The 2010 Opportunity For Backhaul Wholesalers

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Dec 10, 2013 (3 years and 7 months ago)

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The 2010 Opportunity

For Backhaul Wholesalers

Moderated by

Jim Hodges

Senior Analyst

Thursday, February 4, 2010

Packet Backhaul 2010

Agenda



Business Opportunities & Challenges
for Backhaul Wholesalers


Backhaul Network Transition Strategies




Our Panelists






Ralph
Santitoro

Director of Carrier Ethernet Market Development

Fujitsu



Jon
Baldry

Technical Marketing Manager

Transmode


Mobile Backhaul:

A Tale of Two Entities


Mobile backhaul involves a
Wireless Provider

and a
Backhaul Provider


Even if one parent company owns both parts


Money/services exchanged between the two entities (separate P&Ls)


Two network deployments


Two sets of network and operational requirements

Cell Site

Cell Site

Mobile Switching Center

Mobile Switching
Center

BSC

RNC

S
-
GW

BTS

NodeB

eNodeB

Backhaul Network

BTS

NodeB

eNodeB

Service Layer

Transport Layer

BSC

RNC

S
-
GW

CE

CE

CE

CE

Backhaul Provider

Wireless Provider


Data rate grows with 3G and beyond, but revenue doesn’t


Flat
-
rate data plans


Network operations


How do you ensure uninterrupted service to millions of subscribers?


Backhaul networks must be ultra available with predictable QoS


What if LTE ubiquity makes it the “mobile WiFi”?


Integrated into wide range of devices; applications run “in the cloud”


3G radios now built into eBook readers, e.g., Amazon Kindle


Years to upgrade to new backhaul technologies


2G, 3G, and 4G at same cell sites for years to come


Tremendous pressure to make right choice to achieve ROI objectives

Challenges Facing

Wireless Operators

Many business issues affect backhaul technology selection

Critical Factors Affecting Third
Party Wholesalers’ Success


Ability to retrain network operations personnel for Ethernet


Current Sonet/SDH engineering staff needs to learn Ethernet


Having a flexible backhaul network architecture to address
current and emerging wireless services


Today T1s/E1s


tomorrow Ethernet


Need a good transition plan


Ability to make acceptable ROI to meet margin objectives


Three
-
year service contracts with wireless operators


Ability to address wireless operators’ stringent SLAs over
an Ethernet (packet) network


5ms latency


1ms jitter


3x10
-
7

loss


5x9s availability



“Third
-
party backhaul wholesalers
cannot guarantee the same level of
SLA performance as incumbents.



“Wholesalers face challenges in setting up
administration and control mechanisms.”


“Incumbent backhaul providers have proven

they can support large
-
scale deployments.”












The following statements should be considered as debating points.

They do not necessarily represent the opinions


either wholly or
partially


of
Heavy Reading
or of any one
panelist
.

Mobile Backhaul Migration
:

On the Road to Ethernet


Compelling case to keep 2G traffic on TDM


2G traffic growth small so T1/E1 MRC essentially flat


What to do with high
-
growth 3G traffic?


Some base stations will be upgraded to Ethernet


Add Connection
-
Oriented Ethernet (COE)


If you have a
Sonet
/SDH infrastructure


COE over
Sonet
/SDH: Simplest to implement / maximal BW efficiency


Legacy, low
-
growth 2G services remain on TDM

Time

Bandwidth

Voice +
2G Data

3G/4G
Data

3G BS

4G BS

Ethernet

Ethernet

T1s/E1s

2G BS

T1s/E1s (TDM)

Sonet/SDH




COE over
Sonet
/SDH




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Mobile

Switching

Center

Backhaul providers must deploy a solution that evolves with the

wireless operator’s evolving network


longer recurring revenue





Standardized Services


MEF 6.1 Service Definitions


MEF 10.2 Service Attributes

Security


Bridging disabled
-
MAC DoS attacks mitigated


Completely Layer 2
-

no IP vulnerabilities

Attributes Of

Connection
-
Oriented Ethernet

Reliability / Availability


G.8031 50ms EVC Protection


802.3ad UNI & ENNI Protection

Ethernet OAM


802.3ah Link Fault Management


Y.1731 Service Fault Management

Scalability


Layer 2 Aggregation


Statistical Multiplexing

Deterministic QoS


Lowest Delay, Delay Variation, Loss


Bandwidth Resource Reservation


Connection Admission Control

COE

COE facilitates the migration from
Sonet
/SDH to Ethernet

Mobile Broadband:

