Managing the new mobile data network

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Managing the new

mobile data network

The challenge of deploying mobile

broadband systems for profit

By Caroline Gabriel, Research Director

Rethink Technology Research Ltd

June 2012

CORE NETWORK INTERNET PICO FEMTO RELAY RRH

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About Rethink Technology Research

Rethink Technology Research is a research firm and consultancy specializing in business models and technologies for mobile and wireless service providers. It carries out extensive surveys about the deployment plans, and business strategies, of mobile, fixed/mobile and Wi-Fi operators. It also works closely with the vendor community, regulators, standards bodies and investment companies to monitor the upcoming trends in wireless networks.

Rethink started specializing in advanced mobile technologies in 2002 and has the longest established and most in-depth coverage of 4G-specific technology and issues in the industry. The company publishes news and analysis of mobile broadband issues on a weekly basis in its Wireless Watch product, as well as regular research notes to clients and financial analysts. It also produces quarterly full-scale research reports on LTE, WiMAX and other mobile broadband technologies, mainly driven by operator data. Rethink also engages regularly as a consultant with operators, suppliers, regulators and the financial community, usually advising on next generation wireless business models, and so has a deep insight into the real issues in the market, as opposed to the hype.

As well as collecting knowledge and intelligence through constant contact with the vendor, operator and financial communities, Rethink has a unique database of about 100 operators and service providers worldwide and we collect data from them on a quarterly basis. Most of these are deploying, trialing or evaluating a 4G technology and are surveyed at executive level.

The main areas of carrier research cover capex and opex spending plans, the technologies they plan to invest in, vendor selection, spectrum allocation, chosen business model(s), and as the services go live, ROI factors such as ARPU, uptake, revenue etc.

Other research bases that can be surveyed include key infrastructure and device OEMs; mobile software specialists and web services providers; ODMs; and makers of key components such as processors, screens and modems.

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Executive Summary

There is a growing gap between the amount of spectrum/ network capacity available and the amount required to carry rising levels of mobile data worldwide. Mobile data traffic, dominated by video growth, will increase about 20 times in volume between 2012 and 2017, creating huge traffic and signalling burdens for the wireless networks. Traditional methods of increasing network capacity – upgrading the air interface and adding new base stations and spectrum – will be wholly inadequate to meet these challenges. In many cases, those remedies will deliver less than a third of the required additional capacity. While the introduction of LTE, and the allocation of new licences, are important, most of the capacity increase will come from a radical rethink of the network structure. In particular, this will involve the use of millions of small cells to increase capacity and coverage, and relieve the strain on the macro network. In future, these will evolve into heterogeneous networks, which will combine different layers of cells, supporting a variety of air interfaces and spectrum bands. Over 80% of operators globally believe that small cells will be the first or second most important factor in meeting their capacity objectives between 2012 and 2017. With almost two-thirds of carriers expecting to see at least a tenfold increase in cell site numbers by 2017, they will face unprecedented challenges in terms of planning, performance measurement and management. They must ensure they do not just deliver additional capacity in an untargeted fashion, but in a way that delivers optimal cost:performance and supports key business objectives. The capabilities to plan and manage small cell networks will be enhanced as the standards evolve, but the standards will provide only a subset of the tools operators will require. They will also need to harness a whole range of tools and services.

Operators have identified a range of planning challenges which will affect the performance and business returns of the new network. Many of these fall under the following categories:

• Finding sites in the right position and planning their location relative to each other and other networks

• Backhaul

• Reporting effectively to support intelligent data delivery • Integration with the macro and core networks without

interference

Several interrelated developments need to happen to instill full confidence about massive small cell roll-outs. The most commonly cited are:

• Planning and dimensioning tools specifically geared to small cells

• Mature self organizing and self optimizing network tools • Standards for SON

• Affordable small cell backhaul options • Legal framework for leasing small cell sites

Standards-based solutions will only go some way to addressing the issues and 45% of operators expect to invest in new tools and services which are specifically optimized for small cell networks. The new topology of the RANs will be a catalyst for new techniques, and for a shift in how networks are planned and measured, with a focus on methods that deliver high degrees of local accuracy, such as RNC data feeds. Of course, another key factor is that operators need to increase their RAN and backhaul capacity massively – by more than 50 times according to almost one-quarter of cellcos – but with capex and opex budgets that are under intense pressure. The typical operator will have only a 5-10% increase in its backhaul capex budget, and up to 20% in the RAN, while opex constraints will be even tighter. These factors will make it essential to the business case that the new networks can be managed flexibly and efficiently, to deliver the greatest possible capacity where it is needed, and with a high level of automation.

The first wave of large scale small cell deployments is starting in 2012, with a few HetNet and LTE-Advanced roll-outs scheduled for late 2013, so the pressure is mounting to reassure operators that they will have the tools in place to ensure that their new networks deliver capacity at low cost, but

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Method

A global sample of over 65 mobile and converged operators, all in tier one or two, were surveyed during April and May 2012, by email questionnaire followed up by telephone interview.

In regional terms, they were located in: • EU: 32%

• APAC: 33%

• Middle East/Africa: 12% • CALA: 12%

• North America: 11%

The report also draws on broader carrier surveys conducted by Rethink Technology Research during the first quarter of 2012, regarding intentions in small cells, LTE roll-out, carrier Wi-Fi and mobile broadband business models.

The primary research was supplemented by Rethink’s wealth of mobile industry intelligence and interviews with relevant vendors, regulators, standards bodies and other parties. The survey was commissioned by Amdocs Inc.

