The Path from 2G and 3G to 4G/LTE Accelerate Mobile Network Operator Revenue Growth with Mobile Broadband Services
Executive Summary Mobile Network Operators (MNOs) can t afford to wait to travel the path to 4G/LTE network deployment. The opportunity cost is too great. Declining 2G revenues and aging overburdened 2G/3G infrastructure are forcing MNOs to migrate to smarter, more customer-centric 4G/LTE network technologies that enable new consumer and business-grade mobile broadband (MBB) services. LTE-enabled MNOs can efficiently expand network capacity and reach, reduce backhaul cost per bit, and differentiate services. They can provide potentially more profitable local-to-global internet content, digital entertainment, cloud-based business applications, and IP-based data, voice (VoLTE) and video (ViLTE) communication services to rising numbers of mobile subscribers craving higher-quality digital experiences. If MNOs don t move first to capture new 4G/LTE-enabled revenue opportunities in emerging and hard-to-reach markets, competitors surely will. underpinned by a global data communications network platform, O3bConnect, and O3b s managed services business model a combination proven to accelerate MNO revenue growth. Only by leveraging O3b s unique business model and combination of purpose built Medium Earth Orbit (MEO) satellite-driven network services and solutions with LTE, can MNOs: 1. Easily and reliably scale network infrastructure to relieve the increasing stress on 2G and 3G networks from social media, image sharing, and constant streaming of video content to meet business and consumer customers rising, but differing expectations for a high Quality of Experience (QoE); 2. Clearly differentiate themselves in new and established markets with new MBB-enabled services (and revenue streams) utilizing a unique combination of fully managed scalable, lower latency 4G/LTE and MEO-enabled network solutions; and 3. Quickly deploy intelligent, future proof 4G/LTE networks to gain operating efficiencies that better position MNOs for growth and success in a 5G future. O3b already enables MNOs in every region around the world, to successfully accelerate revenue growth by pairing low latency 4G/LTE and MEO connectivity that extends existing and enables new mobile broadband services in new markets. By following the successful O3b MNO model, MNOs can develop market leading positions within their respective markets, by having more cost-efficient, better performing IP transit, access and backhaul solutions from O3b. 2
New Opportunities, Rising Expectations & The Limits of 3G Underserved and hard-to-reach populations around the globe present lucrative growth opportunities for Mobile Network Operators (MNOs) that can smoothly and cost-effectively transition from 2G and 3G to 4G/LTE technologies to enable new mobile broadband (MBB) services in new and existing markets. Per Ericsson, by the end of 2021, the number of LTE subscriptions is expected to rise to a whopping 4.3 billion 1. MNOs will welcome the new revenue and ARPU growth opportunities LTE networks enable (Fig. #1), having experienced recent declines in 2G voice, SMS service revenues and ARPU. Growth is expected to come from adding new subscribers in emerging markets and more unconnected subscribers. But exponential rises in network traffic from mobile subscribers, require MNOs to deploy an efficient future proof network architecture and scalable solutions to support and manage growth. Figure 1: Mobile Operator Revenues, 2015-2025; GSMA Report The 5G era: Age of boundless connectivity intelligent automation, 2017 Consumer and business subscriber expectations for mobile internet services with an exceptional quality of experience (QoE) are continually rising. Consider that today, 50% of mobile users on 3G networks expect a web page to load in less than two seconds. Yet, current average load times for mobile pages top out at 19 seconds over a 3G connection 2. Additionally, sites that load in 5 seconds vs 19 seconds observed: 25% higher ad viewability 70% longer average sessions 35% lower bounce rates Extensive research shows that consistently faster mobile page loads result in, not only a better QoE for the end-user, but higher MNO customer retention and mobile purchasing rates, and twice as much mobile ad revenue for advertisers 3. Additional traffic loads on already oversubscribed 2G and 3G networks can easily lead to network outages, application latency, bandwidth contention, and a poor Quality of Experience for mobile subscribers, negatively impacting MNO retention rates and revenue. Existing 2G and 3G networks simply cannot scale, nor can they cost-effectively aggregate and backhaul network traffic from a proliferating number of small cells (low-powered cellular radio access nodes and enodebs) and new MBB handsets. 