In Search of Profitability


Mobile broadband still in build
-
out phase


3G HSPA and EV
-
DO in 3
rd
/4
th

year of rollout


iPhone, BlackBerry & Android
-
based smartphones and new 3G devices


Generate significant new bandwidth demands


Operators investing for near
-
term subscriber acquisition


And long
-
term transformation of their business models


Mobile broadband (data) isn’t profitable (yet)


In 3G, voice and data still discrete network services


If costs allocated separately to voice and data, mobile broadband (data)
isn’t profitable today


Mobile broadband driving majority of new network capex





Mobile backhaul opex plays a key role

in realigning profitability



“Changes in the broadband economics
model will have a greater impact on
third
-
party wholesalers.



“In order to make wireless broadband profitable,

costs must come down.”


“Incumbent backhaul providers can absorb a squeeze

on margins better than third
-
party wholesalers.”




The following statements should be considered as debating points.

They do not necessarily represent the opinions


either wholly or
partially


of
Heavy Reading
or of any one
panelist
.

Evolution From Sonet/SDH

To Ethernet

FMO Step 1:

Add PONP using COE over
Sonet
/SDH to increase
bandwidth efficiency

PMO:
Sonet/SDH

FMO Step 2:

Begin Migration to Ethernet
over Fiber (
EoF
) network

Existing services unaffected

T1s/E1s

Ethernet

EoS

MSPP

TDM

Sonet/SDH

Ethernet

COE

TDM

Ethernet

COE

TDM

EoF

Packet
Optical
Networking

2G/3G

2G/3G

3G/LTE

2G/3G

3G/LTE

T1s/E1s

T1s/E1s

Packet
-
optical networking platforms with COE facilitate

MBH network migration of multi
-
generation 2G/3G/LTE services

Sonet/SDH

Sonet/SDH

Cell tower


MSC

Packet
Optical
Networking

Meeting MBH Networks’

High
-
Availability Requirements


Link Protection

using IEEE 802.3ad Link Aggregation


For local diversity and protection at cell tower and MSC UNIs and NNIs


LAGs across different cards in a network element


In
-
Service Software Upgrades


Network continues to operate as new software is tested and deployed


Equipment Protection



Redundant switch fabric, control processors, etc.


Service/Network Protection

of Ethernet Virtual Connections
(EVC)


EVC path diversity with sub
-
50ms path protection using ITU
-
T G.8031


Similar to Sonet UPSR path protection (Working path and Protect path)


Dual
-
homed connections at the mobile switching center (MSC)

Bottom Line: No single point of failure










Overlay model:


Pre
-
LTE (2G/3G) and LTE backhaul managed as separate networks


Avoids technical issues such E1/T1 packetization and E1/T1 synchronization


Capex

is driven by parallel networks, and
opex

is a challenge


Integrated model:


Pre
-
LTE and LTE backhaul managed a combined network


Technical considerations such E1/T1 and Ethernet synchronization options


Options to cost reduce backhaul
capex

with varying degrees of complexity (
opex
)

BSC

RNC

aGW

SDH/Sonet

Ethernet

(Best effort?)

Ethernet

(Carrier QoS?)

LTE
GW

HSPA Data offload

LTE

2G, 3G, 4G

2G, 3G, 4G

2G, 3G

Remote

cell site

Nx 3G E1/T1 leased lines

Nx 2G E1/T1 leased lines

Mobile Backhaul Deployments:

Overlay vs. Integrated









Network Synchronization
Challenges: Backhaul Over Fiber

Source: Heavy Reading’s “Ethernet Backhaul Quarterly Tracker” July 2009


More fibered
-
up cell sites, more capacity per site


Fiber assets often owned by third
-
party wholesalers


Excellent opportunities for wholesalers with the right fiber plant


Drives the requirement for multiple synchronization domains



different operators and different wireless technologies



support for legacy E1/T1 and Ethernet

time

Mbit/s

Multiservice

Mobile Backhaul









Access node

BSC

RNC

aGW

Backhaul node

Backhaul node

Backhaul node

2G, 3G, 4G

2G, 3G, 4G

2G, 3G, 4G

Access node

2G, 3G, 4G

2G, 3G, 4G

2G, 3G, 4G

Hub node

Hub node

Multiple technologies and
multiple operators all
delivered within a

single wavelength

Physical

fiber

Wave
-

length

n

Wave
-

length

n+1

4x individually

synchronized

TDM groups

4x individually

synchronized

Ethernet signals

Additional wavelengths
only required if additional
capacity required

DSLAM

2G, 3G

Remote

cell site

Concentration Hub (Site)

With Multi
-
Operator/Technology









BSC

RNC

aGW

Ethernet

E1/T1

Operator 1

3G

Microwave link

Fiber

Operator 1

LTE

Concentration hubs

Operator 2

3G

Operator 2

3G

Operator 1

3G

Operator 3

LTE

Uniquely supporting wholesale solutions for mobile backhaul

Hub node

Backhaul node

Access node

Access node

LTE Migration Path:

Legacy to Hybrid









BSC

RNC

aGW

Hub node

SDH/SONET

DSLAM

Ethernet

LTE
GW

1. Supporting legacy connectivity, synchronization, and OAM

SDH/Sonet

2. Supporting simultaneous native TDM and Ethernet for mobile services
and also fixed
-
line capabilities in the access

Supporting native TDM and Ethernet with multiple synchronized domains

3. Transparent Ethernet connectivity to/from core routers/switches

4. Supporting distributed LTE core architecture (aligned with fixed)

Access node

2G, 3G, 4G

2G, 3G, 4G

2G, 3G, 4G

DSLAM

Ethernet

E1/T1

Fiber

LTE Migration Path:

Hybrid to All
-
IP









BSC

RNC

aGW

1. Access solution to fully support an all
-
IP architecture
(option of supporting legacy with CES)

SDH/SONET

Ethernet

Ethernet / IP
-
MPLS

TDM

TDM

LTE
GW

Ethernet

E1/T1

Fiber

2. Deployable on a per
-
end
-
customer (mobile operator) basis

Access node

2G, 3G, 4G

2G, 3G, 4G

2G, 3G, 4G

DSLAM

DSLAM

Hub node

LTE With Centralized Core









SDH/SONET

BSC

RNC

aGW

DSLAM

Ethernet / IP
-
MPLS

E1/T1

Fiber

1. Supporting a centralized core architecture for both

hybrid and all
-
IP networks

2. Simplified LTE network for mobile operator with further
backhaul opportunities for the wholesale carrier

Access node

2G, 3G, 4G

2G, 3G, 4G

2G, 3G, 4G

DSLAM

Access node

2G, 3G, 4G

2G, 3G, 4G

2G, 3G, 4G

Backhaul node

Hub node

Hub node

“Third
-
party wholesalers are making
some early inroads, but it’s a matter

of time before the incumbent providers
get going and out
-
scale them.













“Aggressive fiber builds by these providers will be able to provide

capacity to meet existing and future 4G requirements.”


“What are the impacts of network sharing?”


“A mix of TDM and Ethernet is a better match for incumbent providers.”


“This is even more pronounced in emerging markets,

since in these markets third
-
party wholesaling hasn’t really taken off.”

The following statements should be considered as debating points.

They do not necessarily represent the opinions


either wholly or
partially


of
Heavy Reading
or of any one
panelist
.

Conclusion


Significant mobile backhaul revenue opportunities for third
-
party
wholesale providers


Driven by wireless operators’ need to significantly reduce opex given the
explosive growth of 3G/4G applications


Third
-
party wholesale providers must carefully select their
mobile backhaul solutions


Need flexible packet optical networking with connection
-
oriented Ethernet
to support growing TDM and emerging Ethernet
-
based backhaul


Capacity growth drives unique challenges in mobile backhaul
deployments


Capacity vs. cost = deeper fiber deployments


Opportunities for facility sharing brings better economics but adds further
challenges, e.g., synchronization


Overall driving 2 dimensions of convergence:


Technology convergence


E1/T1 and Ethernet


Fixed and mobile backhaul convergence

Q&A