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Chapter 1:

The new face of the mobile network

There is a growing gap between the amount of spectrum/network capacity available and the amount required to carry rising levels of mobile data worldwide. According to the widely accepted benchmark for these patterns, Cisco’s Visual Networking Index (VNI), global mobile data traffic will reach 10.8 exabytes (10.8 billion gigabytes) a month (130 exabytes a year), an 18-fold rise between 2011 and 2016. By 2016, mobile video will account for 71% of this total and 4G connections for 36%. At that point, 22% of global mobile traffic will be offloaded to fixed networks.

The explosion in the use of mobile networks for internet and media purposes does not just create a data burden for which traditional wireless technologies, based on GSM and CDMA, were not designed. It also imposes a second burden on the carrier network, that of the signalling storm. Applications which require constant updating, such as social networking, poll the base station on a continual basis, massively increasing the load on the network (a Facebook iOS app may poll 65 times an hour).

Addressing the network issue

As mobile data first became a factor in the early days of GPRS and 3G, addressing the relatively slow increase in the burden was possible using the approaches inherent in the networks and the standards. Upgrading the air interface, adopting packet-based processes and adding the occasional new cell site were sufficient, and kept the ratio of network investment:data capacity predictable. In addition, in the early years of the century data could still be charged at a premium rate, justifying the investments in 3G (at least where carriers did not overpay for spectrum). Even later in the decade, conventional improvements were still sufficient to meet the rising demand for data, even if the returns were being squeezed by price competition and the embrace of all-you-can-eat plans. But various innovations – notably the processor-intensive, touchscreen, full-browser smartphone – created a far more dramatic rise in mobile data and web usage, which has now far outrun the ability of traditional methods to handle on their own. By 2010, mobile data traffic was three times as large as the traffic on the entire internet in 2000, at the dawn of the 3G era.

No one solution will be enough, so a complex combination of techniques will be required to enable carrier networks to deliver a good and predictable user experience despite rising traffic and signalling loads. These will involve multiple air interfaces, frequency bands, network topologies and data analysis tools, and most importantly, powerful management intelligence to ensure all those elements work together seamlessly, rather than creating chaos. (Operators will also need to change their approach to data charging, in order to justify their investments in all these technologies, though that issue is beyond the scope of this report). This report looks ahead to the mobile broadband network of 2017, through the eyes of the operators which are preparing their strategies for the data storm. It is clear that entirely new approaches to network planning and management will be required, and that the tools to support the new-look systems will be as important as the hardware and spectrum elements in delivering the desired results in terms of capacity, efficiency and quality of service.

Fig 1. Growth in data traffic on mobile networks from 2011

to 2016 Source: Cisco VNI February 2012.

exabytes per month

2011 0 2 4 6 8 78% CAGR 2011-2016 10 12 2012 2013 2014 2015 2016

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Chapter 2:

Key ways to handle the data storm

Traditionally, operators would add capacity and speed to their networks by upgrading the air interface, and adding new spectrum and/or macrocell sites. Network planning to ensure greatest coverage and efficiency was complex but one-off, since RANs were not dynamic. Back end tools to analyze and prioritize different types of traffic or subscriber were in their infancy.

But in the mobile broadband era, a far wider range of techniques is necessary. While hardware and spectrum updates remain important, there will be a far greater emphasis on intelligence throughout the network to maximize capacity, efficiency and quality of service. This intelligence will be necessary to manage networks which are increasingly complex in terms of:

• Range of air interfaces and spectrum bands supported within one system

• Number and variety of cell sites

• Number and variety of backhaul connections • Wide range of types of data traffic being handled

• Constantly varying levels of activity according to application, location and time of day

• Varying levels of quality of service according to application or subscription type

As traditional voice and messaging revenue streams decline, operators need a new profit model for data. A flexible, multi-technology network which can be managed in real time will be necessary to boost capacity while keeping costs down, and to support a wide range of new charging plans and applications, in order to retain customers, and to introduce new revenue streams like machine-to-machine.

Three stages in meeting the data challenge

Operators divide their strategies for handling the data storm into three ‘waves’, all of which will evolve in the period between 2012 and 2017, covered by this report. In the early days of mobile data, the wave one techniques would have been sufficient. With each successive wave, a new layer of complexity is added to the network planning and management challenge.

Wave 1:

Traditional techniques have greater

limitations than before

• Upgrade air interface. The relatively short upgrade cycles, and the need to use every piece of spectrum available for mobile broadband, means most carriers will support far more air interfaces in parallel, creating multimode challenges for management systems.

• Add new spectrum. Most countries are auctioning new spectrum for LTE and, in some cases, 3G expansion during the period. But in contrast to early 3G, the new spectrum will, in most cases, quickly be exhausted by the demands of mobile data. Therefore there is a race to harness any spectrum available, refarming 2G bands and integrating licence-exempt options like carrier Wi-Fi. That entails a complex multiband system to manage and plan, especially as carriers move from supporting each frequency separately, to aggregating different frequencies to create a single ‘pool’ of spectrum capacity.

• Add new sectors. 3G networks will be enhanced with addition of new cell sites or base station sectors to the macro layer; and by adding carriers. However, at the macro level, there are diminishing returns on investment in new cells or carriers as new capacity is poorly mapped to hotspots of demand and interference issues arise. • Move to all-IP. IP gives operators the opportunity to

deploy flatter networks with fewer elements although management systems must handle hybrid circuit/packet networks for many years to come, with implications for efficiency and roaming, and for elements like voice.

