Small Cell Economics

Small Cells EconomicsSmall Cells MENAOctober 7th & 8th Dubai, UAE

Dr. Kim Kyllesbech LarsenGroup TechnologyOoredoo Group

Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 2013 2

Small-cell networks addressed in this talk.Other types are pretty cool but for a different time & place.

have inter-cell distances between ca. 50 meter and 300 meter.

are structurally planned & coordinated.

& are based on licensed as well as unlicensed bands.

Femto Cells might not be!

Wearable Area Networks & Femto Cells

exist below and not considered here.

WiFi is considered!


Best places for small cells?

NOTE: WiFi is just a bridge to better cellular small-network systems become main stream with controlable spectrum assets and E2E Customer Experience Management.

@ Work(2 – 4 Cells)

@ Home(2 – 3 Cells)

On theGo

@ Home(1 – 2 Cells)

On theGo

00:00 10:00 12:00 22:0017:006:00 8:00

voicedata

Small Cells

14:00

Femto Cell Femto Cell

Up-to 80% of all cellular data traffic

generated in no more than 3 cells.

Illustration


Data traffic trend to be considered.

47%

37%

16%

Home

Work

Mobile

“SepNet” “SmallNet” and/or “FemtoNets”

“CorpNet”

“SmallNet”

Source: Detailed data mining study, T-Mobile Netherlands 2011.

SepNet = Separate network (i.e., not integrated)CorpNet = Corporate (work-based) network.SmallNet = Operator controlled heterogeneous network.

Mobile Data Traffic Distribution

Illustration

Between 40% - 50% of all traffic occurs at Home,Other 35% to 40% at Work, & lastly no more than 20% is Mobile.

Migration paths:


Cellular Data Mobility Illustration

31

2 3 4 3 3 2 2 2 1 1 1 1

0

5

10

15

20

25

30

35

100% traffic

80%+ traffic

Number CellsEngaged per User

Mobile data usage

Dongle-likeSmartphone-likehandset-like

Up-to 80% of all cellular data traffic

generated in no more than 3 cells.


Heuristics for data usage

Users mobile data traffic is highly localized : 80% @ 3 Cells.

The more extreme usage the higher the localization : → 1 Cell.

No more than 20% of data traffic is associated with 4+ cells.


Cellular range distribution.Illustration

Small CellDomain

UMTS2100

Small-Cell potential (large-scale)- Outdoor off-load.- Indoor off-load.- Cell split replacement- Capacity addition- “Surgical” coverage

Small-Cell potential (small-scale)- Coverage solutions.- Villages.- Residential areas.


Cellular range dynamics.Illustration

NYC

Den Haag

Houston

Leeds

LAChicago

Berlin

Hamburg

London

Houston

0.20

0.40

0.60

0.80

1.00

0 2,000 4,000 6,000 8,000 10,000

City Pop Density (pop/km2)

GSM900

GSM1800

UMTS2100

EffectiveCell

RangeIn km

Small CellDomain


The structure of cells.Below illustrates conventional cell planning, small cells can be much more irregular in their grid placement.

Illustration

WiFi 20 MHz @ 2.4 GHzPico cell – omni directional

LTE 20 MHz @ 2.6 GHzPico Cell – omni directional

LTE 20 Mhz @ 1.8 GHzMacro Cell – 3-sectored*

1 km

1 km

ca. 30 APLowest powerca. 700 Mbps

ca. 12 APLow – mediumca. 300 Mbps

ca. 15 AP*High power

ca. 400 MbpsNOTE: Some caution should be taken in direct comparison between the above simulations as system specs are not exactly the same (e.g., radiating power levels, spectral effi, etc)..

4+ thousand popslives there

16+ thousand popswork there

60+ thousand popsvisits per day


How small is a small cell?Illustration

Rural / Nation-wide700 MHz to 900 MHz

Pico – Macro

Urban – Suburban:Up-to 2100 MHz

SmallCells (SC)

1.8To

2.6 GHz

Throughput& Capacity

Sub-urban to Rural Range 10+ km

Range300m – 1.0km

Femto

1.8To

5.0 GHz

SC Range50m - 300m

Structured & planned & coordinated

Femto Cell: can be unstructured & unplanned & uncoordinated

Femto RangeUp-to 50m

NOTE: Depicted coverage or interaction range illustrations are not to scale.

