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

Next generation thinking

7 December 2011

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Crucial backhaul economics – today’s agenda

Crucial backhaul economics webinar

• 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 minutes

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Crucial backhaul economics – the challenge

Lance HileyVP Marketing Cambridge Broadband Networks Limited

Objectives and overview of the Total Cost of Ownership project


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Crucial backhaul economics


Why is understanding Total Cost of Ownership crucial for 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 horizon

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Crucial backhaul economics – the challenge

Objective

Create a financial model tool to analyse the Total Cost of Ownership (TCO) for popular backhaul technologies to help network operator 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)


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Basis: backhaul solutions and scenarios

Solutions

• Point-to-point (PTP) microwave

• Point-to-multipoint (PMP) multipoint microwave

• E-Band microwave

• Leased fibre

• Built fibre

Scenarios

• LTE

• 3G

• LTE small cells


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Basis: cost parameters

Model was populated with median values across all markets

Capex

• Outdoor equipment costs

• Indoor equipment costs

• Network planning, site acquisition and installation

Opex

• Site rental fees, leased line fees

• Spectrum licensing fees

• Recurring operating costs (e.g. power, maintenance)


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Basis: backhaul topologies

8

RAN

RAN

HUB

RAN

RAN

RANRANRANRAN

RANRANRANRAN

RAN

RAN

RAN

RAN

Point-to-multipoint (PMP) topology Point-to-point (PTP) and E-band star topology

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

HUB

RAN

RAN

RAN

Max 16 RAN sites supported

RAN

RAN

RAN

RAN

RAN

RAN

RAN

RAN

RAN

RAN

RAN

RAN

RAN

RAN

RAN

RAN

RAN

HUB

Max 10 RAN sites supported

RAN

RAN

RAN

RAN

RAN

RAN

RAN

RAN

RAN

HUB

RAN

RAN

RAN

RAN

RAN

RAN

LEVEL 3LEVEL 2LEVEL 1Max 15 RAN sites supported

Up to 240 RAN sites supported, depending on RAN site capacity


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Crucial backhaul economics – the results

Monica Paolini, PhDFounder and President Senza Fili

Analysis and conclusions from the Total Cost of Ownership (TCO) project


| 10 | Confidential - Do not distribute without permission © Senza Fili Consulting LLC

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

April 10, 2023

Our analysis focuses on drivers dynamics:Costs change across regions and types of operators, drivers stay the same

http://www.flickr.com/photos/decade_null/106464382/in/photostream/


Capex drivers: PMP reduces the footprint, and the costs

April 10, 2023

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 capex


Opex also scales with number of installed radios

April 10, 2023


• Opex cost items are constant across wireless solutions• Overall opex depends on topology:

― Number of terminals― Aggregation gains


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


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

October 4, 2011



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 footprint

October 4, 2011

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How VectaStar achieves these cost savings in a live backhaul environment

Lance HileyVP Marketing Cambridge Broadband Networks Limited

How VectaStar achieves these cost savings in a live backhaul environment


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• 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 Gigabit Backhaul Solution

• 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

• VectaStar Remote Terminal

• All-outdoor design• 150Mb/s throughput

• VectaStar Access Point• All-outdoor design• Supports 8 remote

terminals per sector• 150Mb/s throughput• 10.5, 26 & 28GHz ETSI

spectrum support

Commercial in confidence

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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!”

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Multipoint microwave is a fast and cost effective way to build backhaul networks• Low capital requirements

• Low operating costs

• Fast build-out

• Long deployment life

Mature VectaStar solution• Deployed across Europe,

Middle East and Africa

• Compatible with what operators run now and anything they’re planning for the future

Summary

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Watch 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/webinars

Download the white paper: www.cbnl.com/resources/white-papers

http://www.cbnl.com/resources/webinars

http://www.cbnl.com/resources/white-papers

crucial backhaul economics - the latest total cost of ownership comparison of backhaul solutions

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