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New spectrum and more efficient air interfaces are limited in their effect, important as they are. They have a ‘one-hit’ effect on the operator’s ability to manage data loads and gains are diminishing with each update. Aggregated downlink capacity was typically quadrupled when moving from Release 99 UMTS to Release 5 HSDPA, but in moving from Release 6 HSPA to Release 7 HSPA+, the improvement is only 10% to 20% if there are no other changes to the network. Merely moving to LTE and LTE-Advanced, with no other changes to the network topology, will only fill one-seventh of the data gap looming for mobile operators in Europe, according to EU estimates. And once the benefits of new spectrum and new network technologies are fully realized, data traffic will continue to grow.

Fig 2. Air interface upgrades will only boost mobile data

capacity fourfold by 2015, while requirements will rise by 28 times in Europe.

For the above reason, the second and third waves of new techniques are seen as critical to meeting data challenges and gaining return on investment on LTE migrations.

Wave 2:

New techniques already in use

Topology: The shape of the network is already changing to deliver greater total capacity, with greater potential for this to be distributed where most needed. Key changes are remote radio heads and smaller cells, though the single-sector integrated metrocells are still over the horizon.

Offload: One of the important elements of modern mobile data network strategies is to offload certain types of data from the main cellular network. This may be to Wi-Fi hotspots, a user’s own residential femtocell, or the internet.

Spectral efficiency: Carriers look to enhance the spectral efficiency and data rate of LTE or HSPA, beyond the levels supported by the base standards, with network techniques like active antennas (AAS).

Data traffic LTE (+)

LTE (+) x4 Data Gap x28 Increase x32

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Wave 3:

Emerging techniques

Metrocells: The next step for many carriers will be to increase capacity by deploying dense meshes of small cells to bring signals closer to the user and to match capacity more accurately to areas of demand. These metrocells are typically single-sector units based on a single system-on-chip, sometimes with backhaul and/or Wi-Fi integrated in the same product. They are mounted on street furniture or low buildings and are heavily self-organizing. Where an operator has several frequency bands, these may form a separate layer of capacity, in a different frequency from the macro network and closer to the ground.

Fully integrated Wi-Fi: To maintain visibility of users even when they move off the cellular network, and to tap into a larger total pool of capacity, operators will integrate Wi-Fi closely into their 3G/4G systems, using emerging hand-off and automatic authentication standards. The two networks will appear as a single one to users, and can be managed as such by operators.

HetNet: The logical extension of small cells and carrier Wi-Fi is to converge Wi-Fi, 3G and LTE networks to form ‘heterogeneous networks’ (HetNets) of thousands of small cells. These may combine Wi-Fi and cellular in one unit, or instal a mixture of Wi-Fi access points and small 3G/4G base stations within one macrocell. In either case, a flexible pool of capacity is created in different spectrum bands, all managed and balanced as a single entity by the operator’s central systems.

As Figure 3 reveals, there is no such thing as a silver bullet, according to carriers exploring their mobile broadband network strategies. In a recent survey of over 50 3G/4G cellcos, the HetNet was given the heaviest weighting in terms of contribution to beating the capacity crunch. HetNet could deliver an additional 18%, according to carriers, on top of 16% from small cell metrozones and 12% from offload. However, most operators will have to wait until mid-decade or later to achieve that.

These techniques are given high priority because they squeeze more capacity out of existing resources, and in the case of Wi-Fi, unlicensed (free) spectrum. Better traffic management tools are not only essential to deliver the potential of all these techniques, but can contribute 11% of the increased data requirement in their own right – and do not present new challenges for the network itself, unlike most other approaches, each of which comes with a trade-off.

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Only the combination of all three waves will deliver the capacity operators require, yet at the point where techniques from all three are deployed, the network will be unrecognizable from that of 3G. Only if the approaches to network planning and traffic management match the innovations in the network itself will the full benefits be achieved. That means introducing intelligence throughout the network, and at each stage of its deployment and operation.

This intelligence will be seen in several key ways:

• Sophisticated traffic analysis at both core and edge, to prioritize certain packets and offload others, to achieve the optimal performance

• Dynamic allocation of network resources between cell sites to support an on-demand approach

• Constant replanning of the network using automated techniques like SON

To summarize, there are many techniques to improve a network’s capacity, efficiency and quality, and most operators will use a combination of many of them. But each one also brings new challenges to the planning and management of the network and will require new tools, expertise and standards in these areas, to gain the full benefits.

Network technique

% contribution to capacity

_{challenge 2012-2017}

New network challenges

Air interface upgrade 14 Multimode systems

New spectrum 12 Multiband devices, aggregation, _roaming

IP flat network and backhaul 10 IP/circuit systems, IMS costs, voice _dilemmas

Small cells 16 Cell sites, organization, interference

Offload 12 Quality of experience, additional _{network to manage}

Full HetNet 18 Cell sites, organization, complexity

Spectral efficiency methods eg AAS 7 New planning tools and skills, _interference

Traffic management tools 11

Fig 3. Consensus view among carriers, of which network change will have most impact, and the new challenges it will involve for

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Chapter 3:

The new network topology

The report will now drill down in more detail into some key aspects of the new mobile data network, as outlined in the preceding section.

