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Deploying LTE in Europe

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© 2013 Informa UK Ltd. All rights reserved. www.informatandm.com

About the author .............................................................................................................. 3

Introduction ...................................................................................................................... 4

Market overview ..........................................................................................................................................4

LTE in Europe ..............................................................................................................................................4

Deploying LTE in Europe .................................................................................................. 5

MS-BTS ........................................................................................................................................................6

Overlay .........................................................................................................................................................6

LTE deployment drivers in Europe .................................................................................. 7

Conclusion ........................................................................................................................ 9

Appendix ........................................................................................................................... 9

Industry survey ............................................................................................................................................9

MS-BTS deployments ................................................................................................................................................9

LTE overlay ..............................................................................................................................................................10

Network-economics modeling ..................................................................................................................10

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(a) copied or reproduced; or (b) lent, resold, hired out or otherwise circulated in any way or form without the prior permission of Informa UK Limited.

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Contents

3


Principal Analyst , Dimitris Mavrakis

Area of expertise: IMS, mobile access network technologies, femtocells, backhaul, network APIs.

“As LTE is being deployed throughout the world, mobile operators are finding it hard to strike balance between network investments, new pricing schemes and increasing traffic. Several initiatives are being deployed, including capacity upgrades, optimization, offload and policies to tackle all of these challenges.”

Dimitris Mavrakis is a principal analyst with Informa Telecoms & Media. He is part of the Networks team where he covers a range of topics including Next Generation Networks, IMS, LTE, WiMAX, OFDM, core networks, network APIs and identifying emerging strategies for the mobile business.

Dimitris is also actively involved in Informa’s consulting business and has led several projects on behalf of Tier-1 operators and key vendors.

Dimitris has over 12 years experience in the telecommunications market. He has a strong background in mobile and fixed networks and an in depth understanding of market dynamics in the telecoms business. In the past, Dimitris has worked as a project leader to perform challenging network measurements and has lead a team of researchers to produce pioneering research and acclaimed publications.

Dimitris has been working for Informa since 2005. In the past, Dimitris has worked as a project leader to perform mobile network field tests and has lead a team of researchers to produce pioneering research and acclaimed publications during his academic career.

Dimitris holds a PhD in Mobile Communications and a MSc in Satellite Communications from the University of Surrey.

About the author

Contributor

Phillip Marshall, Tolaga Research

Tolaga delivers actionable research for the mobile broadband industry. This research is anchored with extensive market, technology and regulatory databases that span 190 countries and its Market Explorer™ platform. The platform uses a systems based approach to technology and market modeling. Tolaga was established in 2009 and is headquartered in Massachusetts, USA.

www.tolaga.com

4


Market overview

LTE has seen arguably the fastest

growth of any mobile network

technology deployed so far. With

more than 74 networks live in more

than 30 counties, covering every

populated continent, LTE is enjoying

the most successful launch of

any mobile technology in history,

with the most swiftly deployed

networks. There is a proliferation

of LTE-enabled devices in attractive

form factors and at desirable price

points, and nearly all LTE handsets

are smartphones, which provide

operators with more opportunities

for profitability. According to

Informa Telecoms & Media’s LTE

forecasts, there were 62 million LTE

subscribers at end-December, and

this number is expected to increase

to 133 million in just a year.

However, this kind of success does

not come without challenges: Ninety

percent of the LTE market is held by

five operators, and certain regions

are lagging due to reasons including

unclear regulation and spectrum-

license delays. Nevertheless, certain

operators are providing learning

experiences for the whole market,

the leaders being Verizon Wireless,

AT&T and those in South Korea,

where operators have already

deployed LTE to cover almost all of

the population.

LTE has arrived at an appropriate

stage of the evolution of mobile

operator business: Users are

becoming more aware of the benefits

of data services, OTT applications are

garnering success, and there is rising

demand for mobile data services and

smartphones – all influences that

promote the adoption of LTE. Initial

end-user feedback indicates that LTE

services have been well received and

that the higher-speed, lower-latency

network offers serious advantages

compared with previous networks.

LTE in Europe

Despite the success of LTE in many

Asian markets and the US, its

growth has been slower in Europe

due to regulation, license-auction

delays and the wide and dense

deployment of HSPA networks.

TeliaSonera’s LTE network in

Sweden was the world’s first to be

turned on, in December 2009, but as

of June 2011 the country had fewer

than 10,000 subscriptions. This

slow growth was due largely to the

fact that only portable LTE devices

(USB dongles and MiFi units) were

available, at higher pricing than 3G.

