Optimizing LTE infrastructure upgrades and Capex involves: 1) Sweating existing 3G network assets through incremental upgrades like software updates rather than immediately investing in new LTE infrastructure, as 3G can carry significantly more traffic at low cost. 2) Using customer usage data to optimize network planning by understanding where heavy users concentrate to only upgrade networks where needed. 3) Controlling the costs of network expansion by utilizing traffic management measures to flatten 3G traffic peaks and delay necessary capacity upgrades, as traffic growth will only slowly migrate to LTE over several years.

1. Optimizing LTE infrastructure upgrades and CapexBroadband Traffic Management Congress, 16. Nov 2010Dr. Kim Kyllesbech Larsen, Network EconomicsDirk Schöneboom, Network EconomicsTechnology, T-Mobile.

2. 20/01/20112OverviewOptimizing LTE infrastructure upgrades and Capex: For how long does an effective Traffic Management Architecture allow an operator to defer investing in more capacity?Sweating network assets and using customer data to optimize network planning

3. Controlling costs of network expansion without compromising customer experience

4. Modelling future terminal penetration and projecting traffic migration to LTE

5. Understand why LTE is no short-term saviour for operators addressing the capacity crunch

6. Traffic migration in spectrum limited operations

7. Summary20/01/20113Starting pointMobile Data traffic evolutionBandwidthTraffic ManagementtimetodaytomorrowDefinition of Traffic/Bandwidth Management: is the process of measuring and controlling the traffic on a network link, in order to avoid overfilling the link, which would result in network congestion and poor performance(source: Wikipedia)

8. 20/01/20114Cost(incremental)3GLTESweating existing network assetsTypical upgrade steps for today’s RAN:SW upgrade

9. Additional carrier

10. Sectorization (6-sector site)

11. Additional Site Today's 3G networks can carry considerably more traffic with only incremental additional costsRAN Capex per upgrade option3GLTECapexSW upgrade extra carrier 6-sector sitenew site new site(co-loc)

12. 20/01/20115Using customer data to optimize network planningTypical user behaviour in today’s 3G network: Understanding where and how these “heavy users” use network resources is a prerequisite for proper network planning. Network upgrades do not make sense for a small number of heavy usersØ Data usage by terminal typeTraffic demand concentration50% of users account for > 95% of total data traffic

13. 10% of users account for > 70% of the data traffic

14. 1% of users account for > 25% of the data traffic

15. 0.1% of users account for > 10% of the total data trafficUnit usageDatacardOther SmartphonesiPhoneNon-Smartphones

16. 20/01/20116Network TCOΔ costs3G data traffictodaytomorrowControlling costs of network expansionTypical traffic distribution in today’s 3G RAN:Data traffic is very concentratedOnly a small part of the network is actually facing capacity issues

17. The majority of the network can easily accommodate the increase in data traffic Despite the strong growth in data traffic demand, network costs increase only incrementalTraffic distribution over sitestrafficCapacity limit (today)TomorrowToday% of sites

18. 20/01/20117Cell BH throughput / userTraffic ManagementThroughput / user3Gacceptable limittodayfutureControlling costs of network expansion without compromising user experienceDon’t panic if throughput per user goes down…….because this can be alleviated by traffic management measures By introducing traffic management measures necessary RAN upgrades can be shifted in time, or even prevented altogetherCell BH throughput / userLTEThroughput / user3Gacceptable limitAction: RAN capacity upgradetodayfuture

19. 20/01/20118Modelling future terminal penetrationAssumptions:

20. Result of terminal penetration modelling:

21. In 2015 > 50% of the Datacard customers have LTE-enabled terminals

22. In 2018 > 50% of the Smartphone customers have LTE-enabled terminalsLTE terminal penetration100 %Datacards50 %Smartphones

23. 20/01/201193G traffic peak (3G Network)Projecting traffic migration to LTETraffic migration from 3G to LTE:

24. When “peak 3G” will be reached, depends on

25. LTE terminal penetration, LTE rollout, LTE frequency deployment band etc It will take several years after LTE launch until 3G traffic stops growingTraffic per terminal technologyTraffic per networkTB/monthTB/monthLTELTE3G traffic peak (3G terminals)3G3G

26. 20/01/201110TB/monthLTETraffic Management Measures3GtimetodayOptimizing Capex spending during migration to LTETraffic per network:

27. Once we know “peak 3G”, we know when no more capacity upgrades are necessary for 3G

28. From Capex perspective it would be best if 3G traffic demand would be stable over a longer period Use traffic Management measures to “flatten out” the peak demand of 3G in order to minimize 3G Capex during traffic migration to LTETB/monthLTE3Gtimetoday

29. 20/01/201111Migration in Spectrum limited operationsHow does the traffic FC translate into spectrum demand?

30. In which spectrum bands LTE can be deployed depends

31. Spectrum demand of legacy technologies

32. Licence duration of existing spectrum assets

33. Availability of new spectrumFuture Spectrum demand(LTE)Future Spectrum demand(Legacy technologies)MHz2600 MHz2100 MHz1800 MHz900 MHz2010 2012 2014 2016 20182010 2012 2014 2016 2018

34. 20/01/201112SummaryCost(incremental)Cost/MB1(total)3GLTELTETraffic3GtimetodayShort-term investment in 3G is the most efficient way for network capacity upgrades

35. 3G provides lowest incremental costs

36. LTE is most cost efficient in long-term

37. LTE is no short term saviour for operators addressing the capacity crunch

38. 3G traffic growth will reverse only several years after LTE launch

39. Utilize traffic management measures to flatten out the peak demand of 3G

40. Optimize Capex spend during traffic migration

41. Full utilization of existing 3G assets1 Note: Ultimately the absolute cost matters not the relative cost.

42. Thank You!