3.1 Multimode, multiband networks

One of the most obvious is the rising number of air interfaces which will be supported by one carrier, with hand-off required between each one. Some carriers could, at one point, have two flavours of HSPA(+) in one or two bands; LTE plus LTE-Advanced in one, two or even three bands; surviving 2G; plus Wi-Fi. The impact is most obvious in devices. Flagwavers for multiband, multimode networks, such as Australia’s Telstra, are outlining devices with eight or more bands included, and Verizon Wireless says 12 cellular band/mode variations may be required in future products. Users will be moving in and out of different bands and networks more frequently than ever before, taking into consideration Wi-Fi offload; 2G or 3G fallback; domestic and international roaming; and shifting to indoor or outdoor small cells, possibly in their own band. The situation can be further complicated by the introduction of TDD-LTE networks too. These will mainly be seen in markets like China and India, but some carriers are also considering the use of TDD for a separate layer of cells within the HetNet in future. All these variations and movements will have their impact on how networks are planned and managed, and the way in which carriers can track their subscribers.

Fig 4. Percentage of carriers in active deployments or commercial

trials of each mobile broadband standard. All carriers have 3G networks at the start of the period and are actively evaluating 4G, at least.

As Figure 4 shows, by the end of 2014, over 80% of carriers will have a commercial or trial LTE network, However, HSPA+ will still support four times more mobile broadband subscribers worldwide because of its broader coverage. By 2017, half of carriers will be trialing or operating LTE-Advanced, with half of those providing full commercial services in at least some regions. That figure rises from one in five at the start of 2015.

However, even in 2017, almost 80% of operators will be running complex multiband, 3G/4G networks, usually with Wi-Fi offload too. They will be facing three significant management challenges in parallel, each with different demands on their back end systems – adjusting to the very different topologies, notably HetNet, for which LTE-A will act as a catalyst; integrating Wi-Fi; and squeezing the maximum out of soon-to-be-legacy systems. 2013 21.2 10.6 4.5 74.2 47 71.2 0 0 20 40 60 80 100 21.2 50 % of carriers 2015 2017 81.8 _78.8 89.4

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3.2 Key drivers of capacity and profit

As chapter 1 described, the most important technique for boosting affordable capacity, in the operators’ view, will be deployment of more small cells, whichever combination of air interfaces they support. In 2012-2013, operators are trialing and even, in a few cases (mainly in south east Asia) deploying small cells for public access (as opposed to private residential or enterprise femtocells, which are not included in the following findings). While those private, indoor devices have been mainly geared to enhancing coverage and indoor signal strength, the public cells, whether indoors or outdoors, are mainly to add extra capacity in hotspots of mobile data usage, at fairly low cost.

These first small cells are typically single-mode – 3G or Wi-Fi to start with. From 2013, there will be rising availability of, and trust in, multimode small cells, which can reduce cost and allow for integration and migration between 3G and 4G without swapping out the small cells. Increasingly, Wi-Fi will also be integrated in many units as a standard feature. In its simplest form, a multimode cell just combines multiple radios and offers standard interfaces to the carrier network. But to use multimode products efficiently, new management capabilities will be introduced including enhanced scheduling, interference and power control, SON and intelligent mobility management, all taking the different available air interfaces into account for optimal performance. Further out, cognitive radio technologies may add to the cell’s flexibility and responsiveness, but for now, most of these smarts are achieved in software.

The LTE-Advanced upgrade, which carriers will start to deploy from late next year, will be a significant catalyst for small cell networks and for the move to true HetNet, since it incorporates more of the enabling functionality, such as SON, in the standards. With LTE-A, deployment of small, heterogeneous and self-organizing cells, often in different layers of spectrum, will be more standardized. Indeed, not only will LTE-A drive uptake of small cells, but the promise of HetNet will be the most important motivation for carriers to make an early move to the new standard. In developed and urban markets, these factors will prompt a more rapid upgrade cycle than was seen in any previous mobile generation.

Figure 5 shows how the three main mobile broadband upgrades taking place during the study period each delivers capacity and performance improvements in different ways. In HSPA(+), the operators surveyed expect a broad range of improvements, with carrier Wi-Fi marginally the most important, because it is the most immediately achievable change, at least in its simpler form. However, the other main capacity drivers are also delivered to some extent by 3G+. Some operators, as we have seen, will deploy 3G-only small cells to gain an early stage capacity boost, while the spectral efficiency gains of HSPA+ are rated at the same level of impact as those of LTE – though in LTE-Advanced, with its standardized techniques in areas like CoMP (coordinated multipoint), spectral efficiency is expected to be a far more significant factor.

For LTE, the availability of new spectrum is by far the most important boost to carrier networks. Although some carriers will gain or refarm spectrum for HSPA and LTE-A, it is for LTE that almost all countries are allocating new frequencies during the current decade. For LTE-A, there will be less virgin spectrum becoming available, hence the shift in focus to making better use of the frequencies carriers have, with efficiency techniques and, most importantly, the rising use of small cells and HetNet. Over 80% of respondents placed small cells in first or second place in terms of LTE-Advanced’s impact on their networks.

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Fig 5. Impact on network capacity of four key mobile broadband trends. Carriers were asked to rate the four factors in order of expected impact on capacity, within each air interface. The graph shows the number of carriers rating each item in first or second place (sample of 66).

Regionally, although North America has been a leader in indoor femtocells, its operators are generally more cautious than their peers about extensive use of small cells and HetNet. However, it must be remembered that North America is dominated by a very small number of tier one carriers, several of which have a commitment to small cells and will have a disproportionate influence on the national market.

