light radio portfolio 2

T E C H N O L O G Y W H I T E P A P E R

As data usage escalates, mobile service providers need a new approach to delivering

a high quality of experience, while keeping costs down. Alcatel-Lucent enables this

business and infrastructure transformation, with its pioneering lightRadio architecture,

which distributes intelligence between the radio head, on-site processors and centralized

processing over high-bandwidth and low-latency optical networks. The architecture

also provides optimal configurations for each service providers requirements, including

backhaul needs, to reduce the networks total cost of ownership (TCO) significantly.

These innovations can allow service providers to benefit from increased wireless demand,

while deploying highly optimized networks, reinforced by powerful radio, transmission

and antenna advances.

This paper is one in a series authored by Alcatel-Lucent that discuss the current state

of wireless networks and the benefits of transitioning to a lightRadio architecture

that supports data and video traffic, now and well into the future.

Portfolio: White Paper 2Economic analysis

Table of contents

1 1.Introduction

1 2.Mobileserviceproviderpainpoints

1 2.1 Explosion of mobile devices and data traffic

3 2.2 Networks are not uniformly data loaded a new challenge

3 2.3 Mobile data profitability challenges

5 3.ImprovingmobiledataeconomicswithlightRadio

5 3.1 Alcatel-Lucent lightRadio

6 3.2 lightRadio economics at site level

8 3.3 Network evolution economics

9 3.4 Additional solutions to optimize data economics

9 4.Conclusion

10 5.Authors

lightRadio Portfolio Economic analysis | Technology White Paper #2 1

1. Introduction

Mobile service providers are facing many challenges today, as they operate in a rapidly evolving market. End-user data usage is rapidly increasing, with the proliferation of new devices, content diversification and new multimedia applications. These new trends result in:

Increased wireless data traffic that must be handled by networks that were designed for voice transport.

End user expectations that data throughput speeds and QoS for mobility services will be similar to those delivered by fixed networks.

Declining revenue per bit from new applications, such as streaming Internet video, compared to earlier offerings, like voice and SMS, that generated extremely high revenue per bit. (Mobile data now generates only 35 percent of revenues while consuming 54 percent of resources.)

New value chains, with players from IT, television and web domains, that erode operators revenues but leave them with transport costs.

It is imperative that service providers adapt both their business and infrastructure to this changing landscape. This paper highlights the pain points that result from todays key trends, analyzes their impact on service providers economics and describes what can be done to bring about improvements.

2. Mobile service provider pain points2.1ExplosionofmobiledevicesanddatatrafficThe trend toward smartphone and widescreen device adoption is continuing to accelerate, with the number of smart devices in use expected to be potentially 18 times higher in 2015 than in 2010. These new smart devices will strongly impact network bandwidth and signaling requirements, in varying ways.

For example, recent network traffic studies indicate that BlackBerry and Android devices stress control and signaling functions more than bandwidth. Conversely, Air cards (which support continuous data sessions) and Apple iPhones and iPads impact bandwidth more than signaling. In addition, the use of new mobile multimedia services, connected device applications and machine-to-machine services is expected to grow as the new wireless IP infrastructures being implemented today sets the stage for rich innovation and expansion of the wireless ecosystem.

What will mobile service providers face as this enriched ecosystem and device proliferation combine with new technologies that enable higher throughput? This combination is likely to result in more diversified mobile applications, increased traffic per user device and greater mobile device density. For example, Alcatel-Lucent studies forecast that, in 2015, the number of smartphones in urban areas will increase to 12,800 per urban square kilometer, compared with approximately 400 per square kilometer today: a 32-fold increase. The studies also indicate that global wireless data traffic will grow 30 fold over the next five years. In other words, the combination of all these factors is leading to an unprecedented explosion of usage, referred to by experts as the mobile data traffic tsunami.

lightRadio Portfolio Economic analysis | Technology White Paper #22

Figure 1. World-wide wireless traffic evolution (Source: Alcatel-Lucent)

Global aggregate mobile traffic (Pbytes/month)

Feature phones Smartphones Widescreen devices

7,000

6,000

5,000

4,000

3,000

2,000

1,000

02010 2011 2013 2014 20152012

Consequently, mobile service providers need to deploy more capacity in their networks, by increasing the number of sites and using the latest technologies, such as LTE. However these steps can raise other issues.

