Nokia_Cost-Optimized Transport Evolution - Smarter Solutions for Mobile Operators

Cost-optimized Transport Evolution Smarter solutions for mobile operators

White paper

2

Nokia white paper Cost-optimized Transport Evolution Smarter solutions for mobile operators

Contents

Executive summary 3

Increasing competition drives transport decisions 4

How evolving technology will affect transport 5Enhancing effi ciency in the transport network 5Hybrid backhaul 6Adaptive modulation 6Point-to-Multipoint 7Fixed WiMAX (802.16-2004) for cellular backhaul 7

Solutions for different operator cases 8Cost optimized transport evolution 8

Alternative solutions for TDM leased line based transport networks 8Segmented approach for microwave based transport networks 8

Conclusions 9

Abbreviations 10

3


Executive summary

Mobile operators today are facing great unknowns as they try to plan transport for their mobile networks.

There are many reasons for this uncertainty. One is the challenge that new services present, requiring high bandwidth at low cost. Another is that radio access is evolving to encompass a much broader set of technologies, making new demands on the transport network of the future.

Added to this is the fact that we are moving away from a past where transport needs could be predicted fairly accurately, into a future that will change constantly in unforeseeable ways. Operators no longer have the fi rm foundation that they are used to as a base for their timing, capacity and technology plans. All this means that the transport solution must adapt to these future needs in a way that is smarter than is common in traditional approaches. This smarter approach will include the need to identify the key backhaul segments, and focus on the areas that need to be optimized within each network segment. All phases need to take account of these factors, everything from planning and implementation to maintaining and updating the network.

The increased uncertainty about what will happen in the future can be dealt with by using a solution offering great scalability, which removes the risk of making wrong choices. Synergy between mobile and transport networks again brings the benefi t of not having to do things twice. By looking at transport in a smarter way, we can fi nd the most cost-effective route to evolve the mobile network.

The new approach will not be about maximizing capacity, but about achieving the best effi ciency across the whole transport network. This will be done by choosing among the new transport technologies now becoming available, including Point-to-Multipoint, WiMAX and Hybrid Backhaul. Operators with an E1/T1 based leased line transport network need to evaluate alternative options carefully. Continuing with the current model will not provide the cost point needed to compete for mobile data applications successfully. Furthermore, only a small proportion of links is expected to exceed 16E1/T1 in the coming years, microwave links will continue to dominate access transport networks.

Figure 1. Transport Network needs to support future Technology Evolution.

. . .3.9G

WiMax

WCDMA/HSPA

GSM/EDGE

Optimized Network Architecture,incl. Transport Network

Multi-Radio Access Options

I-HSPA

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Interconnection

Technical operations

Customer Care

Marketing & Sales(incl. COGS)

Other costs

Office etc.

Other staff costs

3%4%

11%

1%

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40%

Other O&M

Site leases

Transport

Technicaloperations staff

Maintenance

Technical operations

16%

0%

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30% ofTechnicaloperations

Traffic growing

CAGR = Compound Annual Growth Rate

2004 2005 2006 2007 2008

CAGR 16%

2009

ARPU declining

2004 2005 2006 2007 2008

CAGR 4.1%

2009

Voice

Data

Figure 2. Transport related costs are more than 30% of network related OPEX.

Increasing competition drives transport decisions

Figure 3. Declining ARPU despite growing traffi c. Source: Nokia.

Mobile operators have never been under more pressure to reduce the cost of transporting bits. Network transport costs currently represent more than 30% of the network related OPEX, with peaks of up to 40% in networks with a large share of TDM E1/T1 leased lines. As voice tariffs come under increasing pressure and

subscribers demand fl at rate data tariffs, ARPU will continue to decrease or, at best, remain fl at. At the same time, traffi c is expected to grow, yet estimates of when this will occur vary widely.

All this means that operators need to reduce the cost of transporting each bit

substantially, yet also offer broadband data services. If they cannot achieve this, the business case for new mobile data applications will be diffi cult to justify. One possibility, TDM leased line solutions, does not add up, as this option is not very fl exible and the solution cannot be scaled up economically.

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Fiber access will take a larger role in many networks, as fi ber networks are deployed in many countries. However, deploying fi ber to each single site will be very costly and challenging, even in dense urban areas where fi ber is most prevalent.