In 3G, Europe, along with the far smaller Middle East/ Africa sample, leads the way in rating small cells as a key capacity booster. 60% see small cells as an important tool to enhance 3G+, and 90% in LTE-Advanced, though with just half giving small cells top billing in first stage LTE, there are signs that major HetNet roll-outs in the region will wait for the LTE-A stage. This is an even more marked pattern in Latin America, while Asia leads the way in commitment to LTE small cells, dominated by the advanced approaches of carriers in south east Asia.

3.3 Business objectives

These carrier projections about which network changes will most impact their total data capacity are vital to their business models, which increasingly rely on being able to deliver vastly increased volumes of data and content, at

• Reduce cost of delivery by 35%

• Boost average data rates by 200% or more • Reduce power consumption by 85%

These top line objectives relate to their overall KPIs (key performance indicators), which are also changing, along with the business model, as data becomes the heart of the business. As Figure 6 shows, many carriers still judge themselves by the conventional measures of cost per Mbps, or data rate, which remain the single most important KPI for 14% and 12% respectively.

These are conventionally network focused measures, but increasingly operators are looking to metrics more familiar to data center providers –overall data capacity and the cost of that within operator planning. 56% place capacity in their top three KPIs, with 18% - the highest number – rating it number one. Cost per bit is a top three concern for one-third of respondents though this is closely followed by a key indicator of competitive edge, quality of service.

Another increasingly prominent KPI, revenue per site, reflects the rising need to target cell sites, especially as these multiply in number, to locations which drive traffic and income. This is a top three KPI for 32% of cellcos.

Fig 6. Carriers’ top three KPIs for mobile broadband services.

no of carriers rating 1 or 2 Small cells 55 60 50 40 30 20 10 0 31 27 34 19 16 28 53 23 29 29 38 Carrier

WiFi spectrumNew efficiencySpectral

HSPA+ LTE LTE-A

0

no of carriers

Cost per MbpsCost per bit QoS

Data capacity Data rate

Revenue per site

Coverage Energy 10 23 22 ₂₀ 37 12 8 19 21 39 10 11 11 0 9 ₆ 8 20 30 40

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3.4 Small cells

If carriers perceive small cells to be so important to their business models going forward, the number of base stations within their networks will clearly go up sharply over the period – as, potentially, will their management complexities.

Fig 7. Increase in numbers of cells expected by 2017, divided between macro/microcells (over 200m range), and pico/ metrocells (under 200m).

In terms of cell numbers, Figure 7 indicates the huge growth in network capacity and coverage which is expected across all kinds of base stations. Predictably, the rise is sharper in small cells, which here include all those of 200m range and below, regardless of whether they use a traditional picocell architecture or the emerging integrated SoC designs (metrocells).

Almost 60% of carriers expect to have 10 times more small cells in their networks by 2017 than they have in 2012, while one-third expect to have quadrupled the numbers in the same period.

Operators are still expanding the number of macrocells throughout the period, especially in emerging economies, but in the second half of the decade, the build-out of additional macrocells will decline sharply.

Among more conventional base station form factors, operators have been shrinking cells since the early days of 3G, but not generally to current ‘small cell’ dimensions. Instead they have been using microcells – typically using a standard base station architecture, but with a range of 250 meters to 1.5 kilometers and at lower power than a macrocell. Between 2012 and 2017, 18% of operators expect to have a static number of macro/microcells (though many will be upgraded or modernized), while most anticipate that they will double or quadruple their numbers (just over one-third apiece). Just 15% expect to have 10 times more macro/microcells by 2017, most in countries like India where 3G is only just being built out at all.

As Figure 8 highlights, in the new network topologies there will be a sharp move away from microcells towards far smaller, cheaper and lower power small cells. Ironically, the small cell trend will therefore have less impact on macrocell expansion than on microcells, since most carriers will still require a macro ‘umbrella’ for broad coverage, often in a separate frequency band. Microcells, however, will fall uncomfortably between two stools in terms of power/price/ performance ratio.

Fig 8. Composition of networks by 2017. How carriers

expect their total cell sites to be split between macrocells, conventional microcells and small cells.

% of carriers Same x2 x4 x10 0 10 20 30 40 50 60 70 18.2 0 9.1 34.8 31.8 34 59.1 15.2 Macro Small 0 % of carriers <21% 21-31% 31-50% >50% 20 24.2 31.8 21.2 30.3 53 16.7 30.3 40.9 15.2 21.2 0 40 60

Macro Micro Small cell

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By 2017, no carrier expects to have a data network in which microcells will make up half the base stations or more. By contrast, 15% will still have networks which are at least 50% composed of macrocells, but that figure will have been overtaken by systems with at least 50% small cells. This will be the case at one in five cellcos. There are still, however, many operators which are cautious about widespread small cell roll-outs, and these will still be offsetting the enthusiasts of south east Asia even in 2017. The most common topology by that date will have about between 30% and 50% small cells, 20% to 30% microcells, and 20% to 50% macrocells. Most operators acknowledge that these projections may alter if they engage in small cell RAN sharing, a hot topic of debate. Another important cell site issue is the integration of Wi-Fi into the base station. As well as moving rapidly towards networks which have a large component of small 3G/4G cells, operators are also deploying carrier Wi-Fi, either as separate access points or integrated into cellular base stations, often as part of a HetNet. By 2017, only 12% expect to have no Wi-Fi integrated into their cellular networks, as seen in Figure 12, while 29% will have it incorporated in up to one-fifth of base stations, mainly small cells. About 40% think they will have Wi-Fi integrated between 20% and 50% of cells by 2017, and 18% are even eyeing WLan support in half their locations.

