to Care! Wi-Fi & Small Cells MENA, Dubai, UAE, 27 October 2014. Dr. Kim Kyllesbech Larsen Technology Office, Group Technology Ooredoo Group.
  2. 2. Small-cell networks* 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. Cellular Small Cells = LTE & WiFi mitigates 3G “shortfalls”. * In this presentation I am primarily concerned with larger Small Cell deployments rather than the single Small Cell Node. Dr. Kim 2 Dubai, October 2014 Kyllesbech Larsen, Small Cell Networks – Why & When to Care!
  3. 3. Dr. Kim 3 Dubai, October 2014 Kyllesbech Larsen, Small Cell Networks – Why & When to Care!
  4. 4. Mobile Video rules Cellular Data! Global Monthly usage in Exa-Bytes (Million GB). Ca. 70 Billion YouTube Videos1 Ca. 40% Mobile Broadband Ca. 90% 25+ (2+ hrs) YouTube Videos per Customer* per month CAGR 54% 2.3 Trillion YouTube Videos1 Note: Asia, North America & Western Europe makes up for 80% of the Total Source: Cisco VNI 2013 – 2018; 2019 & 2020 is authors projection based on VNI. (*) Based on ca. 2.7 Billion Unique Mobile data users (i.e., 3G and beyond), (**) Based on estimated 7 Billion Unique Mobile Data Users. 1 Using 5 minutes video segment @ 240 kbs video streaming rate. Dr. Kim 4 Dubai, October 2014 Kyllesbech Larsen, Small Cell Networks – Why & When to Care! CAGR 63% 325 (27+ hrs) YouTube Videos per Customer** per month YouTube Trivia – on average 6 hours viewed per month per User
  5. 5. Location matters! FROM TO CELLULAR MOBILE NETWORK DATA OFF-LOADING TO FROM Dr. Kim 5 Dubai, October 2014 Kyllesbech Larsen, Small Cell Networks – Why & When to Care! WIRELESS + FIXED-NETWORK DATA ON-LOADING Centre drawing: Courtesy of Zahid Ghadialy / eXplanoTech’s whitepaper “4.5G: LTE & WiFi Better Together” http://www.slideshare.net/zahidtg/45g-integration-of-lte-and-wifi-networks.
  6. 6. Best places for and types of off-load? data voice 00:00 6:00 8:00 10:00 12:00 17:00 22:00 Femto Cell Femto Cell @ Work (2 – 4 Cells) 14:00 NOTE: WiFi is just a bridge to better cellular small-network systems become main stream with controlable spectrum assets and E2E Customer Experience Management. Dr. Kim 6 Dubai, October 2014 Kyllesbech Larsen, Small Cell Networks – Why & When to Care! @ Home (2 – 3 Cells) On the Go @ Home (1 – 2 Cells) On the Go Small Cells Mature Market Illustration On-load potential WiFi +18 month
  7. 7. Customer cellular trends to be considered. Up-to 30+ Cells 2 – 4 Cells 1 -3 Cells 80% of a customers traffic is delivered to no more than 3 cells Source: The “Cellular Data Usage” distribution based on detailed data mining study, Mature Market Illustration. Dr. Kim 7 Dubai, October 2014 Kyllesbech Larsen, Small Cell Networks – Why & When to Care!
  8. 8. Capacity fundamentals. CAPACITY Ci = BANDWIDTH Bi MHz × EFFICIENCY Ei Mbps per MHz per Cell Ci = BaU (COSTLY) BaU (COSTLY) Dr. Kim 8 Dubai, October 2014 Kyllesbech Larsen, Small Cell Networks – Why & When to Care! × CELLS Ni # Business as Usual New spectrum New technologies New macro × VERY COSTLY Innovation Re-farming Improvements Small-cells × (VERY) COSTLY Radical Spectrum sharing Spectrum sharing Site sharing Note: Sub−script i referes to a relevant cellular clutter area; thus the Total Capacity can be written as i(Areas) EFFICIENT i(Areas) Bi×Ei×Ni (VERY) COSTLY COMPLEX + EFFICIENT COMPLEX BUT EFFICIENT, QoE CHALLENGE SMALL CELLS VERY EFFECTIVE BUT COSTLY Right Frequencies @ Sufficient Large BW Could delay or slow proliferation of small-cells!
  9. 9. Technology is customer experience. Satisfaction Perceived Good Quality (Compared to price paid) Expectations fulfilled Dis-satisfaction Expectations unfulfilled No service! Continuous poor experience Perceived poor Quality AND perception of high price paid Slow or no data access Dropped call Long call setup (>3 secs). Repeated poor network experiences over short time Handset! Dr. Kim 9 Dubai, October 2014 Kyllesbech Larsen, Small Cell Networks – Why & When to Care! High mobility High proportion of usage on inferior technology
  10. 10. Economic Metrics to look out for! Uncertain 푅푂퐼 = Dependent on Pricing strategy & possible new revenue streams Note: Wi-Fi likely cannibalistic to cellular revenues! Δ푹−Δ퐶 Δ푪 >0 R Incremental Revenue from an Investment. C Net Capex & Opex Cost of an Investment Certainty Deployment cost … CWiFi SC ~ CLTE SC with WiFi equipment being cheaper, build similar & Opex slightly higher. Profitability Impact ROCE / ROIC Impact Min(tOpex,휕푡Opex ), (tCapex)  with t being time Check Cost per Byte compared to Price per Byte charged! Max푁푃푉do nothing , 푁푃푉delay , 푁푃푉Option 1 ,…, 푁푃푉Option i Dr. Kim 10 Dubai, October 2014 Kyllesbech Larsen, Small Cell Networks – Why & When to Care!