Also targets for Small Cell & Femto deployments (small-scale)


Small cell fundamentalsIllustration

macro

The Backhaul challenge.The Interference challenges.Planning & Optimization complexity.

The Backhaul challenge.The Interference challenges.Planning & Optimization complexity.

Small Cell off-loading strategies.

What to look out for!

Maybe only capacity & coverage alternative.Might have favorable TCO economics.

New business models to emerge.

Maybe only capacity & coverage alternative.Might have favorable TCO economics.

New business models to emerge.

Small Cell benefits.

macro macro

macromacro

Small cell

Small cell

Small cell

Small cellSmall cell Small cellSmall cellSmall cell

Illustration


Capacity fundamentals.CAPACITY Ci = BANDWIDTH Bi

MHz× EFFICIENCY Ei

Mbps per MHz per Cell× CELLS Ni

#

Business as Usual New spectrum New technologies New macro

×

Innovation Re-farming Improvements Small-cells

×

Radical Spectrum sharing Spectrum sharing Site sharing

Total Capacity = ∑A REAS

Ci = ∑A REAS

Bi×E i×N i

VERY COSTLY

(VERY) COSTLY

EFFICIENT

(VERY) COSTLY

COMPLEX + EFFICIENT

COMPLEX BUT EFFICIENT

BaU (COSTLY)

BaU (COSTLY)

𝐸𝐵𝐼𝑇𝐷𝐴2020

𝐸𝐵𝐼𝑇𝐷𝐴2012

≥1𝐹𝐶𝐹 2020

𝐹𝐶𝐹 2012

≥1𝑂𝑃𝐸𝑋2020

𝑂𝑃𝐸𝑋2012

<1

Leapfrog Network Capacity & Quality within Financial KPIsLeapfrog Network Capacity & Quality within Financial KPIs

COSTLY BUT EFFECTIVE

Right frequency large BW → might delay or slow proliferation of small-cells!


Capacity fundamentals.

NOTE: It should be well understood that there is a possible disconnect between demand & supply and that to make the two comparable the utilization needs to be considered.

CAPACITY Ci = BANDWIDTH BiMHz

× EFFICIENCY EiMbps per MHz per Cell

× CELLS Ni#

Demand in 2020 to 2012 ratio (Cisco VNI for MEA).

50 × (CAGR 63%)

Supply in 2020 to 2012 ratio

9 – 60 ×4 – 8 ×

Low & high frequency blend

1.5 ×Incl. LTE, but

efficiency blend

2 - 5 ×Macro-based

× ( Ksmall-cell >1) ×Incl. small-cells

2012 Utilization Compensated Demand (i.e., directly comparable to Supply)

10 – 20 ×

2020 Mobile Broadband Networks in MEA likely to cope with expected demandBUT ONLY WITH MUCH MORE SPECTRUM & MANY MORE SITES

SMALL CELLS BIGGEST BANG


Economics of a macro rooftop site.Illustration

Note: the above is based on WEU cost distribution. Differences are likely to occur for other markets / regions.


The small cell TCO “competition”

Macro Cellular Sectorization.

Macro overlay / co-location of new capacity.

A Macro cellular cell split.

Abundance of bandwidth at Low frequencies (i.e., APT700).


Economics of a small cell network.Cost breakpoints in #small-cell nodes to Macro, Overlay and Sector Cost.

For Mature Market Economics *. Illustration

* Note: the above is based on WEU cost distribution. Differences are likely to occur for other markets / regions.

Incremental macro costUp-to 20 Small Cell Nodes have better Capex compared to a macro-cellular rooftop.

Up-to 10 Small Cell Nodes have better Opex economy compared to a macro-cellular rooftop.


Small cell cost scaling challenged - Capex.