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Chapter 4:

The planning challenges of the

new network

The mobile data network will look very different in 2017 from its current form, and this will not only entail new structures and equipment types, but a concomitant rethink of how the network is planned and managed. Operators have identified a range of planning challenges which will affect the performance and business returns of the new network. While some of these will be addressed to some extent by extensions to the standards, especially in LTE-Advanced, standards-based methods will address only part of the issue and additional tools will be required to gain optimal benefit from the small cell roll-outs.

The report will examine the most pressing specific issues facing operators planning small cell networks and HetNets. But to indicate the complexity of the task, this wider list indicates the top 10 decisions that carriers cite when planning a new network. All of these will add to the complexity of the task, but are critical to an effective deployment.

• Deployment timescales – should carriers wait until the macro layer is saturated before moving ahead with small cells? The most common approach is to roll out small cells as a second wave, though some cellcos, mainly in Asia, are adopting a parallel or even metrozone-led strategy. • Interference and how to stop thousands of small cells

and gateways from degrading network performance or subjecting the macrocells to signalling storms. A key decision is whether the macrocells and small cells should share the same spectrum carriers. This is conventional thinking but there is rising interest in dedicated small cell layers, to maximize offload potential.

• Integration of small cells with the macro network and the core, in particular in a way that protects the RNC from interference and overload. The initial approach has usually been to link all small cells to the RNC, but operators are now moving towards a separate layer which protects the RNC, and uses femtocell-style connections (Iuh).

• Source from multiple vendors and assemble a best of breed solution, or rely on a single vendor or integrator? Many operators are internally divided on this. Financial and strategic departments are enticed by the vision of mixing and matching cells, backhaul units and other elements from different suppliers, with software doing most of the interoperability work. But many planning departments want a single point of contact and shared risk, and point to increasing interoperability testing challenges at the LTE-Advanced stage.

• Whether to share small cell sites with other carriers. In some cases this may be mandated by the local authority to limit the overall number of cells being deployed but some operators believe small cells are a competitive tool to deliver specific localized services and QoS.

• Site acquisition is a major challenge (see Figure 9), involving local authority rules, legal and leasing frameworks, environmental considerations as well as cost and logistics. The most pressing challenge, according to operators, is not sourcing sites in sufficient volume, but in the optimal locations to avoid macrocell interference while offloading the largest amount of traffic.

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• Backhaul is the largest opex item in a small cell network but it is increasingly clear that one solution will not fit all needs. Not only do carriers need to strike the right cost/ performance balance with a mixture of wireless, fiber, copper, cable or even satellite, but they must consider new topologies like rings and meshes.

• The physical logistics of installing and provisioning thousands of units at affordable cost, and complying with local regulations.

• Green and regulatory considerations regarding power levels, base station proximity to users, and antenna positioning. Limitations will vary according to local rules and operators’ own green policies, increasing planning complexity.

• Planning a network which will be adaptable to future needs, particularly those of emerging services that behave differently from traditional voice/data. In particular, these include many M2M applications. There is also a key decision on whether the small cell network should support voice as well as data, given the additional demands to ensure low latency and QoS.

4.1 The critical issues

We will now examine the most pressing issues for planning and management in greater detail. These can be summarized as:

• Finding sites in the right position and planning their location relative to each other and other networks

• Backhaul

• Reporting effectively to support intelligent data delivery • Integration with the core network

The carriers were asked to identify their top three challenges in terms of planning small cell or heterogeneous networks. As Figure 13 shows, the five factors which are most commonly cited in the number one position all relate to cell sites, except one (integration with the core network). Securing sites in the best locations is rated as the most urgent challenge by 24% of respondents, followed by core integration (21%), the cost of acquiring small cell sites

In terms of top three factors, where cost is mentioned, it is always the number one priority. Other issues, notably the challenges of reporting effectively on the performance of each cell, figure highly as second or third most important challenges, after the urgent demands of securing the best sites. After core integration, which has a top three position with 60% of carriers, reporting on complex networks is close behind, rated as a top three challenge by 59%. These are followed in the top three ratings by site positioning (47%) and backhaul (45%).

Fig 9. Carrier ratings of the top planning challenges associated with small cells, in terms of impact on the business targets.

Several interrelated developments need to happen to instill full confidence about massive small cell roll-outs. The most commonly cited are:

• Planning and dimensioning tools specifically geared to small cells

• Mature self organizing and self optimizing network tools • Effective interoperability mechanisms for multivendor

cells and SON

• Affordable small cell backhaul options • Legal framework for leasing small cell sites

0 10

no of carriers

Cell sitesCost sitesPositioning Backhaul_InterferenceReporting

Core integrationWiFi integration Green 20

30 40

(18)

4.2 Standards-based enhancements

Standards are seen as an essential starting point and most carriers believe these elements in LTE-Advanced will find their way into effective commercial systems. However, the other elements will be required as well, in order to deliver the full benefits. Operators are eager to see the evolving response of equipment and network management/planning vendors to these challenges. The caution about relying too heavily on standards is particularly seen in the attitudes to SON (self-organizing or self-optimizing networks). The vision of fully automated networks which can be run in an almost entirely hands-off manner - constantly reconfiguring themselves to avoid interference and boost capacity where it is needed – is understandably a seductive one for cellcos. Many elements of SON will be standardized at the LTE-Advanced stage, and so will become easier and cheaper to implement, with important effects in encouraging trials and uptake, and in supporting interoperability and roaming. However, most operators believe these standards will support a fully automated network, but not one which is fully optimized to deliver maximum targeted capacity and the full potential benefits. Once networks grow to thousands of cells and more, additional capabilities will be needed to fine-tune planning and measurement, and to tailor the network’s structure precisely to the operator’s own priorities.