On the technical side, new radio access technologies such as HSPA, I-HSPA, 3.9G or WiMax are developing rapidly.

I-HSPA, or Internet HSPA, uses a standard HSPA air interface with a simplifi ed network architecture developed by Nokia. The architecture channels all user data traffi c via a direct link from the Base Station to the Intelligent Service Node, which is the gateway to the Internet and data services. Bypassing the Radio Network Controller (RNC) and Serving GPRS Support Node (SGSN) eradicates the costs of delivery arising from these two network elements. I-HSPA is based on open 3GPP standards allowing other vendors to offer solutions in a free and competitive market.

Depending on the competitive and regulatory situation, mobile operators will need to choose among these technologies to complement their existing GSM/WCDMA networks.

All these new technologies are optimized for packet-switched services and a packet-optimized architecture for the transport network would allow operators to benefi t from the effi ciency gains that can be achieved with the growing amount of packet data in the network. However, todays TDM transport networks, which lack ATM/IP aggregation points, are unable to benefi t from the gains offered by a packet-based architecture. This calls for a transport network designed to deal with a large share of packet traffi c.

How evolving technology will affect transport

Developing technology is providing more options for operators seeking to improve the effi ciency of their transport network. Hybrid Backhaul, Point-to-Multipoint, fi xed WiMAX and adaptive modulation all offer advantages for the cost conscious operator.

Enhancing effi ciency in the transport networkContinually growing data traffi c means that the transport capacity per site needs to be increased. With todays TDM based transport protocols, the link closest to the network controller (BSC/RNC) needs the sum of the capacity of all sites connected to it.

With future transport capacity per site expected to be in the region of 4E1/T1 to 16E1/T1, there is an enormous demand for transport capacity in the higher layers. However, this doesnt take into account the impact of improvements in transport effi ciency on the network level. NodeB can act as traffi c concentration points by applying ATM/IP aggregation, cutting the need for transport capacity signifi cantly.

Figure 4. Enhanced effi ciencies in the transport network reduce the required transport capacity.

Huge savings can be achieved, particularly in the early phases of HSPA. The capacity for each single site needs to be dimensioned according to peak demand, but up to four-fold effi ciency improvements can be achieved on a network level, without compromising quality for the user.

Taking this into account, operators can delay the upgrade of existing microwave networks to a later stage and focus their initial investment on a limited number of high capacity links in the Metro or Regional Access.

IP Ethernet

Tail Sites Chain Sites Small Hubs Large Hubs

Capa

city

Req

uire

men

ts

CapacitySavings

Adaptive Modulation

Network level optimization

HSPA

Witho

ut ne

twork

level e

fficien

cies

With network level efficiencie

s

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RNC

Real-time

NonReal-time

BTS

Non Real-time

Real-time

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Real-time

Hybrid backhaulEthernet leased lines are becoming more widespread and less expensive than traditional TDM leased lines, driven mainly by the demands of corporate users. Although the variation is quite large between countries, it is fair to say that a 10Mbit/s Ethernet leased line is typically available at the price of 1..2 x E1/T1, giving cost reductions of up to 75% per bit.

The ability of WCDMA NodeB to separate HSPA traffi c from delay sensitive traffi c allows operators to benefi t from the cost-effectiveness of Ethernet leased lines while providing the quality of service of TDM leased lines, needed for delay sensitive traffi c.

Mobile Operators with a microwave based transport network can benefi t even more from this architecture, as they can cut out all leased line OPEX, be it TDM or Ethernet. The ability to separate different traffi c types gives them a completely new way of planning their transport network, without the need for heavy investment in high capacity solutions.

Adaptive modulationUntil now, microwave links have been planned in terms of the static E1/T1 capacity needed. Recently, PDH microwave radios with capacities up to 40E1/T1 have become available even capacities above 64E1/T1 seem to be achievable before the need to move to SDH.

However, these capacities require high order modulations with a low system gain. Larger antennas are needed in order to use these modulations with an acceptable hop length, resulting in signifi cant additional investments in civil works. Site owners will also be reluctant to accept larger antennas. In addition, a full 28MHz channel needs to be allocated. This is a growing concern in high-density microwave networks, as spectrum is increasingly congested in urban areas. Adaptive modulation offers a different approach and can avoid the pitfalls of high capacity PDH radios with static capacity.

