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Win-Win / JAN 2010Win-Win / JAN 2010

taking on ultra-broadband challenges with easeNew network technologies and the drive to improve the quality of user experience (QoE) are driving us towards the ultra-broadband era. It is estimated that 1000EB of data will be generated each year in this era. An ocean of information will fl ood networks, necessitating new approaches to network construction and operations. How can operators prepare for the challenges ahead?

By Xu Kun & Liu Shuqing

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Tao of Business

ABC

Win-Win / JAN 2010

By Wang Kening & Ling Yun

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ABC unveils three challenges

ltra-broadband is fundamentally changing the nature and structure of the broadband industr y, notably in terms of network infrastructure, services, O&M, and business

models.The surge in network traffic forces operators to

continuously expand and upgrade their networks, which in turn increases TCO. Mobile broadband and IPTV have emerged as expected services that incur high costs and yield stagnant ARPU growth. The ultra-broadband era will be characterized by higher network traffic levels and performance requirements, but decreased revenue per megabit of bandwidth.

Creating a business model that raises revenue, satisfi es bandwidth needs, and creates a climate in which ultra-broadband can thrive is one of the key issues facing operators today. Research by Huawei reveals that challenges in ultra-broadband operations can be summarized in the A (ARPU), B (Bandwidth) and C (Costs) curves, as shown in Fig. 1.

Curve A: fi nding new ARPU sources

A retrospective look at industry trends shows that rapid bandwidth growth has not only failed to boost ARPU, but has in fact narrowed the profit/cost gap. This pattern is exacerbated by P2P and video services; it is predicted that 18EB of data from Internet video will be generated each month in 2013, compared with 2EB from mobile data traffi c. Operators need to begin exploiting the commercial value of high bandwidth.

Finding a killer application is not so easy after IPTV and mobile broadband. Nevertheless, the Internet is a vast and fluid world with an almost unimaginable potential for personalized applications. Operators have to fi nd and

match ultra broadband applications with long tail markets that can create value and combat stagnant revenue growth.

Curve B: meeting bandwidth demands

High bandwidth is necessary to satisfy the surge in demand and enhance QoE for home users and enterprises. Annual network traffi c growth is exceeding even Moore’s Law, and network infrastructure–including nodes, ports, and architecture–must evolve to accommodate ultra-broadband services.

Operators face the challenge of involving their networks to accommodate ultra-broadband capability and services.

Curve C: reigning in costs

While ultra-broadband powers network evolution, network upgrades and expansion based solely on traffic causes TCO to skyrocket, which is untenable when coupled with low ARPU. Hence, operators need to reign in costs to raise the profi t margin.

Monetizing broadband

Th e charging mode in traditional broadband networks is unitary and mainly derives from home and enterprise users. If the ultra-broadband network follows this model, profi ts will remain low.

A new operating philosophy

Operators generally charge home users for broadband access and do not benefit from value-added services (VAS). However, the maturing HDTV industry chain is injecting energy into IPTV development and, when combined with an eff ective network operation model, will enable operators to build service aware and diff erentiated

U

Creating a business model that raises revenue, satisfi es bandwidth needs, and creates a climate in which ultra-broadband can thrive is one of the key issues

facing operators today.

Win-Win / JAN 2010

Fig. 1 Three challenges to ultra-broadband development

Voice Era HSI Era HDTV/MBB/Triple-Play Era Multi-Play Era

B How to keep the technology in line with bandwidth increase?

A How to generate new revenue?

C How to restrain the cost?

Post-Moore’s Growing

Sustainable MarginGood Margin

Worse Margin

Curve B: Bandwidth

Curve C: Cost

Curve A: ARPU

home service gateway integrates the server, STB, some access gateway functions, and it cooperates with the service delivery platform (SDP) to provide PC-style applications via TVs. Operators can build a service platform for third parties to provide VAS for home users, and thus engender an ecosystem of profitable long-tail applications.

Enterprise users generate revenue for operators mainly from private line connections. Operators’ role is mainly in providing bandwidth pipe and customer premise equipment (CPE), including the ONT, router and LAN switch. O&M is usually undertaken by the enterprise using expensive, specialist personnel. SMEs in particular would prefer operators to shoulder the O&M burden, and provide a range of services from private lines and ICT.

The service routing gateway (SRG) is vital for operators

networks. An increasingly open application market facilitates the development of myriad applications, which promotes differentiated operations and a long-tail strategy that can achieve success in the home user market.

The two major factors that impact IPTV QoE are channel zapping and picture quality. By storing groups of pictures (GOPs) for HDTV in a video engine near to users, sub-1-second channel zapping is possible and lost packets can be retransmitted to maximize QoE. The video engine can support customized applications such as time shifting TV and local ads.