1 For mature market economics, cost-structure and typical price levels.. 2 his is equivalent to no more than 50 hours of technical labor in US not considering materials.

civil works

equipment+ antenna

transportCore

Macro-siteAnnualized

Capex

100 per unit

50 Node Small-Cell networkAnnualized Capex

<2 per unit Equipment1

US$ 30k Macro Equipment.US$ 6k annualized Capex.

< US$ 120 annualized Capex< US$ 600 per Small-cell Node.

Civil Works1

SimilarlySmall-cell CW should be < US$ 1,200 per Small-cell Node 2

Feasible?

LARGE SCALE SMALL-CELL DEPLOYMENT REQUIRE a QUANTUM-LEAP in ECONOMICS of scale & DEPLOYMENT INNOVATION.

Illustration


Small Cell cost scaling challenges – Opex.

Macro-siteAnnualOpex

100 per unit

50 Node Small-Cell network

Annual Opex

<2 per unitRental1:Macro lease of US$ 10k pa would requireSmall-cell node unit lease to be no more than< US$ 200 per anno!

Transport1:Macro transport cost of US$ 8.5k pa would requireSmall-cell nodal transport solution should be better than < US$ 170 per anno or< US$ 15 per month (@25-50Mbps)

rental

O&M

transport

energy

OPEX SCALING is one of the BIGGEST CHALLENGES for LARGE-SCALE SMALL-CELL NETWORK DEPLOYMENT.

Illustration

Feasible?

1 For mature market economics, cost-structure and typical price levels.


TCO challenges & possible solutions.

• Wireless backhaul (Sharing?)

• Low cost xDSL or Cable (QoS issue?)

• Fiber connectivity (availability?).

• Wireless backhaul (Sharing?)

• Low cost xDSL or Cable (QoS issue?)

• Fiber connectivity (availability?).

Backhaul Scaling.

• Aggressive price reductions.

• CW: Sharing with other operators.

• CW: Strategic partnerships.

• Aggressive price reductions.

• CW: Sharing with other operators.

• CW: Strategic partnerships.

RF Equipment & Civil Works.

• Securing strategic locations early.

• Strategic Partnerships.

• Sharing with other operators.

• Securing strategic locations early.

• Strategic Partnerships.

• Sharing with other operators.

Site Lease Cost.

• Self Optimized Networks.

• Small Cell outsourced operations.

• Independent SC business model.

• Self Optimized Networks.

• Small Cell outsourced operations.

• Independent SC business model.

Operations.


What to be passionate about!

Small-Cell Networks are great remedies for surgicalcapacity & coverage additions.

Small-Cell Networks tend to economical scale well up-to about 20+ nodes* & for inter-cell distances below 300 meters.

Large-scale Small-Cell Networks (>50+ Nodes*) have many economical & physical challenges to be addressed.

Small-Cell Network TCO might appear excessive!often it is only way to deliver demanded capacity & coverage.

Note (*):The size of Small-Cell Networks in terms of Nodes and whether a particular size is economical (in comparison to Macro Cell) will ultimately depend on the local cost structure and pricing levels of active equipment.


Oh BTW a little teaser ;-)Can small cells be meaningful in emerging markets?

Myanmar• Fixed lines% <1% → hardly any fixed BB

infrastructure.• Mobile% <10% → less than 2,000 Base Stations.• Internet% <2% → very poor international BW available.• Electrification ca. 20%+ & with large grid stability

issues.

Infrastructure• Top-100 cities with ca. 25% of population.• More than 70% of population lives in rural areas.• Number of villages exceed 67+ thousand.

– Many without electricity.Small Cells can compete with Tower Economics (easier actually than Roof Top).

More cost efficient provision of capacity in urban areas.

Small Cell Networks with Macro Cellular Backhaul (via high towers) more economical

Dr. Kim Kyllesbech LarsenFollow Dr. Kim on Twitter @KimKLarsen

Blog: www.TechNEconomyBlog.comPresentations: http://www.slideshare.net/KimKyllesbechLarsen

Acknowledgement: I am indebted to my wife Eva Varadi for her great support and understanding during the creation of this presentation.