As Figure 10 makes clear, SON alone will not deliver all the capacity and efficiency increases operators want from their new networks. Precise positioning of cells, greater intelligence in dynamic traffic management, and new antenna technologies are among the other important factors cited by cellcos. Only one in five operators expects SON alone to deliver a 20% or greater capacity improvement, while 30% are looking for only 5% or less from this method. They acknowledge the importance of the technology to reduce operating costs and make dense small cell networks viable in the first place, but believe that gaining maximum capacity benefits will return on a far wider combination of innovations and tools.

Fig 10. Expected capacity improvements derived from SON

by 2017.

With standards only delivering part of the picture, Figure 11 shows that 44% believe they will need to invest in new tools and systems specifically optimized for small cell planning, management and reporting. This is especially true as elements of the network which were previously relatively simple, notably backhaul, acquire new topologies and intelligence too, all of which will need to be planned, optimized and monitored against performance targets.

Fig 11. Intentions to plan, manage and report on future

small cell and heterogeneous networks.

<5% 10% 15% >20%

Invest in specific tools

Rely on standards alone Undecided

Rely on existing tools 23% 44% 13% 21.9% 31.3% 18.8% 28.1% 20%

(19)

The majority of operators believe the network equipment vendors are making efforts to extend their planning and measurement tools to support smaller cells, but this process is at an early stage, and about three-quarters believe more granular specialized tools will be needed, probably from specialist providers, to complement what equipment suppliers offer.

4.3 Cell locations

The single most decisive issue in ensuring that a small cell network delivers optimal benefits is the location of the cell sites. A recent study by Orange indicated that, in that operator’s tests, the optimal distance from the macrocell is about 200 meters, with a small cell radius of about 30 meters. That can support 100% capacity gain for the macrocell, as well as improved quality of experience, while distances of under 50 meters add little capacity but plenty of interference. Other issues include the small cell’s proximity to its neighbours and to cells run by other operators; and mapping the cell’s position as accurately as possible to peak areas of data usage. The situation may be further complicated when several operators have cells in the same neighbourhood, with resulting interference risks. These issues may drive a trend for several carriers to share a small cell network. While several carriers have expressed interest in such a scheme, there are very few concrete examples, and most relate to indoor locations such as airports, which commonly run a single network for all cellcos. And conversely, some carriers believe they would use their own small cell layer to deliver differentiated and localized applications to their users, even while they share a common macro network (a concept discussed by the cablecos in the US).

All these interrelated considerations will create major planning challenges. Operators believe they will need to look far beyond the most common conventional approach, drive testing, which will lack the scale or pinpoint accuracy that small cell metrozone planning and performance reporting will require. More detailed performance measurement strategies, involving a range of tools and techniques, will be employed. As Figure 12 indicates, most of the carriers interviewed expect to use a combination of theoretical modelling from RF planning tools and real world data. An important emerging source of the latter will be RNC trace data, the stream of data reported by each active mobile device to the base station, which can be accurate to 50 meters or less, and indoors.

Fig 12. Most important methods of identifying optimal cell

site locations as rated by carriers.

31.3% 14.1%

32.8%

21.9%

RNC

Call records RF tools

(20)

Chapter 5:

Capacity at lower cost

Operators’ investments in radically new network topologies, evolving towards the full HetNet, are designed to deliver major improvements in capacity, efficiency, data rate and quality of experience, as the previous sections have outlined. However, those vital enhancements will only support the mobile broadband business case if they are achieved at significantly lower cost than previous major upgrades have entailed. Carriers are investing heavily in upgrading to HSPA+ and LTE, but almost all cite cost efficiency as a significant motivation for updating their systems. They expect to lower their total cost of ownership (TCO) and operating costs by running the more efficient, flatter networks that the new standards support. Other important factors will be lower cost, commoditized base stations, and the potential to offload traffic. Such trends will push down the cost of data delivery on a Mb or per-Mbps basis, but carriers are still facing the massive increase in volumes of that data. The additional capacity required will outrun the new cost efficiencies, so that overall costs will still continue to rise.

There are four key ways to address this challenge with the new-look networks:

• Lower spectrum costs than in 3G, including use of unlicensed bands.

• Lower cost equipment and cell site costs. However, the numbers of cells envisaged in dense HetNets will sometimes outweigh the reduced upfront cost per unit. Therefore the last two items are regarded as more significant.

• Lower network operating costs. Small cells contribute to this in many respects, such as lower power and self-healing. In network terms, lower opex can be delivered by automation. However, as we have seen, this has its limitations in terms of business returns, so the priority will be to choose management tools which balance a high level of automation with strong support for the business case. • Lower cost of delivery. Key to this are intelligent traffic

management and network monitoring tools, to maximize capacity and harness it in the most efficient and targeted way.

With such pressure on budgets, operators will require skilful management software to squeeze more capacity out of every base station and MHz, and deliver huge increases within constrained cost structures.

Fig 13. Carrier expectations of capacity increase

requirements by 2017, in radio and backhaul.