  11. 11. Small Cells! … what are the good for? Provides Surgical Capacity  Increased Customer Experience. When Macro-Cellular is not an option Provides Surgical Coverage  New Customers & New Traffic. When Macro-Cellular is not an option Cellular Small Nets integrates well with Macro-Cellular layer. Wi-Fi & Femto being more problematic Natural solution for high-frequency spectrum (e.g., 2.3+ GHz) Dr. Kim 11 Dubai, October 2014 Kyllesbech Larsen, Small Cell Networks – Why & When to Care!
  12. 12. Wi-Fi is hard to ignore for fixed broadband! Pyramid: 2011 BB Penetration, Strategy Analytics 2011: Household WiFi penetration. () Emerging APAC, () Mature APAC, () Eastern Europe, () Latin America, () North America, () Western Europe. Dr. Kim 12 Dubai, October 2014 Kyllesbech Larsen, Small Cell Networks – Why & When to Care! CAGR 35%
  13. 13. WiFi … it’s a @Home thing! Monthly smartphone usage. 0.9 GB 3.9 GB 1.3 GB 2.5 GB WiFi Traffic rises sharply between 16:00 – 2:00 AM dominating the Evening Cellular Data Traffic drops sharply after 18:00 picking up after 6:00 AM 70% of Smartphone’s WiFi traffic happens between 16:00 and 7:00 Dr. Kim 13 Dubai, October 2014 Kyllesbech Larsen, Small Cell Networks – Why & When to Care! 1.2 GB 2.0 GB 7.2 GB 3.1 GB AM in the morning Source: Informa/Mobidia White Paper “Smartphone use transforming with the rise of 4G and Wi-Fi”, 2014. & “Understanding today’s smartphone user: Demystifying data usage trends on cellular & Wi-Fi networks” 2012.
  14. 14. Why Wi-Fi ? WiFi Offload  Delay Macro-cellular Capacity Extensions ? WiFi Offload  Allow MNO off-load low (or no) profitability traffic ? WiFi Availability  Increased 3G Data Usage ? Incremental 3G Data Usage  Increased 3G Revenue ? Dr. Kim 14 Dubai, October 2014 Kyllesbech Larsen, Small Cell Networks – Why & When to Care!
  15. 15. Why Wi-Fi? … It’s all about “All I can eat of the best at lowest cost!”. Cisco IBSG Survey 2012: 1,079 US Mobile users, 52% own a Smartphone, 48% a Basic phone, 20% owns a Tablet, 20% own an eReader, 25% a Media Player, and ca. 20% a Mobile-Gaming Device. 75% owns a Laptop. Dr. Kim 15 Dubai, October 2014 Kyllesbech Larsen, Small Cell Networks – Why & When to Care! Top-3 Most Important WiFi Attributes Speed “Free” Unlimited
  16. 16. Dr. Kim 16 Dubai, October 2014 Kyllesbech Larsen, Small Cell Networks – Why & When to Care!
  17. 17. WiFi business logic … true or not? WiFi Offload  Delay Macro-cellular Capacity Extensions. - If Cellular expansion exhausted, WiFi might be the only remaining option! - BUT Cellular expansion scenarios often have better economics than WiFi. - Deferred Cellular investments (not per se avoidance). WiFi Offload  Allow off-load of Low (or No) profitability traffic. - Require MNO control of Connection Manager – tightly coupled networks. - Likely to be perceived as anti-neutrality of services provided. - Possible customer push-back on such practice unless upfront agreed. Dr. Kim 17 Dubai, October 2014 Kyllesbech Larsen, Small Cell Networks – Why & When to Care!
  18. 18. WiFi business logic … true or not? WiFi Availability  Increased 3G Data Usage. - Plausible but causality very hard to prove. - Remove WiFi: if Cost-neutral to consumer it is likely that part of the WiFi traffic might spill over to Cellular. - Without Cost-Quality arbitrage between WiFi & Cellular, it is likely that users would be insensitive to what technology is used. Incremental 3G Data Usage  Increased 3G Revenue. - Very naïve market assumption. - Will depend on price-plan structure. - It is true if unique new 3G users are captured by WiFi propositions. Dr. Kim 18 Dubai, October 2014 Kyllesbech Larsen, Small Cell Networks – Why & When to Care!