Nevertheless, TeliaSonera reports

that deploying LTE first was the

“most brand value accretive action

we have taken,” and other LTE

early adopters have made similar

statements.

The European market has its own

peculiarities, as do most global

regions. Densely deployed HSPA

networks, saturated markets, a

fragmented spectrum landscape

and the wide availability of fixed

networks have made the rollout of

LTE throughout the region slower, but

rises in the demand for data and the

availability of LTE smartphones are

helping the technology expand rapidly.

Europe’s mobile market has several

unique properties that make LTE

deployments in the region stand out.

•Networksharingiswidespread

in the EU, and several operators

now share parts of their network

in a passive or active mode. There

are discussions in certain markets

about regulating network sharing,

which would force operators to

share part or all of their networks.

Although network sharing reduces

costs, the strategy, governance and

integration involved often make it a

complex task.

• LTEspectrum:ThekeyLTE

bands in Europe appear to be

800 and 2600MHz and 1800MHz,

which seems to be considered a

key global LTE band. Operators

generally prefer lower bands,

which have better propagation

characteristics, meaning that

they can offer good coverage with

fewer cell sites. Some operators

have already been awarded

spectrum, some are waiting

for spectrum auctions before

they begin to deploy LTE, and

some are attempting to refarm

existing spectrum, such as the

1800MHz band, which has been

used for 2G/3G. Existing unpaired

spectrum assets might also be

used for TD-LTE networks in the

future. Unlike in regions that have

clearer conventions for spectrum

use – such as the US, where LTE

is in the 700MHz band – Europe is

fragmented, and some spectrum

auctions have yet to take place.

Introduction

5


• 3G-networkdensity:Countriesin

Western Europe – and several in

Eastern Europe – are characterized

by dense HSPA deployments,

which have provided adequate

capacity for mobile subscribers.

But deploying LTE has been

considered a strategic objective,

and several operators have started

deploying it without clear visibility

of pricing models and business

opportunities. As of 2013, LTE has

become a major objective of all

mobile operators, since spectral

and network efficiency is a key

concern as the market becomes

more data-centric.

There have been several notable

LTE-network launches in Europe

(see fig. 1).

Mobile operators have been skeptical

about the value proposition of

LTE, especially due to the fact that

monetization of 3G came much later

than expected and was challenged by

license costs, low technology maturity

and overall slow development of the

ecosystem. These factors have since

been addressed, however, and the

LTE ecosystem is seeing healthy

growth across chipsets, devices and

network infrastructure, alleviating

operator concerns.

Apart from deployments that are

driven by regulation, LTE networks in

Europe have primarily been developed

in parallel with modernization efforts,

especially in cases where aging legacy

2G/3G networks were increasing

total cost of ownership (TCO) and

modernization offered an opportunity

for cost savings. Fig. 2 illustrates a

decision tree when deploying LTE and

with different options operators could

take advantage of to deploy LTE.

A major factor inhibiting LTE

deployments in Europe – and other

areas, including Japan and South

Korea – is the presence of widely

deployed legacy networks. With the

aim of reducing the cost of running

legacy infrastructure, operators

have taken steps to optimize their

infrastructure before deploying LTE

networks, mainly by consolidating

existing 2G/3G infrastructure into

a single platform, often referred to

as a Multi-Standard Base Station

(MS-BTS) platform. But MS-BTS

platforms deployed for 2G/3G might

require considerable investment

to upgrade to LTE, which requires

new antennas, Remote Radio Units

(RRUs) and manual installations.

Costs are even higher when using

4G spectrum that does not overlap

with 2G/3G frequencies. For

example, 2.6GHz LTE deployments

often require new RRUs, antennas,

baseband units, manual upgrades

and, most likely, new cell sites to

satisfy coverage requirements,

boosting the deployment cost

considerably despite the existence of

an MS-BTS deployment.

This white paper discusses two

options for deploying LTE: Multi

Standard Base Stations (MS-BTS)

and LTE overlay, which refers to

adding new equipment at cell sites

Legacy 2G/3Gnetwork

MS-BTS for 2G/3G

Add LTE payloadin MS-BTS

LTE deployment

Add LTEoverlay

MS-BTS for2G/3G/LTE

Fig. 2: LTE-deployment options for legacy networks

Source: Informa Telecoms & Media

Fig. 1: Notable European LTE-network launches

Operator (country) Launch date Details Band

TeliaSonera (Sweden) Dec-09 USB dongles and MiFi only 800/1800/2600MHz

Vodafone (Germany) Dec-10 Rural deployment first 800/2600MHz

Yota (Russia) Dec-11 Wholesale network 2600MHz

EE (UK) Oct-12 Only UK LTE network 1800MHz


Deploying LTE in Europe

6


for LTE. An operator choosing to

deploy LTE with a legacy 2G/3G

network has several possible paths

to choose from.