To achieve the planned availability for radios with static capacity, a fading margin must be included in the dimensioning. The full fading margin is needed only for short periods to overcome severe weather conditions, a characteristic that can be used to allow for higher modulations. This gives higher transport capacity most of the time, including periods of light rain or drizzle. This is the basic concept of adaptive modulation.

Non Real-time

Real-time

RNCBTS

Figure 5. Hybrid backhaul separates HSPA traffi c from delay sensitive traffi c.

Figure 6. Adaptive modulation combines hybrid backhaul with microwave.

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The transmission characteristics of adaptive modulation in combination with hybrid backhaul are ideally suited for the needs of HSPA traffi c. Delay sensitive voice traffi c and synchronization is transmitted over a highly reliable connection, while the HSPA traffi c, which can tolerate variations in transmission capacity, is sent over slightly less reliable but more cost-effective links.

While building a high capacity microwave network with static capacities will quickly lead to spectrum limitations, the combination of hybrid backhaul and adaptive modulation in microwave networks will allow operators to meet the needs of a growing share of packet traffi c. At the same time, this solution can be scaled up more cost-effectively than high capacity transmission with static capacity.

Adaptive modulation is currently being discussed in ETSI and national regulators are expected to introduce the requirements by the end of 2006.

Point-to-MultipointFor some time, Point-to-Multipoint (PMP) has been introduced alongside Point-to-Point technologies in mobile backhaul. The main arguments in favour of PMP have been a lower cost per link, if a particular number of sites can be connected to the hub, and a lower environmental impact. The speed of rollout has also been an important argument, as individual link planning is obsolete with PMP. At the same time, regulatory conditions have prevented the use of PMP for mobile backhaul in some countries, as the spectrum has been reserved for fi xed network applications. However, some national regulators have indicated their willingness to reconsider this restriction.

One of the key advantages of PMP can unfortunately not be used in current cellular networks the fact that PMP, as an ATM based technology, can offer huge savings in bandwidth due to its inherent multiplexing gain. With backhaul being based on PDH protocols with E1/T1 interfaces, no multiplexing gain can be achieved. However, the growing share of HSPA traffi c will make PMP a more attractive solution.

The benefi ts of adaptive modulation also apply to PMP. Due to the block allocation of PMP spectrum, operators with PMP infrastructure will not have to wait for approval of adaptive modulation by the national regulator and can start deploying PMP with adaptive modulation immediately.

In combination with hybrid backhaul concepts, earlier evaluations might need to be reconsidered and PMP could begin taking a more signifi cant role in transport networks.

Fixed WiMAX (802.16-2004) for cellular backhaulThe fi xed WiMAX 802.16-2004 technology offers the fi rst standard air interface in the microwave radio industry and chip sets are being developed and launched that promise growth in consumer Wireless DSL. These exciting developments are leading operators to look for additional benefi ts in other market segments, particularly in the cellular backhaul of base stations.

Commercial WiMAX chip sets are aimed at frequencies below 6GHz. The fi rst WiMAX 802.16-2004 products work on 3.5 GHz, a common licensed broadband wireless access band in Europe and Asia, and on 2.5 GHz, which is allocated as a licensed band in the USA. There will be fi xed WiMAX products operating in unlicensed bands, for example 5.8 GHz. However, a question mark remains regarding mobile operators accepting unlicensed frequencies to carry cellular BTS traffi c.

Although it is accepted that the standard air interface and lower frequency bands will make fi xed WiMAX products cost-effective, the traffi c capacity of these systems remains a concern as 3G traffi c and HSPA data solutions move forward. This is due to the limited amount of spectrum available in these bands.

Given that fi xed WIMAX is a Point-to-MultiPoint system, frequency reuse needs to be considered. For continuous or near continuous fi xed WiMAX coverage, the available bandwidth for a sector will only be suffi cient for a very small number of E1/T1s.