2G and 3G networks also cannot slice, differentiate service quality or prioritize delivery of data, video and voice streams (e.g. emergency alerts vs. email). To deliver data over 2G and 3G networks, TDM voice traffic must be converted from circuit switched (TDMA) to packet switched (IP) back to circuit switched (TDMA) to reach its destination. This conversion process requires excessive bandwidth use, unnecessarily increasing carrier transit, access and backhaul costs. It also introduces latency or delays in traffic flowing over the network. And since mobile users QoE is largely determined by the cumulative end-to-end network latency of data traversing a mish mash of network segments, any weak link in the data delivery chain (e.g. 2G/3G radios, extra hops, loop-backs, hand-offs between carriers, etc.) can degrade QoE, resulting in potential customer churn and financial losses for MNOs. ¹ Ericsson Mobility Report, June 2016 ² Google Data, Aggregated, anonymized Google Analytics data from a sample of mweb sites opted into sharing benchmark data, n=3.7k, Global, March 2016 3 Google Data, Aggregated, anonymized Google Analytics and DoubleClick AdExchange data from a sample of mweb sites opted into sharing benchmark data, n=4.5k, Global, June 2015 - May 2016 3
The Promise of 4G/LTE 4G/LTE has evolved from decades of mobile innovations and successful long-term use. This proven high-performance all IP-based 4G network architecture, when coupled with low latency backhaul, efficiently transports voice, video and data over a single fixed or mobile managed network connection, leaving a MNO with no network hierarchy to manage. Used to support bandwidth intensive applications with differing service level requirements, point to point tunneling in a multi-tenant environment securely connects 4G/LTE edge locations in remote and hard to reach areas, directly to the evolved packet core (EPC) network, resulting in: Higher data transfer speeds, throughput, and lower end-to-end network latency for unbeatable QoE; Greater coverage using the 700 MHz band leading to improved economics in remote and rural areas; and A resilient future proof, revenue enabling network architecture ready for a 5G future. 4G/LTE networks are already proving to be a far more intelligent architecture choice. Quality of Service (QoS) and Class of Service (CoS) management capabilities allow MNOs to prioritize traffic based on application requirements and changing network conditions. Application aware network performance profiles can be created for different classifications of MNO customers (high, medium, low priority) in dedicated or multi-tenant environments. For example, consumers will accept some latency when sending an email with a picture attached but not if it causes poor voice and video during a video call. By segmenting traffic using profiles, MNOs can ensure the right QoE is available at the right time to meet consumer or business users expectations. The ability to have separate profiles also presents opportunities for MNOs to develop and offer premium business-to-business focused broadband packages with multiple service levels, in addition to the best effort MBB services typically available to consumers. Enabling Smart Growth MNOs transitioning to 4G/LTE networks leveraging O3b s managed MEO satellite-enabled connectivity solutions will benefit from having a smarter network infrastructure and business model that delivers the following: No need for TDM-to-IP-to-TDM as all network elements are fully IP-based and delivered over a flattened network architecture monitored, proactively managed, and optimized for industry leading low end-to-end low latency. Better MNO returns on investment due to the new revenue generating capabilities of LTE (Fig. #2) and use of a reduced CAPEX and OPEX pay-as-you-grow business model. MEO enabled backhaul combined with LTE innovations enable data delivery to end users at less than half the cost/bit of existing GSM and 3G technologies. 4G/LTE radio interfaces have the flexibility to operate in both Frequency Division Duplexing (FDD) and Time Division Duplexing (TDD) modes, bonding channels of different widths and frequency bands to enable very high data throughput. Uplink and downlink capacity ratios can also be modified dynamically as needed, providing flexibility for operators. LTE-Advanced allows speeds up to 1 Gbps for download by bonding together 60 MHz of spectrum in different frequency bands using 256 QAM modulation and 4x4 MIMO antenna systems multiple antennas are used together to provide higher throughput. MNOs can offer new broadband services in new markets that, due to use of a better business model, previously would have been unprofitable. Figure 2: O3b Customer Results Case Study, 2016 4