For example, increasing the number of sites addresses the need for additional capacity. But it can result in higher costs for operations, site rental, power consumption, civil works and in increased network management complexity. In addition, service providers are facing regulatory constraints that make it difficult to acquire new sites and re-negotiate rights on existing sites to introduce new technologies or make renovations.

Figure 2 shows key drivers of the total cost of ownership (TCO) for a high-capacity macro indoor site in a European urban area. Civil works, site rental and transmission are the top contributors to radio access TCO. Consequently, service providers can realize significant savings by decreasing or containing their site footprint and associated network-related operating costs.

Figure 2. Radio access TCO breakdown reference

Site rental20%

Powerconsumption

7%

Operations7%

Maintenanceand repair

6% Equipment11%

Civil work14%

E&I&I3%

ND&O3%

Transmission29%


Deploying new technologies, such as LTE, can help meet capacity demands and lower cost per megabyte (MB) significantly. But to meet future data demands at the lowest cost per MB, operators must continue deploying solutions that reduce costs like site rental, power consumption and operations.

2.2NetworksarenotuniformlydataloadedanewchallengeCapacity needs are not uniform in the network. Some base stations are more heavily loaded by wireless data traffic than others, and mobile networks are witnessing a clear geographical disparity in base station load. Therefore, a mix of flexible capacity-improvement solutions will be needed to efficiently address both very dense, usually urban, wireless data areas and lighter loads in rural areas.

As shown in the Figure 3, traffic is not uniform over time, either, as users locations and usage patterns vary through the day, changing the load on different base stations.

Figure 3. Wireless cells daily load (Source: Alcatel-Lucent Wireless Network Guardian)

15

Traf

fic

(%)

10

5

25

20

0

Midday

Cell 1 Cell 2

Cell 3

Cell 4

MidnightMidnight

Today, mobile service providers are deploying solutions that address each individual sites busy hour/peak hour capacity needs, but this capacity is not fully used during off-peak periods. Increased capacity utilization, while meeting peak demand, is key to improving network economics.

2.3MobiledataprofitabilitychallengesWireless service providers are all seeing dramatic increases in data traffic, as 3G capabilities become widespread and new 4G capabilities are deployed. However, not all providers are experiencing the same level of growth in their data revenues. A subscriber with a smartphone who uses 600 MB per month puts 6000 times more load on a network than a heavy SMS user without a smartphone. But the smartphone user brings in only about twice as much data revenue, resulting in a declining revenue-yield per MB. Bell Labs analysis estimates that the current cost per MB on a traditional


macro network is between 5.5 US cents and 9.5 US cents for more efficient and higher utilization networks. The range depends on market, operator efficiency, density of cells and traffic carried. As a result, wireless data traffic and associated costs are starting to encroach on wireless data revenues and profitability for many operators, as shown in Figure 4.

Figure 4. Costs compared with revenue for mobile data traffic (Source: Alcatel-Lucent)

30

$/su

bsc

rib

er/m

on

th

20

10

50

40

0

20122006 2007

Source: Bell Labs Modeling and Network Planning Conservative traffic model assumptions

2008

Revenue/subscriber

2009 2010 2011

Network cost/subscriber

Service providers can apply several options to counter this scissor effect. For example, they can deploy usage caps, throttle bandwidth for users who exceed usage caps and increase pricing for mobile data services. However, in a competitive environment, such strategies may increase churn by sending high-end users to other operators that offer lower-priced mobile data services with higher usage limits and no caps.

Leading operators are addressing this dual opportunity and threat to their business by unscissoring both these curves. On the revenue side, they are introducing new services, frequently with third-party application and content partners, that are priced and sold as services rather than data traffic. On the cost side, they are planning and introducing new wireless technologies and solutions that drive down the cost per bit transferred over their network. This approach allows them to contain their overall total cost of ownership and thus improve margins. With lower cost per bit, operators can, in turn, introduce lower-priced plans that expand the market by making services available to users who could not otherwise afford them.