Figure 13 shows the significant increases in capacity which operators expect to deploy in order to meet mobile broadband challenges. So, only 6% of operators expect to increase their total radio link capacity by four times or less between 2012 and 2017, while almost one-quarter believe it will rise by 50 times. Many of these are in economies which have limited capacity in 2012 but which will see exploding data demand combined with significant new spectrum – as in India. About 70% are planning for an increase of 20-35 times.

On the backhaul front, the projections are even more dramatic, with only a small number of operators (3%) anticipating a boost of tenfold % or less. Almost three-quarters see backhaul capacity rising by 30 times or more, with 27% envisaging a 50 fold expansion.

0 6.1 x10 x20 x30 >x50 30.3 24.2 39.4 45.5 27.3 24.2 3 10 20 30 % of carriers 40 50 Radio Backhaul

(21)

Intelligently planned and managed small cell networks, as outlined in the preceding chapters, will be key to delivering the targeted capacity expansion at affordable cost, but those cost targets remain daunting, especially on the backhaul side. It will be critical that the costs of ownership and management are minimized through skilful and targeted planning and measurement. In particular, such tools enable operators to: • Match capacity to data demand on a dynamic basis,

ensuring quality of service without over-provisioning all cells • Position cells according to the areas where there is greatest

revenue potential, not just traffic

• Reduce manual planning and adjusting even in complex networks

• Use small cells’ location awareness to support added value services such as targeted promotions

• Use granular performance monitoring to gain accurate views of quality of service in each cell, enabling different QoS levels to be offered, with revenue potential

Fig 14. Comparison of capex and opex targets, for cell sites

and backhaul.

Cost efficiency techniques will be important on the radio side, and even more so in the backhaul. As capacity expansion shifts towards the backhaul, it would be logical for the balance of spending to do so too. There has been more sustained investment in RAN capacity but backhaul has often lagged behind the data boom. However, while acknowledging that logic, most operators remain even more constrained in backhaul budgets than on the cell site front. This means most expect to have to achieve the backhaul capacity increases at lower cost per Mb/Mbps than the associated RAN capacity increases. And as Figure 14 indicates, opex is under even greater pressure than capex, hence the intense interest in tools to reduce the manual overhead of running networks, or to allocate capacity more efficiently.

While most carriers are budgeting for increased capex over the period of the study, to account for network upgrades, a substantial number are looking for an actual reduction in opex bills by using more modern technologies. 18% believe this is achievable in the RAN and 24% in backhaul. Most commonly, operators are looking to increase their annual cell site capex by 10-20% during the period, and their backhaul capex by 5-10%. Almost half of respondents have set that target for cell sites, and 39% for backhaul. Almost one-quarter of carriers will boost their site capex spend by more than 20%, but only 21% in backhaul.

In opex, the contrasts are more stark. While 30% of carriers aim to keep their site opex stable and 18% to reduce it, in backhaul the same figures are 44% and 24%. Only 3% expect to spend more than 20% a year extra on backhaul opex, half the number on the RAN side.

Decrease % of carriers 60 50 40 30 20 10 0

Site capex Site opex Backhaul capex Backhaul opex

(22)

5.1 Backhaul challenges

This continuing squeeze on backhaul budgets compounds operators’ challenges, in an area which they already see as one of the top four risks to successful small cell or HetNet strategies.

The biggest factor constraining backhaul for the new networks is the logistics of planning and provisioning for small cells, with 49% identifying that as their most important challenge (Figure 15). That means that the new planning and monitoring tools which carriers say they need must apply as much intelligence and granular analysis to the backhaul links as the access, viewing the whole HetNet in a holistic and dynamic way.

Fig 15. The most important limitations on backhaul expansion. After small cell logistics, the other important challenges in backhaul were noted to be overall cost (nominated by 26%), and the shortage and/or cost of fiber (25%). The need for fiber is a divisive issue however, and there are radically different viewpoints among carriers. At one extreme are operators like China Mobile, which has significant fiber reserves to draw upon, and is a proponent of Cloud-RAN. In this, base stations’ processing is virtualized on huge cloud servers, and most supporters believe the loads involved will require almost all the links to be fiber based.

At the other extreme are operators which believe wireless – or even, in some cases, commodity options like DSL – will be almost entirely adequate to backhaul small cell networks, because of the lower capacity required per site. New backhaul techniques are helping the case – for instance, relay standards; flexible topologies; point-to-multipoint or non-line of sight systems; new spectrum options. However, many of these are immature at this stage, and effective management and planning tools will be essential to offset the disadvantages of using microwave backhaul in networks where cells are close to the ground – interference, lack of line of sight for point-to-point links, weather conditions and so on. Despite those risks, only 6% of operators believe significant amounts of fiber are essential to the small cell network case, while 44% favour a 50:50 split between fiber and wireless, and 26% plan to use mainly or entirely wireless links (Figure 16). The hybrid approach, of course, adds another layer of complexity for planning and management teams.

Fig 16. Carrier views on the importance of fiber to small cell

backhaul.

Carriers’ budgets are under intense pressure and few will have the same kind of capex hikes which they enjoyed to deploy previous network upgrades. And opex targets are even more rigorous, with many carriers investing in new topologies precisely to save on running costs. Lower unit costs for cell sites and backhaul will only address part of the challenge, especially with the huge numbers envisaged. Instead operators will have to rely on sophisticated and

Cost Fiber Small cell logistics

49.2% 24.6% 26.2% 26.6% _21.9% 45.3% 6.3% Essential

80% of cases Mainly wireless