  19. 19. So … Show me the money! Dr. Kim 19 Dubai, October 2014 Kyllesbech Larsen, Small Cell Networks – Why & When to Care!
  20. 20. Off-loading & revenue cannibalization. Can have a very substantial cellular revenue loss impact! Revenue loss RCellular =  nUL→P4 × (PUL – P4) Dr. Kim 20 Dubai, October 2014 Kyllesbech Larsen, Small Cell Networks – Why & When to Care! Pul P4 P3 P2 P1 Cellular price plans Illustration WiFi Causing Reduced Cellular Usage User of given price-plan distribution DATA USAGE
  21. 21. On-loading – incremental cellular traffic & revenue? Tends to be a (very) minor positive revenue factor! Revenue addition RCellular = + wP2→P3 × (P3 – P2) Dr. Kim 21 Dubai, October 2014 Kyllesbech Larsen, Small Cell Networks – Why & When to Care! Pul P4 P3 P2 P1 Cellular price plans Illustration DATA USAGE WiFi Resulting Increased Cellular Usage User of given price-plan distribution
  22. 22. Dr. Kim 22 Dubai, October 2014 Kyllesbech Larsen, Small Cell Networks – Why & When to Care!
  23. 23. Dr. Kim 23 Dubai, October 2014 Kyllesbech Larsen, Small Cell Networks – Why & When to Care!
  24. 24. WiFi & Cellular interworking - MNO controlled. Tightly coupled Cellular-Wireless Networks. 802.1x HS2.0 WiFi AP MC-GW eNB eRAN S-GW P-GW Dr. Kim 24 Dubai, October 2014 Kyllesbech Larsen, Small Cell Networks – Why & When to Care! Illustration INTERNET EPC HSS AAA ANDSF PCRF UE MME Trusted WiFi EAP-SIM* ISP 2 1 3 4 5 5 5 CM: Connection Manager. (*) RFC4186, good description can be found in “Analysis & Design of a SIM Based authentication solution for WLAN”, by Robert Penz. Also for a great overview of this topic check out Zahid Ghadialy http://www.slideshare.net/zahidtg/45g-integration-of-lte-and-wifi-networks.
  25. 25. When WiFi makes the most sense for an MNO. Faced with cellular spectral limitations or cell-split limitations. Cellular expansion options have been exhausted! Fixed & Mobile Broadband Operation MNO controls on both sides of the customer experience & value chain! Competitive pressures (from WiFi offerings). Ultimately very likely to be a loss-loss scenario! Dr. Kim 25 Dubai, October 2014 Kyllesbech Larsen, Small Cell Networks – Why & When to Care!
  26. 26. Economics of Small Cells – A Scaling Challenge. Small Cell Tipping Points Mature Market Economics * Illustration Up-to Max 20 SC Nodes have better Capex compared to a macro-cellular rooftop. Up-to 10 SC Nodes have better Opex economy compared to a macro-cellular rooftop. 20 Incremental macro cost 10 10 3 New Site Co-location *above is based on WEU cost distribution. Differences are likely to occur for other market types / regions (although those usually come with their own challenges). Dr. Kim 26 Dubai, October 2014 Kyllesbech Larsen, Small Cell Networks – Why & When to Care! 5 0.5
  27. 27. The Small Cell TCO “competition” Economically better to exhaust cellular expansions. Macro Cellular Sectorization. Macro overlay / co-location of new capacity. Abundance of bandwidth at Low frequencies (i.e., APT700). A Macro cellular cell split. Dr. Kim 27 Dubai, October 2014 Kyllesbech Larsen, Small Cell Networks – Why & When to Care!
  28. 28. TCO scaling challenges & possible solutions. Site Lease Scaling. • Securing strategic locations early. • Strategic Partnerships. • Sharing with other operators. Backhaul Scaling. • Wireless backhaul (Sharing?) • Low cost xDSL or Cable (QoS issue?) • Fiber connectivity (availability?). Infrastructure Scaling. • Aggressive price reductions. • CW: Sharing with other operators. • CW: Strategic partnerships. Operations Scaling. • Self-Optimized Networks (SON). • Outsourced (shared) operations. • Independent business unit. Dr. Kim 28 Dubai, October 2014 Kyllesbech Larsen, Small Cell Networks – Why & When to Care!
  29. 29. To be passionate about! Small-Cells are great surgical solutions solving challenges not captured by Macro. Small-Cell Networks scale economically reasonable well for smaller clusters & coverage areas. Large Scale Small-Cell Networks have many challenges Economical as well as Operationally. Small-Cell Network TCO might appear excessive! But it might be the only way to deliver! Dr. Kim 29 Dubai, October 2014 Kyllesbech Larsen, Small Cell Networks – Why & When to Care!
  30. 30. Dr. Kim Kyllesbech Larsen Follow Dr. Kim on Twitter @KimKLarsen Blog: www.TechNEconomyBlog.com Public ppts: http://www.slideshare.net/KimKyllesbechLarsen Acknowledgement: I am indebted to my wife Eva Varadi for her great support, patience & understanding during the creation of this presentation.

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