3. Improving mobile data economics with lightRadio

To help mobile service providers contain their TCO, while addressing their capacity needs, Alcatel-Lucent has developed key simplifications in the network architecture, called lightRadio.

3.1Alcatel-LucentlightRadiolightRadio is a new product family designed to dramatically improve network capacity while lowering cost per bit. It delivers 2G, 3G and LTE technologies with a defined path to LTE Advanced, and it works with multiple scale points, from large macro-cells to small metros, across all deployment morphologies from rural to dense urban. lightRadio also includes the five radio access elements antennas, radios, baseband, controllers and management. But it broadens the baseband architecture to distributed intelligence; for example, in the conventional baseband unit and centralized baseband.

lightRadio includes the following features:

Wideband active antenna arrays that can improve available capacity by 30 percent, in urban and suburban settings, and survive array element failure.

Multi-band remote radio heads that reduce the on-tower equipment needed to service multiple frequency bands by a factor of two or three.

Remotely programmable software-defined baseband, with digital modules that can be used and reused for any demand mix of GSM, WCDMA and LTE.

Digital modules usable in three deployment modes:

All-in-one for zero site footprint with minimum backhaul

Conventional BBU for easy transition of current sites

Centralized baseband with zero footprint, reduced OPEX, load balancing and a path to 80-percent capacity gains, with coordinated multi-point (CoMP) and inter-cell interference coordination (ICIC)

Centralized baseband, facilitated by IQ signal aggregation and state-of-the art compression, to minimize transport requirements

Common family of macro and metro cell scale points that provides consistent functionality, along with hot-spot data offload, and up to six times greater capacity from the same spectrum lease.

Controllers software virtualized and separate from hardware to allow Advanced Telecommunications Computing Architecture (ATCA), Blade Server and private cloud delivery for lower cost and elastic capacity

Wireless IP intelligence that understands the network and responds to change more quickly

Self-optimizing network capabilities that automate complex management of heterogonous networks

Network-wide visibility across wireline and wireless IP elements


3.2lightRadioeconomicsatsitelevelAn extensive TCO study, conducted by Alcatel-Lucent Bell Labs Business Modeling, examined different disruptive RAN architectures and innovative features that can help mobile service providers face todays key operating challenges. The study focused on a high-capacity macro indoor site in a European urban area, in 2013. The findings from this exhaustive analysis show the impact on five-year TCO provided by different components of the new lightRadio architecture, compared to a traditional state-of-the-art converged RAN solution, from both a CAPEX and an OPEX perspective.

The new lightRadio architecture moves away from the traditional architecture, with its static assignment of fixed-purpose and digital processing functionality, to a shelf-based baseband unit (BBU), typically located at each base station. The lightRadio distributes intelligence appropriately between the radio head, on-site processors, and centralized processing over high-bandwidth, low-latency optical networks. This approach provides optimal and flexible configurations for each service providers operating requirements, including backhaul needs, thus minimizing TCO.

Figure 5. TCO benefits per disruptive lightRadio RAN features and design

Expenses/components With controller cloud (*)

Zero footprint RF

With BB in RF (**)MB RRH and WB active

array antennasAdvanced OA&M

and SON

+

+

+ +CAPEX

Equipment

Civil works

E&I&I

ND&O

+++ + ++

++ ++ +++ +

+ ++ ++

OPEX

Transmission

Site rental

Power consumption

Operationsand maintenance

3.2.1 Zero footprint RF

The lightRadio architecture offers zero footprint options, eliminating the need for a temperature enclosure to house a conventional baseband unit. This option saves on heating and cooling costs, as well as site rental costs in some cases. For new or expanding sites, civil works costs to establish a pad and enclosure can be eliminated. This point is critical in some new urban sites, because they have no place for cabinet-mounted gear to be located. Some operators are also considering elimination of on-site battery backup, because secured AC power is now available in some locations or the delivery grid is considered sufficiently reliable. This step can provide additional savings.

The lightRadio architecture offers zero footprint deployment options to meet varied operator needs.

The all-in-one option puts the baseband in the remote radio head (RRH). It also works with restricted bandwidth backhaul.