The home gateway is set to be the cornerstone of long-tail value in the ultra-broadband era. The traditional home network usually comprises independent devices including the access gateway, server and set top box (STB). The

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Tao of Business

Research by Huawei reveals that challenges in ultra-broadband operations can be summarized in the A (ARPU), B (Bandwidth) and C (Costs) curves.

Win-Win / JAN 201016

Enhanced fiber backhaul and network capacity are set to simplify ultra-broadband network architecture from five to three layers; devices will be compact

and network architecture simpler.

to provide VAS and unlock their pipe provider chains. SRG functionally integrates the ONT, router, LAN switch, Wi-Fi, and firewall, while the network management system (NMS) centrally manages the system and provides O&M. Through a VAS service platform, operators can provide antivirus applications and launch ICT VAS. In doing so, they construct a mutually beneficial business relationship in which an operator provides the pipe and integrated services for enterprises in a much more holistic context.

Two new business models

Two additional business models can boost ARPU: service/bandwidth wholesale and digital advertising.

Service and bandwidth wholesale requires an open service and network platform to access a target market comprising SPs and CPs. Singapore, the UK, and Australia are examples of countries in which it is mandatory for operators to open their networks to third parties and offer wholesale services and bandwidth.

E2E service wholesale comprises three layers. First, the service layer; IMS and SDP enable the service wholesale, for example, online shopping, content markets, and virtual communities. Second, the backbone layer; the OTN enables the wholesale of Gigabit Ethernet. Third, the access layer; IP mobile backhaul via any media is wholesaled to compensate for the declining revenue of traditional TDM mobile backhaul.

The second model, digital advertising, inserts target ads into VOD programs, for which operators charge the agent or advertiser. In 2008 alone, network advertising formed a 50 billion USD global market. A wide subscriber base incorporating customer profiles and an E2E delivery platform positions operators as the natural facilitators of digital advertising, including network and IPTV ads. IPTV and SDP can open up new revenue sources and create an operating platform for advertisements. Internet content

can be introduced to TVs, and advertising revenues shared with CPs.

Target advertising depends on a powerful advertising platform that features an ultra-large database, user behavior analyzer, category management, and user information, including registration and behavior data. Target advertising will push local and targeted ads to the Internet and terminals, including IPTV and handsets.

Expanding bandwidth

Ultra-broadband will underpin FMC. In turn, networks must unify service bearing and deploy high-capacity nodes that are able to process and transmit huge amounts of data over long distances. IP+optical equipment will dominate various network nodes and layers, and this has catalyzed rapid progress in optical technologies–evolution from 40G to 100G has taken just two years.

Enhanced fiber backhaul and network capacity are set to simplify ultra-broadband network architecture from five to three layers; devices will be compact and network architecture simpler, as shown in Fig. 2.

The full-service ultra-broadband backbone network has extremely high capacity and reliability requirements. Router clustering on backbone nodes is inevitable and network ports that support 40 to 100Gbps will be gradually deployed. For optimum bearer and O&M efficiency, IP and optic convergence can fully utilize connection resources and the optical network’s high bandwidth.

IP routers will connect seamlessly with the OTN to deliver optically convergent architecture and enhance the backbone capacity, optimize traffic, lower costs, and raise reliability through dual-layer network protection.

The full-service ultra-broadband Metro Ethernet Network (MEN) embodies the largest E2E component

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Tao of Business

of network architecture given the diversified technical so lut ions and network types . However, network deployment and O&M are complex and, due to the rapid development of mobile broadband and video services, the MEN must evolve from bearing triple-play to multi-play in order to achieve “one service edge, full service bearer”.

“One service edge” can be flexibly configured to manage and deliver all network services including fi xed/mobile broadband, IPTV and enterprise private line, and integrate VAS modules such as DPI and the fi rewall, which will greatly simplify MEN architecture and increase O&M effi ciency.

“Full service bearer” increases the OTN applications in the MEN that then cooperate with the IP layer to build a full-service ultra-broadband MEN. Based on one platform and supplemented by Layer 2 and 3 technologies, the network can deliver L2 VPN or L3 VPN depending on service features. Network bandwidth utilization can be optimized through unified full-service bearing after integrating an independent video processing module and mobile backhaul capability, such as 1588v2 and PWE3.

In terms of access, ultra-broadband will be spearheaded by 3G/LTE for mobile access and FTTx for fi xed access. The replacement of copper wire with optical fibers will accelerate, and xPON will be uniformly chosen for service access by home and enterprise users and also the base stations of mobile broadband networks. Greater bandwidth

demands require OLT to have TB capacity and the ability to smoothly evolve to 10G PON. Th e WDM PON and WDM at the access layer will further raise bandwidth for fi xed-line ultra-broadband access.