Although overlay usually refers

to specific additional equipment

used to enable an air interface, the

infrastructure could be an MS-BTS

with specific functionality enabled,

which can enable modernization of

the network in later stages while

satisfying the current need for a

quick LTE rollout.

MS-BTS

MS-BTS platforms are deployed

when several networks have to

operate in similar frequencies and

at the same cell sites. For the most

part, vendors have accordingly

chosen names for their technologies

that reflect the fact that a

single base station can provide

service for different technologies

simultaneously. Assuming that an

MS-BTS is providing service for

different technologies, the following

elements are usually deployed:

• Integratedbasebandunit(BBU):

The baseband unit is responsible

for processing and converting

digital signals. It is usually in the

form of an upgradable platform,

where new cards (or “blades”)

can be introduced to cater for

increased utilization or new

protocols. Typical MS-BTS BBUs

may be made compatible with

LTE through software upgrades,

though in many cases a hardware

upgrade is necessary due to the

increased functionality required by

LTE eNodeBs.

• RemoteRadioUnit: The RRU

includes RF equipment and

converts digital signals to RF for

transmitting, and vice versa for

receiving. RRUs are band-specific,

meaning that new LTE frequencies

need new radio units. But there

are some cases where networks

share RRUs between 2G, 3G and

LTE for the same frequencies

after refarming. In most cases,

new RRUs are necessary to

enable LTE in existing MS-BTS

deployments.

• Antennas: Similar to RRUs,

antennas are band-specific and

need to be upgraded if LTE is

deployed in new frequencies.

Overlay

In overlay deployments, new

hardware is installed in existing

base stations without affecting

the existing infrastructure or

network operation. The operator

is able to procure equipment from

any vendor, not just the existing

MS-BTS provider. The following

figure illustrates a brief comparison

of MS-BTS and overlay deployments

for European networks (see fig. 3).

Both deployment strategies

offer specific advantages and

disadvantages, and the decision

of which to use is affected by

several parameters, including LTE

spectrum, legacy-network age,

whether a modernized network

has been fully depreciated, vendor

relationships and many others. But

the European market is now at a

stage where an overlay is becoming

a valid competitor to MS-BTS

platforms for LTE deployment.

Fig. 3: Comparison of LTE-deployment strategies

LTE overlay Single RAN

Bevnefits Speed of deployment Lower site rental cost

No network disruption Lower power comsumption

Lower capex Cell-site simplification

Challenges Potentially higher opex Requires existing network renewal (downtime and potential disruptions, additional optimization and training)

Multiple platforms to manage Vendor lock-in


7


Several operators have already

modernized their existing networks,

with a focus on reducing opex for

2G and 3G deployments. Many of

these modernizations have taken

place over the last five years, in the

900MHz, 1800MHz and 2.1GHz bands.

As such, these modernized networks

might not be fully depreciated and

cannot be removed without suffering

a decommissioning fee, which can be

substantial – especially if considering

stand-alone (non-MS-BTS)

platforms. In many cases, mobile

operators continue to operate stand-

alone platforms until they are fully

depreciated, after which they might

be considered for replacement.

Simplification of the network and

reductions in capex and opex are the

advantages most frequently cited by

European operators for deploying

LTE through an MS-BTS platform

(see fig. 4).

An overlay decouples modernization

efforts from network deployment,

which results in a faster and less

disruptive network rollout and might

also delay modernization. Operators

with aggressive LTE deployments

have reported that traffic over their

3G networks is declining in favor

of LTE, which in turn reduces the

pressure to modernize. A simpler

network deployment is also a

major advantage in markets where

regulations and permissions for

work at cell sites are strict.

Although opex savings can be

achieved by consolidating 2G/3G

and LTE base stations, the majority

of TCO will come from upgrades,

which applies to both MS-BTS and

overlay cases. Moreover, adding

functionality to a platform that is

already operating and providing

connectivity to subscribers might

lead to unplanned downtime,

which might be considered a risk.

According to Informa’s financial

modeling, the cost of an overlay is

in many cases lower than that of an

MS-BTS (see fig. 5).