Leading MNOs Pave the Way O3b has helped the world s largest MNOs successfully transition from 2G or 3G networks to 4G/LTE with: superior end-to-end managed backhaul with seamless 2G/3G handovers; multi-tenant scalable shared capacity using secure tunneling; improved link aggregation and optimization techniques; and application aware Quality of Service (QoS) capabilities used to differentiate services. One successful, growing South American MNO uses an O3b solution (Fig. #3) with dedicated Classes of Service (CoS) to segment and prioritize network traffic to deliver revenue generating Voice over LTE (VoLTE) and Video over LTE services (ViLTE). This proven solution enables the MNO to offer new revenue generating applications over a market leading low latency, high performance LTE/MEO infrastructure. The fully managed solution consistently delivers an unmatched high Quality of Experience (QoE) for users consuming content, communicating in real-time online, or when using new latency sensitive internet and cloud-based business applications. The MNO s Key Performance Indicators (KPIs) below (Fig. #4) depict actual results from the O3b solution that exceed the MNO s desired targets. Note that the O3b solution provides performance Figure 3: MNO Multi-Site Network Backhaul Solution and QoE KPIs in-line with that of microwave connectivity. Results will vary though depending on the MNO and service locations and configurations. Figure 4: O3b Customer MNO KPI Report 5
The following KPIs are of note, especially the very low E-RAB rate. 1. Mobility (HO SR) - Handover attempt (target 90%) vs. success (actual 95.3%) variation is +5.97% 2. Accessibility (RRC) - Radio Resource Control attempt (target 90%) vs success (actual 99.92%) variation is +11.02% 3. Retainability (E-RAB) E-UTRAN Radio Access Bearer Call drop rate, target 3% actual 0.33% variation 89% Because of the high quality of the S1 interface and high availability of the link between the enb (remote) and MME (core) shown in the KPIs, the MNO can provide advanced network services such as VoLTE and ViLTE with fiber-like performance for business customers who want a premium service. Figure #5 illustrates changes in uplink and downlink requirements over time as users in a large remote city (e.g. population of 30-50K people) consume content and communication services across the LTE network. A rapid increase in usage resulting in bandwidth demand above expectations could have led to congestion, but as link is dynamically augmented to handle more traffic, usage is encourage consequently driving revenues higher from a near 100% prepaid subscriber base. A large MNO with operating units across Africa has also achieved positive results using a similar MEO + 4G/LTE aggregation and backhaul solution from O3b. 18 120.0 16 14 100.0 12 80.0 In TB 10 8 60.0 In Mbps 6 40.0 4 2 20.0 - Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Month 13 Month 14 Month 15 Month 16 Month 17 Month 18 Month 19 Month 20 Month 21 Month 22 Month 23 Month 24 Month 25 Month 26 Month 27 Month 28 Month 29 Month 30 Month 31 Month 32 Month 33 Month 34 Month 35 Month 36 - Figure 5: Representative traffic volume billing traffic vs. throughput for uplink (orange) ad downlink (blue) in Mbps MNOs in remote or hard to reach markets can leverage this type of multi-tenant solution to be first and best-to-market with a host of differentiated mobile broadband services for consumers and enterprises. While each MNO has unique requirements, O3b customers can expect a common-sense risk reduction, network and growth strategy that delivers: Proven success transporting 3G, 4G/LTE traffic with streaming speeds up to 2Gbps per beam Quick deployment accelerating time-to-service and time-to-revenue Minimal points of failure suitable for remote areas increase reliability and minimize need for maintenance Immediate revenue opportunities to drive market penetration End-to-end managed service supported by a strong SLA The ability to pay only for capacity used, not estimated With unconstrained, efficient network capacity and a managed services business model, MNOs can now offer new or expanded mobile and broadband services anywhere, without worrying about network performance bottlenecks or hindered cash flow due to CAPEX outlays. 6
MODEC, Brasil MNOs and the 5G Future MNOs that have successfully and cost-effectively transitioned from 2G and 3G networks to 4G/LTE, will find themselves well positioned for a 5G future. High-throughput satellites (HTS) in GEO, MEO and LEO will support 4G and 5G mobile networks into the future to ensure the international broadcasters, MNOs, governments and enterprises that depend on O3b/SES Networks every day, will have ultra-reliable communications virtually anywhere, any time. These four sweet spots offer MNOs competitive advantages low latency, high performance, ubiquitous connectivity to enable and extend terrestrial 5G networks to remote and unserved areas. With a 5G future on the horizon and the evolution to a global digital economy full of new possibilities, true ubiquitous coverage will be key for success. By cost-effectively leveraging a customer-centric business model and next-generation evolved packet core network platform, with 4G/LTE/5G technologies at the network edge, operators can launch new revenue generating services for which they can scale and manage network capacity and quality more easily and efficiently across mobile, satellite, microwave, and terrestrial network segments to reach 99% of the world s population. Learn more about O3bNetwork Services, O3bPerformance Services and O3bMarket Solutions. Email: getconnected@o3bnetworks.com Website: o3bnetworks.com Copyright 2017 O3b Networks. All specifications subject to change without notice.