Reducing TCO

Network synergy lowers costs

Video streams, such as multicast and VOD, have a smaller convergence ratio than conventional Internet traffic. Video streams increase traffic in the MEN and backbone network, which bottlenecks bandwidth. The cost of traditional IP network expansion is prohibitive for operators, and multi-technology synergy is the only way to optimize network traffi c fl ow to lower deployment costs.

Firstly, the synergy between IP and optical networks can help optimize network traffi c fl ow.

The backbone network generally comprises an IP backbone and a WDM backbone. Traffi c fl ows hop by hop in a traditional IP+WDM backbone network, necessitating regular network expansion. Conversely, uniformly planned services at the optical and IP layers can redirect traffic via IP and OTN network synergy. Th e OTN constructs the shortest transport path and reduces the traffi c burden facing core routers, which removes the need for constant

Fig. 2 Ultra-broadband network architecture

Full service ultra BB backbone

Service delivery platform

CPE (Customer Premise Equipment)

UPE (User Provider Edge)

NPE (Network Provider Edge)

S-POP (Service-Point of Presence)

CR (Core Router)

OLT (Optical Line Terminal / CSG (Cell Site Gateway)

User terminal

10T/80T Cluster CR

T-Bit TSR/1M BRAS

T-Bit OLT/10G PON

100G LH DWDM

T-Bit OTN/WDM

WDM PON/CWDM

Full service ultra BB metro

Full service ultra BB access Converged OSS

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network expansion. Multi-channel load balancing (MC-LB) provides dual-layer service protection to ensure backbone network reliability.

With an IP+OTN backbone, traffic flow and direction are optimized as traffic directly flows to the destination without hopping. Cross-connecting the OTN allows one port to connect in multiple directions, which cuts costs by 50%. Moreover, MC-LB in routers enables traffic routing in one direction via different paths. Multi-path protection is thus realized without backup links, reducing expenditure by 60%.

Secondly, the synergy between fixed and mobile networks optimizes mobile broadband traffic volume.

The cost of bandwidth in mobile broadband networks is higher than that in fixed networks. In traditional mobile backhaul, TDM leased lines exist between Node B and the RNC, which are inadequate for mobile broadband services. Several leading mobile operators have already built their own IP backhaul networks to reduce costs. An integrated operator can use its existing fixed broadband network to carry mobile backhaul traffic, which can reduce mobile backhaul costs by nearly 70%.

Thirdly, the synergy between storage and IP can leverage bandwidth from storage.

According to IBM, storage costs have been dropping at a weekly average of 3% over the past 25 years, much faster than the drop in bandwidth costs. This trend makes it feasible to leverage bandwidth from storage. For example, TV ratings comply with the Pareto principle in that 20% of programs attract 80% of the audience. Further studies reveal that 5% of on-demand programs attract 65% of all viewers and that storing these will reduce bandwidth usage by 65%. If the programs are stored in network nodes close to end users, bandwidth costs can be reduced dramatically. This model can also apply to IPTV multicast traffic and HDTV-generated unicast traffic, and thus bandwidth usage is huge. Caching IPTV GOP in the nodes near users reduces traffic, lowers bandwidth costs, and raises QoE.

User-centered operation reduces OPEX

The currently dominant O&M model mainly focuses on networks. O&M teams should adapt to the user-centered O&M model at the beginning of network design and transform their approaches in terms of installation, service delivery, testing, fault location, and service upgrades. Convergence management and visualized O&M are crucial to realizing user-centered O&M.

To realize efficiency gains in the All-IP era, ultra-broadband needs convergent management and visualized O&M. Convergent management would allow operators to unify the management of the access, backbone and transport networks and the MEN, achieve E2E service configuration, and simplify system architecture. Through a visualized O&M approach based on physical and logical links in the network, operators can achieve highly efficient O&M from E2E traffic monitoring, precision fault location, and intelligent network-wide alarm analysis.

Effective fault diagnosis tools are needed as the nature of video traffic obscures whether a fault has occurred in the bearer layer or service system. Analysis shows that 95% network failures occur on the last mile access network and MEN. The Huawei integrated fiber-copper line diagnosis system locates faults with optical fibers and copper wires in FTTx networks to within 6m and 1m respectively, and cuts the location time from minutes to seconds. The real-time IP network monitor tracks packet loss, delay and jitter on every channel and supports full-service monitoring, which can also be applied to third-party networks. With these two tools, operators can monitor IP network traffic in real time 24/7, thus achieving low TCO for IP networks.

Network synergy and user-centered operations can boost bandwidth ten-fold without raising TCO, thus realizing a sustainable and profitable ultra-broadband network.

Editor: Liu Zhonglin liuzhonglin@huawei.com

Network synergy and user-centered operations can boost bandwidth ten-fold without raising TCO, thus realizing a sustainable and profitable

ultra-broadband network.