Another major operator concern

is vendor lock-in, which is a

considerable commitment with most

MS-BTS platforms. An operator

becomes tied to the vendor’s strategy,

including infrastructure upgrades,

which usually keep pace with market

LTE deployment drivers in Europe

0

5

10

15

20

25

30

35

Resp

onse

(%)

5

101212

3031

Othe

r (p

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e sp

ecify

)

Hard

war

e re

use

for d

iffer

ent a

ir in

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Abili

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sup

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futu

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pect

rum

refa

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er s

ite c

osts

(inc

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ower

)

Net

wor

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ifica

tion

– o

ne p

latfo

rm to

man

age

Low

er C

APEX

and

/or O

PEX

Fig. 4: What is the most important benefit of deploying an MS-BTS platform?

Note: Responses from survey of 112 European operators.Source: Informa Telecoms & Media

0

100

200

300

400

500

600

700

800

NPV

gai

n (U

S$ m

i.)

726660544842363024181260

Simulation month

Dominated by the negative impact of

multi-standard RAN upgrade

Dominated by the positive impact of reduced power consumption, OA&M and ground lease costs for multi-standard RAN

Fig. 5: Forecast cumulative gain in net present value of an LTE overlay relative to MS-BTS

Source: Informa Telecoms & Media, Tolaga Research 2013

8


Our research, modeling and survey

illustrate that LTE overlay is

considered a viable alternative to

MS-BTS. Several operators across

the world, especially in the US,

Japan and Korea, have deployed

LTE by overlaying on existing

infrastructure and, in many

cases, have enjoyed a competitive

advantage by being first to market.

Many operators in Western

Europe are expected to follow

similar steps and include overlay

as an element of LTE-network

deployments.

Many of their counterparts in

Eastern Europe are expected to

follow, given that LTE adoption

in that region is slower than in

the more developed markets of

Western Europe.

Other benefits of an overlay include

not being locked in to a single

vendor, a lack of network disruption,

greater reliability and, in many cases,

a financial advantage over MS-BTS.

Both deployment strategies

offer specific advantages and

disadvantages, and the decision of

which to use is affected by several

parameters.

developments but could fall short due

to changes in vendor strategy.

Reliability of the network and vendor

lock-in are among the top concerns

related to MS-BTS deployments

cited by European operator

respondents to our industry survey

(see fig. 6). Another major concern

linked to vendor lock-in is financial

stability, in cases where several

vendors are subject to hostile

market environments and their

future is not clear.

The biggest advantage of a network

overlay is speed of deployment. It is

usually much faster than deploying

an MS-BTS and replacing legacy

networks. By deploying LTE through

an overlay, the operator can offer

LTE services the soonest, which

in many cases gives it a major

competitive advantage. A quick

deployment also gives operators

extra time to consider the strategic

impact of an LTE network, which is

especially useful when considering

the value proposition of LTE

in Europe’s volatile economic

environment.

Network sharing is a major force

behind network deployments,

and its importance is expected

to increase. Active sharing

arrangements provide the most

economic benefits but require

operators to be in similar market

positions, e.g., using similar

bandwidth and frequencies. Passive

sharing is expected to be more

popular, because the integration,

governance and cultural and

strategic issues linked to active

sharing pose a considerable

challenge for operators. In cases

where operators are already

participating in active-sharing

arrangements, they need to jointly

decide to upgrade the platform to

new technologies, including LTE.

In many cases, an overlay strategy

is considered a more effective

option, enabling each operator to

meet its strategic objectives without

having to wait for its active-sharing

partners to move in parallel.

Othe

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May

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netw

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infra

stru

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Com

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e v

endo

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ck-in

Resp

onse

(%)

0

5

10

15

20

25

30

35

912

19

27

33

Fig. 6: What is the most important challenge when deploying an MS-BTS platform?


Conclusion

9


Industry survey

To gauge market perception of LTE

launch strategies and understand the

state of European networks, Informa

has launched an industry survey that

includes broader questions regarding

LTE. Those that are relevant to this

study are presented here.

The survey had 442 respondents,

of which 112 were operators

based in Europe. Of these operator

respondents, 68 were mobile

operators and 43 hybrid operators,

with both fixed and mobile assets.

Asked if they had an LTE network

live or pending launch, a staggering

96.3% of European operators

answered in the affirmative, with

only 3.7% stating that they are not

planning to launch LTE. Method of

deployment was evenly split among

the three options (see fig. 7).

Western European operators were

biased toward overlay and those in

Eastern Europe toward MS-BTS.

