Crucial backhaul economics

Transcription

1 Next generation thinking Crucial backhaul economics The latest Total Cost of Ownership comparison of backhaul solutions 7 December 2011

2 Crucial backhaul economics today s agenda Overview of the Total Cost of Ownership project - Lance Hiley The latest financial comparison of backhaul solutions - Monica Paolini Meeting the challenges of mobile backhaul - Monica Paolini How VectaStar achieves cost savings in a live backhaul environment - Lance Hiley Your questions - Q&A will be open for 10 minutes Crucial backhaul economics webinar 2

3 Crucial backhaul economics the challenge Lance Hiley VP Marketing Cambridge Broadband Networks Limited Objectives and overview of the Total Cost of Ownership project Crucial backhaul economics webinar 3

4 Crucial backhaul economics Why is understanding Total Cost of Ownership crucial for backhaul market? Operator financial focus is higher than ever Operators demands Capex and opex are at the forefront of the CEO s thoughts Potentially millions of small cells on the horizon Crucial backhaul economics webinar 4

5 Crucial backhaul economics the challenge Objective Create a financial model tool to analyse the Total Cost of Ownership (TCO) for popular backhaul technologies to help network operator decision making. Based on: An independent and fair analysis Accurate cost estimates Research from customers and vendors across continents Industry published data by Next Generation Mobile Networks (NGMN) Crucial backhaul economics webinar 5

6 Basis: backhaul solutions and scenarios Solutions Point-to-point (PTP) microwave Point-to-multipoint (PMP) multipoint microwave E-Band microwave Leased fibre Built fibre Scenarios LTE 3G LTE small cells Crucial backhaul economics webinar 6

7 Basis: cost parameters Capex Outdoor equipment costs Indoor equipment costs Network planning, site acquisition and installation Opex Site rental fees, leased line fees Spectrum licensing fees Recurring operating costs (e.g. power, maintenance) Model was populated with median values across all markets Crucial backhaul economics webinar 7

8 Basis: backhaul topologies Point-to-multipoint (PMP) topology Point-to-point (PTP) and E-band star topology HUB HUB Up to 240 sites supported, depending on site capacity Max 16 sites supported Point-to-point (PTP) and E-band tree-and-branch topology Point-to-point (PTP) and E-band ring topology HUB HUB LEVEL 1 LEVEL 2 LEVEL 3 Max 15 sites supported Max 10 sites supported Crucial backhaul economics webinar 8

9 Crucial backhaul economics the results Monica Paolini, PhD Founder and President Senza Fili Analysis and conclusions from the Total Cost of Ownership (TCO) project Crucial backhaul economics webinar 9

10 December 9, 2011 TCO analysis of backhaul costs: why a long-term view matters 10 Confidential - Do not distribute without permission Senza Fili Consulting LLC Analysis approach Small network that scales in size, same size assumptions across solutions Cost assumptions are for median prices across developed and emerging markets, and are consistent across solutions No specific allowance was made for discounts made on the basis of contract size or operator competitive position Analysis of multiple geographic and competition environments: presentation focuses on single one, model allows to change assumptions Crucial to look at both capex and opex Real cost of backhaul is opex - for both wireless and fiber solutions Looking primarily at capex can be easier, but misleading Impact of equipment costs is often overestimated But money is not everything Non-financial considerations in many cases prevail (and rightly so) But understanding tradeoffs makes it possible to take right decision Our analysis focuses on drivers dynamics: Costs change across regions and types of operators, drivers stay the same

11 December 9, 2011 Capex drivers: PMP reduces the footprint, and the costs 11 Confidential - Do not distribute without permission Senza Fili Consulting LLC Source: Senza Fili Consulting PMP topology: fewer equipment terminals, as single hub supports multiple sites 15 sites: 18 (15 +3) radios with PMP, 30 radios with PTP Fewer terminals: less equipment, less sites to be installed, lower capex

12 December 9, Confidential - Do not distribute without permission Senza Fili Consulting LLC Opex also scales with number of installed radios Source: Senza Fili Consulting Opex cost items are constant across wireless solutions Overall opex depends on topology: Number of terminals Aggregation gains

13 13 Confidential - Do not distribute without permission Senza Fili Consulting LLC A closer look at cost drivers PTP compared to: PMP E-band Leased fibre Capex Equipment costs, outdoor Equipment costs, indoor Network planning, site acquisition, installation Opex Site rental fees, leased line fees Spectrum licensing fees N/A Other recurring operating costs = higher cost than PTP; = lower cost than PTP; = comparable cost as PTP

14 October 4, Confidential - Do not distribute without permission Senza Fili Consulting LLC Summary of results PMP is the most cost effective backhaul Overall cost savings of 49% over PTP microwave for LTE networks 31% cheaper capex than PTP microwave 53% cheaper opex TCO of backhaul networks is dominated by opex For PMP, opex accounts for 83% of TCO For PTP and E-band, opex accounts for 76% of TCO PMP cost effectiveness is driven by Less equipment to be deployed, installed and maintained Leveraging traffic aggregation gains Source: Senza Fili Consulting

15 October 4, 2011 Meeting the challenges of mobile backhaul: high traffic volumes and small cells 15 Confidential - Do not distribute without permission Senza Fili Consulting LLC High data traffic loads changes the nature of mobile backhaul Capacity density rather than coverage becomes a major issue Small cells quickly add to backhaul costs Need to keep equipment footprint down to contain capex and, primarily, opex Solutions like PMP that lower amount of installed equipment are more cost effective: Lower installation costs Lower opex Added benefits: faster installation, smaller footprint

16 How VectaStar achieves these cost savings in a live backhaul environment Lance Hiley VP Marketing Cambridge Broadband Networks Limited How VectaStar achieves these cost savings in a live backhaul environment Crucial backhaul economics webinar 16

17 VectaStar Gigabit Backhaul Solution VectaStar Remote Terminal All-outdoor design 150Mb/s throughput VectaStar Access Point All-outdoor design Supports 8 remote terminals per sector 150Mb/s throughput 10.5, 26 & 28GHz ETSI spectrum support VectaStar Radio Controller (Hub) Aggregates and switches 8 Access points 1U Rack mount, 10Gb/s backplane capacity Supports 240 Remote Terminals per hub 300Mb/s/sector capacity VectaStar is a carrier-grade multipoint microwave solution with the capacity to handle the aggregated traffic from multiple HSPA and LTE sites Each connection requires one radio, one visit, meaning less time and money to deploy Commercial in confidence 17

18 Case study: European LTE network Brief: LTE backhaul for dense urban network emphasis on performance and speed of deployment VectaStar hubs situated on existing macro sites in dense urban setting each covering 2sq. Km 150 Mb/s peak performance 90 Mb/s delivered to customers Stable sub-600 μs latency In the words of the customer: The only other feasible alternative to (VectaStar) is leased fiber. Speed to deploy and flexibility in deployment are the key VectaStar advantages (it takes months to set-up leased fibre connections but VectaStar takes hours. It also has 25% lower TCO over 2 years! Commercial in confidence 18

19 Summary Multipoint microwave is a fast and cost effective way to build backhaul networks Low capital requirements Low operating costs Fast build-out Long deployment life Mature VectaStar solution Deployed across Europe, Middle East and Africa Compatible with what operators run now and anything they re planning for the future Commercial in Confidence 19

20 Your questions Lance Hiley: Monica Paolini: Download the white paper: /resources/white-papers