The centralized baseband option achieves zero footprint and enables easy load balancing and baseband maintenance and augmentation. Although this option requires fiber for transport, it makes the future LTE-Advanced features, CoMP and ICIC, easier to implement.


3.2.2 Multiband remote radio head and wideband active array antenna

The wideband active array antenna (AAA) enables operators to electrically control vertical downtilt, yielding approximately 30 percent gains in usable capacity. Working across multiple frequency bands reduces costs and improves flexibility, and it is inherently multi-technology.

The multiband RRH allows an operator with multiple frequency bands to reduce the number of radio heads on a tower by half or more.

3.2.3 Advanced OA&M and SON

To optimize network management, lightRadio automates manual activities, using advanced OA&M and self-organizing network (SON) capabilities, and provides process simplification and flexibility with the controller cloud, multiband RRH and wideband active array antenna. These capabilities reduce the number of network operations needed to deploy and manage the network, as well as maintain it.

As a result, lightRadio brings TCO efficiencies from 25 percent to 66 percent on key cost components, as shown in Figure 6. These components represent 48 percent of the overall TCO for a high-capacity site in an urban area.

Figure 6. lightRadio benefits on TCO components

Siterental

-66%

-51%

Powerconsumption

-60%

Civilworks

-25%

Operationsand maintenance

Compared with a traditional state-of-the-art converged RAN solution, these disruptive RAN architecture designs and innovative features can reduce overall TCO by at least 20 percent over five years for an existing high-capacity site in an urban area with reductions of at least 28 percent reduction for new sites. (The extent of reduction depends, in part, on site geography.)

3.2.4 Benefits from better compression techniques

As a result of data traffic increases, operators are introducing new 3G carriers, adding LTE with wider bandwidths and using advanced MIMO antennas to improve performance. These increases, combined with centralization of baseband processing, can place a significant load on the backhaul network. To address these demands, Alcatel-Lucent is pioneering Common Public Radio Interface (CPRI) compression techniques that reduce traffic by a factor of nearly three. Research at Bell Labs promises further improvements to come, allowing backhaul costs to be minimized. Exact cost savings from compression will be highly dependent on specific service provider and site requirements.


3.2.5 Alcatel-Lucent commitment to reducing power consumption

Alcatel-Lucent has already begun implementing several energy efficiency options within lightRadio. The energy benefits of lightRadio are based on:

Elimination of temperature-controlled enclosures for the conventional baseband unit

Radio designs tuned to minimize off-peak power consumption

AAA to eliminate RF power losses in cables from RRH to passive antennas

3.3NetworkevolutioneconomicsService providers can choose from a number of options when evolving the network to cope with an increased demand in capacity, and the solutions can be adopted successively or alternatively. These choices depend on service providers unique circumstances, in terms of capacity growth, spectrum availability, time to market and overall competitive situation.

In the following example, Bell Labs used the Wireless Strategy Optimizer (discussed in section 3.4.3) to compare the total cost of ownership for six different evolution scenarios for a Radio Access Network. The network operated in an urban area, served 20 million subscribers and was designed to meet wireless data traffic growing 30-fold over the next five years. The scenarios evaluated included:

1. The base scenario, where traffic growth is managed by deploying more capacity using 2G and 3G technologies, only, and limited spectrum refarming.

2. 3G+ is deployed for capacity enhancement.

3. 3G+ and 3G small cells are both deployed.

4. LTE copes with capacity enhancement without 3G+ deployments.

5. LTE, 3G+ and 3G small cells are simultaneously used to absorb traffic increases.

6. Traffic growth is managed through lightRadio and small cells.

Figure 7. Benchmark on network TCO analysis over five years of evolution

2010 2011

3G, 2G only

3G+

Smallcells

LTE

LTE andsmall cells

lightRadio

2012 2013 2014

0%

-10%

-20%

-30%

-40%

-50%

-60%

-70%

-22%

-27% -27%

-33%

-51%

Figure 7 shows the results for this five-year TCO comparison. For a Radio Access Network that serves 20 million subscribers in an urban area, lightRadio delivers TCO reductions of 51 percent over five years, compared with the 2G- and 3G-only base scenario.