If issues related to the required synchronization accuracy and delay variation of the transmitted signal can be solved, fi xed WiMAX seems to be a technically and commercially viable cellular transmission solution for backhauling GSM base stations in suburban and rural areas. The application will however be limited to areas where the required capacity per BTS is reasonably low, that is, less than one E1/T1 per site, while fi xed WiMAX does not provide suffi cient backhaul capacity for high-density HSPA networks.

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Cost optimized transport evolution

Deciding on the best transport strategy needs a careful evaluation of the options and advantages offered by leased lines and operator owned microwave networks.

For operators with an E1/T1 based leased line transport network, continuing with the current model will not provide the cost point needed to compete for mobile data applications successfully, as transport is expected to be the biggest single cost element in the business case for these applications. With increased transport effi ciency reducing need for capacity in the upper layers of the network, microwave technologies are expected to maintain, and even extend, their dominant role in access transport.

Alternative solutions for TDM leased line based transport networksEthernet leased lines allow a signifi cant reduction of OPEX for operators who want to continue with a leased line model, although using them will remove the benefi t of the increased fl exibility of a microwave network owned by the operator. As well as other cost-benefi ts in comparison to Ethernet leased lines, a microwave network allows the operator to control the quality of the transport network. At the same time, only a highly integrated solution will allow the operator to manage the transport network with existing resources, without increasing the network related OPEX.

A combination of microwave links in the lower layer and fi ber in the upper layer is considered to be the most cost-effective approach when moving from a leased line model to an operator-owned model. The largest savings can be achieved with solutions that are integrated on a system level and allow remote operations, with a limited need for site visits. Treating the transport solution as a separate entity without paying attention to the overall network performance and cost will lead to results that are less than the best: GSM transport networks were relatively simple in planning and operations, whereas HSPA and other packet optimized radio technologies require a far higher level of integration and remote management capabilities.

Segmented approach for microwave based transport networksFor a cost-optimized evolution of microwave networks, it is worth verifying the current distribution of link capacities in networks using microwave links. This depends on the topology of each operator, but in most mobile networks,

80% of the links currently operate at capacities below 8E1/T1. These links have suffi cient spare capacity for the traffi c growth during the next two to three years as the existing equipment will most often scale up to 16E1/T1. This takes into account the expected capacity demand combined with effi ciency improvements in the traffi c handling capabilities of the NodeB, which were outlined in the previous section. Links in this category can be grouped as Lower Access. In this segment, the attention needs to be on standardized solutions that offer high operational effi ciency.

The largest savings can be achieved with solutions that are integrated on a system level and allow remote operations, which reduce the need for site visits. Again, the temptation to treat transport as if it had nothing to do with the overall network performance and costs will lead to results that are far from ideal. While GSM transport networks were relatively simple to plan and operate, HSPA and other packet optimized radio technologies need much more in the way of integration and remote management capabilities.

Solutions for different operator cases

Figure 7. Majority of links will continue at capacities below 16E1.

4E1 8E1 16E1 32E1 63E1/STM-1

2xSTM-1

Lower Access Focus on high operational efficiency

Metro/Regional Access Focus on tailored solutions

Majority of installed linkscaters for the traffic growthrelated to HSPA

Small share of links require capacitiesabove 16E1 with flexibility to beupgraded beyond STM-1

Today 2008

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Due to the expected effi ciency gains in the traffi c handling capabilities of NodeB, only a small proportion of links is expected to exceed 16E1/T1 in the coming years. These effi ciency gains are expected to reduce the required capacity in the upper layers signifi cantly. These links can be grouped as Metro or Regional Access, as they would typically connect medium and large hub sites back to the network controller, often over a fi ber connection. Due to the relatively small number of links in this category, only small savings can be achieved with standardized solutions in this segment. Solutions need to have the fl exibility for site-specifi c requirements and the scalability to meet growing capacity demands. The focus in this segment needs to be on solutions that offer the fl exibility to grow to very high capacities, including multiple STM-1/OC-3 capacities, but at low initial investment.

Thus, microwave technologies are expected to maintain, and even extend, their dominant role in access transport networks in the years to come. The optimal transport effi ciency combined with lowest cost can be achieved by a segmented approach to the needs of the network. Transport networks for mobile operators need to be scalable, at low initial investment and optimized for a large share of packet traffi c. More dynamic traffi c handling capabilities in the base stations as well as in the microwave equipment will play a key role. Finally, the management of these Transport Solutions will be critical to the time to market for new services, as well as the fl exibility to customize such services to the local environment.