This is somewhat expected, since

operators in Western Europe expect

faster take-up of LTE services due

to higher demand for mobile data,

and they rely on a faster deployment

strategy. The results illustrate that

developed markets are more likely to

rely on overlay deployments for LTE.

MS-BTS deploymentsQuestions about MS-BTS platforms

revealed that cost savings and

network simplification are the major

incentives for operators to take such

an approach. The ability to reuse

hardware for future technologies

was cited by surprisingly few

respondents, as was support for

future refarming efforts.

Regarding the challenges of

deploying LTE through a MS-BTS

platform, the most operators

cited vendor lock-in and network

downtime. Future upgrades scored

only 12%. The responses about

MS-BTS deployments imply that even

though the technology is usually

positioned by vendors as future-

proof, meaning it offers cost savings

on future hardware, operators do

not take that into account. And

they do not appear to consider the

additional costs of introducing new

air interfaces a major challenge for

MS-BTS, indicating that they are

deploying these base stations only to

consolidate legacy networks rather

than to cater for future technologies.

LTE overlayRespondents cited service interruption

and network reliability as the main

benefits of an LTE overlay (see fig. 8).

Other (please specify)4%Only using small cells

1%

Overlaying LTE in an existing network deployment

32%

Adding LTE in an existing MS-BTS deployment32%

Replacing a legacy 2G/3G network with a MS-BTS platform supporting LTE as well31%

Fig. 7: What is the primary deployment mode for your LTE network?


Appendix

Resp

onse

(%)

0

5

10

15

20

25

30

35

Oth

er (p

leas

e sp

ecify

)

Lega

cy n

etw

ork

is tr

ied

and

test

ed

Low

er C

AP

EX

com

pare

d to

Sin

gle

RA

N

Hig

her

net

wor

k re

liabi

lity

No

2G/3

G s

ervi

ce in

terr

uptio

n

10

15

19

23

32

Fig. 8: What is the biggest benefit of deploying LTE through an overlay?


10


Other answers included the ability to

deploy LTE at any time rather than in

parallel with a modernization effort

coupled with MS-BTS.

The need to manage multiple

platforms and interoperability

problems with the existing core

network were the most frequently

cited challenges when deploying

an overlay (see fig. 9), with a rise

in opex and the need for multiple

vendor relationships cited by fewer

respondents.

When asked for the most important

technical aspect of an LTE network,

an overwhelming 60% chose cell

throughput, and when asked which

future capability of the technology is

the most important, 36.8% answered

LTE-Advanced, followed by VoLTE,

with 30.3%.

The survey results chime with the

analysis findings presented above

and reflect the market state in

Europe. Although each deployment

must be considered independently,

due to specific market and operator

conditions, overlay appears to be

a viable deployment method for

LTE despite the trend for network

modernization and platform

consolidation.

Network-economics modeling

A simulation model was developed

to compare the economics

of MS-BTS and overlaid LTE

architectures, based on a real

operator in a leading European

market and using the following

general assumptions:

• AtthetimeoftheLTE

implementation, the 2G/3G

radio equipment had already

been modernized and operated

multicarrier RF equipment.

• ThesimulationstartedinJanuary

2013 and assumed that an LTE

overlay had commenced six

months earlier. The simulation

covers a six-year period.

• Thenetworkconsistsof2G

GSM/EDGE, 3G UMTS/HSPA

and 4G/LTE. The 2G GSM/EDGE

network uses 24.8MHz of 900MHz

and 10MHz of 1800MHz radio

spectrum. UMTS/HSPA operates

in the 2.1GHz 3G band with 20MHz

bandwidth. LTE operates in the

800MHz band with 20MHz, the

1800MHz band with 30MHz and

the 2600MHz band with 40MHz.

The LTE network is deployed

initially to maximize coverage and

expanded into higher frequency

bands according to capacity

demands.

•Mobiletrafficisestimatedon

a per-device basis for non-

smartphones and smartphones,

and connected tablet, laptop

and e-reader devices. A general

category is used to estimate

0

5

10

15

20

25

30

Othe

r (p

leas

e sp

ecify

)

Lega

cy n

etw

ork

is tr

ied

and

test

ed

Low

er C

APEX

com

pare

d to

Sin

gle

RAN

High

er n

etw

ork

relia

bilit

y

No

2G/3

G se

rvic

e in

terr

uptio

n

12

15

19

24

30

Resp

onse

(%)

Fig. 9: What is the biggest challenge when deploying LTE through an overlay?