In addition to TCO savings, the Wireless Strategy Optimizer takes into account the subscriber migration and spectrum costs, providing the service provider with a full view of their network evolution costs.

3.4AdditionalsolutionstooptimizedataeconomicsAlcatel Lucent and Bell Labs have developed several additional solutions to help service providers cope with todays data explosion, optimize their network investments and improve their overall economics.

3.4.1 Wireless Network Guardian

The Alcatel-Lucent 9900 Wireless Network Guardian (WNG) provides an unparalleled view of how IP applications, devices and subscribers load wireless networks, helping to determine the users quality of experience (QoE). By collecting field data from the service providers network, the Alcatel-Lucent 9900 WNG gives service providers better ways to characterize subscriber group, device and application behaviors, so they can understand the associated impact on their network utilization, efficiency and performance. This data can be input to the new data traffic forecasting model to enable better capacity planning.

3.4.2 Mobile Data Analysis Model (MDAM)

Bell Labs has developed a methodology for characterizing mobile data traffic. It is based on a detailed subscriber model that captures a users experience with an application including how frequently the subscriber invokes the application, the impact on the session of various application options, and per-subscriber bearer and signaling load characterization. This methodology has been successfully incorporated into the Bell Labs Mobile Data Analysis Model (MDAM), which forecasts bearer and signaling loads resulting from mobile data applications. MDAM maintains an applications database with a variety of traffic profile information for data applications, and it uses the Alcatel-Lucent Wireless Network Guardian as a critical source of current usage pattern data.

3.4.3 Wireless Strategy Optimizer

Bell Labs has developed an advanced methodology and model, called the Wireless Strategy Optimizer (WSO), to help service providers plan their strategies for complex network evolution. These complexities arise when many variables are involved, including multiple technologies and spectrum bands, many types of data-centric devices (such as voice, smartphones and datacards) and multiple planning morphologies, as well as different usage patterns and cell site densities.

These factors produce a complex system with thousands of variables and constraints. But the WSOs holistic modeling can analyze all key parameters simultaneously and compare all possible strategy options and network evolution scenarios. It offers a scientific approach to selecting the best TCO optimized strategy for a service providers circumstances.

4. Conclusion

To address their geographically heterogeneous capacity needs over time, mobile service providers must deploy several technologies, including 2G, 3G and 4G, and several solutions, including macro cells and small cells. This evolution, especially the introduction of LTE and small cells, will improve the economics of capacity growth, bringing down the cost per bit.


In addition, operators need to rely on disruptive architectures and designs that can provide all the necessary flexibility, velocity and agility required for their capacity deployments. For example, an operator that deploys a disruptive lightRadio architecture will successively benefit from the TCO reductions offered by small cells, as well as macro cells. The overall TCO reductions for an existing high-capacity, fiber-fed site in an urban area compared to traditional state-of-the-art converged RAN solution are projected to be at least 20 percent over five years. For a new site, they are at least 28 percent. This savings is over and above any improvements in cost per bit that may be achieved by migration to LTE, introduction of metro-cells and future LTE-Advanced opportunities with the potential for significantly improving spectral efficiency.

In conclusion, mobile service providers have clear challenges ahead, as they adapt to the new wireless ecosystem created by innovative devices, attractive applications and the resulting explosion in usage. The latest wireless RAN innovations and disruptions will allow service providers to benefit from this increased demand, while deploying a lightRadio architecture that is highly optimized and reinforced by powerful digital processing, radio, transmission and antenna innovations.

5. Authors

[email protected]

GuruPatil [email protected]

JonathanSegel [email protected]

NicolasLanglois [email protected]

PatrickLagrange [email protected]

MarkBass [email protected]

www.alcatel-lucent.com Alcatel, Lucent, Alcatel-Lucent and the Alcatel-Lucent logo are trademarks of Alcatel-Lucent. All other trademarks are the property of their respective owners. The information presented is subject to change without notice. Alcatel-Lucent assumes no responsibility for inaccuracies contained herein. Copyright 2011 Alcatel-Lucent. All rights reserved. CPG0591110116 (02)

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