A smarter approach to planning a transport network will include the need to identify the key backhaul segments, and focus on the areas that need to be optimized within each network segment, in everything from planning and implementation to maintaining and updating the network. By looking at transport in a smarter way, we can accomplish the evolution of the mobile network in the most cost-effective manner.

The increased uncertainty about the future can be dealt with by using a solution offering great scalability, and new approaches in microwave technology will also need special consideration.

However, when evaluating different options for the future evolution of their microwave network, mobile operators should not be dazzled by the frenzy of megapixel solutions. As in digital cameras, where the highest number of pixels does not necessarily indicate the best solution, standalone products with high transmission capacities do not necessarily match the needs of mobile operators.

Conclusions

Successful operators will manage to get the most out of their installed base by improving the effi ciency of their transport network. Taking this into account, operators can delay the upgrade of existing microwave networks to a later stage and focus their investment initially on a few high capacity links. Operational effi ciency on a system level is the key to a cost-optimized transport network in the Lower Access area. Treating the transport solution as a separate entity will lead to less than optimal results. The focus in Metro or Regional Access needs to be on solutions that offer the fl exibility to grow to very high capacities, including multiple STM-1/OC-3 capacities, but at low initial investment.

Mobile operators that successfully handle the challenges of building a cost-optimized transport network are in pole position in the race to create a leading business with advanced mobile data and voice services.

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Abbreviations

3.9 G3.9G is the evolution path of GSM/WCDMA in ETSI/3GPP standardization forum utilizing latest radio technologies and packet switched only network architecture.

HSPAThe WCDMA standard HSDPA (high-speed downlink packet access) and its sister standard HSUPA (high-speed uplink packet access) are merged under the acronym HSPA. HSPA enables high speed data connections and increases packet data throughput.

I-HSPABased on open 3GPP standards, Internet HSPA, or I-HSPA, is an evolution of HSPA developed by Nokia and which offers very low delivery costs for high volume data users.

PDHThe Plesiochronous Digital Hierarchy is a technology used in telecommunications networks to transport large quantities of data over digital transport equipment such as fi ber optic and microwave radio systems.

SDHSynchronous Digital Hierarchy (SDH) is a standard primarily for communicating digital information over optical fi ber. Lower SDH capacities are also in use with microwave radio transmission. SONET is the ANSI equivalent of SDH. Both SDH and SONET can be used to encapsulate earlier digital transmission standards, such as the PDH standard, or used directly to support either ATM or so-called Packet over SONET (PoS) networking.

STM-1/OC-3The STM-1 (Synchronous Transmission Module) is the basic rate of transmission of SDH. It has a bit rate of 155.52 Mbit/s and is the SDH equivalent of an OC-3 (SONET).

TDMTime-division multiplexing is used for e.g. the PDH and SDH network transmission standards.

WiMAXWiMAX is used as a common name for 802.16 technology standard. Broadband wireless access standard IEEE802.16-2004 without mobility support and IEEE802.16e for mobility.

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The contents of this document are copyright 2006 Nokia. All rights reserved. A license is hereby granted to download and print a copy of this document for personal use only. No other license to any other intellectual property rights is granted herein. Unless expressly permitted herein, reproduction, transfer, distribution or storage of part or all of the contents in any form without the prior written permission of Nokia is prohibited.

The content of this document is provided as is, without warranties of any kind with regards its accuracy or reliability, and specifi cally excluding all implied warranties, for example of merchantability, fi tness for purpose, title and non-infringement. In no event shall Nokia be liable for any special, indirect or consequential damages, or any damages whatsoever resulting form loss of use, data or profi ts, arising out of or in connection with the use of the document. Nokia reserves the right to revise the document or withdraw it at any time without prior notice.

Nokia and Nokia Connecting People are registered trademarks of Nokia Corporation. Nokia product names are either trademarks or registered trademarks of Nokia. Other product and company names mentioned herein may be trademarks or trade names of their respective owners.

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Nokia_Cost-Optimized Transport Evolution - Smarter Solutions for Mobile Operators