Resp

onse

(%)

0

5

10

15

20

25

30

35

Oth

er (p

leas

e sp

ecify

)

Lega

cy n

etw

ork

is tr

ied

and

test

ed

Low

er C

AP

EX

com

pare

d to

Sin

gle

RA

N

Hig

her

net

wor

k re

liabi

lity

No

2G/3

G s

ervi

ce in

terr

uptio

n

10

15

19

23

32

Fig. 8: What is the biggest benefit of deploying LTE through an overlay?


11


the average traffic generated

by M2M devices. Data and voice

traffic is skewed using a modified

lognormal distribution to reflect

the differing population densities

across the network-coverage

area. Bandwidth usage caps are

assumed across the forecast

period and form the basis for

determining the upper limits

of per-device traffic. Network

dimensioning is based on peak

traffic demands.

• AnOkumura-Hataradio-

propagation model is used to

predict network coverage and

combined with a radio-capacity

model to predict the number of

base stations needed and their

associated output powers. Four

categories of base stations are

used, including high-power,

medium-power and low-power

macrocells and microcells. Each

base-station category is defined

in terms of antenna height, output

power, receiver sensitivity and

average number of sectors. Small-

cell and Wi-Fi offload is used to

moderate large-cell demand.

Fig. 10 shows forecast subscriber

usage and downlink data traffic on

the network. Data traffic per user is

forecast to increase from an average

of 258MB a month to 1.5GB per

month over the six years, covering

both mobile devices and connected

computing. Average voice-service

use per user is assumed to remain

constant at 130 minutes a month.

The forecast traffic was applied

to a network model to predict

radio-base-station requirements

(see fig. 11). Two scenarios where

analyzed, one in which GSM/EDGE

base stations were decommissioned

after three years and on in which

the GSM/EDGE cell sites remain in

place. Data traffic is assumed to be

aggressively migrated to LTE over

the first 8-12 months of the forecast.

As a result, no additional UMTS/

HSPA(+) base stations are assumed

to be required after six months.

The demand for LTE base stations

increases throughout the forecast,

reaching 30,300 after six years.

The network-deployment scenario

studied in this report reflects

that of many mobile operators, by

incorporating three radio-technology

generations – GSM/EDGE, UMTS/

HSPA and LTE – spanning five

frequency bands. Because the

majority of network costs are due

to radio-base-station operations,

mobile operators are eager to

optimize their radio-infrastructure

costs. Many operators have replaced

obsolete infrastructure and are

carefully evaluating LTE-deployment

strategies.

Tota

l bas

e st

atio

ns (0

00S)

0

5

10

15

20

25

30

35

LTEUMTS/HSPAGSM/EDGE

726660544842363024181260

Simulation month

Fig. 11: Forecast base-station requirements over six years


0

100

200

300

400

500

600

Downlink network bandwidth LTE

Downlink network bandwidth HSPA(+)

Downlink network bandwidth UMTS

Downlink network bandwidth GSM/EDGE

7266605648423630241812600

300

600

900

1200

1500

1800

Average data traffic per user (M

bps/mo.)

Dow

nlin

k ne

twor

k ba

ndw

idth

(Gbi

ts/s

econ

d)

Simulation month

Fig. 10: Forecast subscriber and network traffic over six years


12


The financial impact of an LTE

overlay is compared with an

equivalent MS-BTS implementation

using a marginal discounted-

cash-flow analysis, to forecast the

cumulative benefit in net present

value (NPV) of an LTE overlay

relative to a MS-BTS deployment.

The results demonstrate the

following:

• Forthefirst19monthsof

the simulation, the MS-BTS

architecture is more costly

because it requires 2G and 3G

upgrades in addition to LTE

implementation. At its peak,

the cumulative NPV benefit for

LTE overlay is forecast to reach

US$601 million.

• AstheMS-BTSisimplemented,

it offers cost savings through

reductions in power consumption;

lower operations, administration

and maintenance costs; and

slightly reduced site-lease

costs. The MS-BTS base stations

are assumed to use up to 50%

less power, incur 60% lower

operations and maintenance

costs and bring down the cost of

ground leases by 7%. The gains

begin to be reflected after 19

months.

The results indicate that for a

modernized 2G/3G network, an

MS-BTS implementation does not

achieve a positive return relative to

an LTE overlay architecture even

after seven years, and they illustrate

that mobile operators must carefully

evaluate the total cost of ownership

for alternative network architectures

before pursuing LTE-network

upgrades.

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