TCO Comparison for ECI Telecom s MPLS-TP Based Native Packet Transport Solution for a Mobile Backhaul Network Executive Summary Metro transport networks are undergoing a gradual transition from circuit-based to packet-based services and technologies. Service providers face the challenge of controlling costs as they manage this transition. Though control of capital expenses (CapEx) is a concern as traffic continues to grow rapidly, control of operation expenses (OpEx) is an even greater worry. Day-to-day operations and service provisioning activities are major OpEx components, and service providers seek technology that minimizes operational complexity because it is a root cause of high OpEx. MPLS-TP extends IP/MPLS beyond the core network into the metro network and provides a reliable packet-switching transport between these networks. MPLS-TP simplifies MPLS by eliminating elements of MPLS that are not necessary in a transportoriented network. ACG Research performed two analyses to compare the cost of a mobile backhaul network solution using ECI Telecom s MPLS-TP based Native Packet Transport (NPT) to one using IP/MPLS. The first study compares a pure packet network using the topology and port requirements of an actual mobile backhaul network to support packet-only traffic requirements. Total cost of ownership (TCO) was 55% lower for the MPLS-TP solution. The second study compares the TCO of the same mobile backhaul network with TDM services added to the network. It shows that the NPT solution is much more efficient in handling the addition of TDM services than the IP/MPLS network that uses Circuit Emulation Service (CES) to handle the added TDM traffic. The CapEx of the NPT solution increases by 5% with the addition of TDM services; the CapEx of the IP/MPLS solution increases by 37%. The OpEx savings of 55% in the first study increases to 64% when the TDM traffic is added to the traffic load. 1 Key Takeaways The TCO of a mobile backhaul network is compared for MPLS- TP and IP/MPLS solutions: MPLS-TP has 55% lower TCO, CapEx and OpEx for a pure packet network carrying packet-only traffic. ECI Telecom s NPT solution was compared to TDM over CES for a network carrying both packet and TDM traffic: NPT experiences a 5% CapEx increase when TDM is added to the network; CES experiences a 37% increase. The 55% OpEx advantage of NPT over IP/MPLS widens to 64% when TDM is added to the service mix.
Introduction Metro transport networks are undergoing a gradual transition from circuit-based to packet-based services and technology. The transition is taking place in all market segments. In the residential market broadband services are gaining wide acceptance. New broadband service deployments use packetbased technology whether carried over copper-twisted pair, fiber optics or coaxial cable. Business services are moving to converged IP solutions, including private IP and public cloud solutions. Significant sales of smart phones and tablets are driving mobile operators to deploy advanced 3G and LTE networks. Despite the rapid growth in packet-based solutions there is a very large embedded base of circuit-based infrastructure and services that will transition slowly to packet technology. When planning the transition to packet-based technology service providers must address a number of challenges. Carrier-grade packet-based systems have more demanding performance requirements than enterprise packet solutions. Ethernet s original purpose was to support LAN connectivity for enterprises. Since then the Metro Ethernet Forum and its members have developed the Carrier Ethernet specification that defines standardized services, scalability, reliability, QoS, and service management requirements that service providers need to offer Ethernet as a carrier-grade service. Consequently, carrier-grade packet solutions cost more than enterprise packet solutions. Day-to-day operations activities and service provisioning are primary drivers of OpEx; therefore, it is essential to use technology that minimizes operational complexity, which is a root cause of high OpEx. Technically complex solutions also increase OpEx because they require highly skilled and paid technical staff for operational support work. Building and operating a mix of TDM and packet service offerings during the transition period presents additional operational and cost challenges. MPLS-TP is designed to extend IP/MPLS and its benefits beyond the core network and into the metro network by providing a reliable packet-switching transport between these networks. MPLS-TP simplifies MPLS by eliminating elements of MPLS that are not necessary in a transport-oriented network. ECI Telecom s NPT is an MPLS-TP based packet optical transport solution that can handle both packet and TDM natively as well as use CES. This whitepaper analyzes the cost reduction benefits of MPLS-TP. Two analyses are presented: 1. TCO comparison of the build-out of a pure packet mobile backhaul network using MPLS-TP versus IP/MPLS technology. The comparison uses a mobile backhaul operator s actual network topology and node configurations. 2. A second TCO comparison where TDM traffic requirements are added to the all-packet requirements analyzed in the first study. The same mobile backhaul network topology is analyzed. 2
TCO Modeling Framework Figure 1 shows the topology of a mobile backhaul operator s actual packet-based mobile backhaul network. Packet-Based Mobile Backhaul Network Figure 1 Packet-Based Mobile Backhaul Network Topology Table 1 shows the number and port requirements for each of the six node types in Figure 1. Network Layer Node Type Nodes FE Ports GE Ports 10 GE Ports Access Metro Aggregation A 50 8 4 B 50 16 C 17 32 2 D 17 40 4 E 16 40 8 Metro Core F 6 80 12 Table 1 Configuration of Pure Packet Nodes The total cost of ownership for MPLS-TP and IP/MPLS networks that backhaul traffic from cell sites is calculated for the topology and node configurations shown in Figure 1 and Table 1. The network has three layers and uses GE and 10 GE rings on the metro access, aggregation and core layers. A five-year 3
study is used to establish a representative balance of CapEx and OpEx. All equipment expenses (CapEx) are incurred in Year 1; OpEx is incurred in all five years. All of the CapEx and OpEx associated with the packet technology are included in the TCO analysis. Optical transport equipment and fiber optic cabling are considered sunk costs and are excluded from the analysis. MPLS-TP Solution The MPLS-TP solution is modeled using ECI Telecom s NPT Packet Optical Transport System product line running the MPLS-TP protocol. It features a centralized network management system and is capable of handling Ethernet packets and TDM traffic in their native modes as well as pseudowire technology (CES). Note, however, that the first TCO analysis exclusively addresses pure packet traffic. IP/MPLS Solution The IP/MPLS solution is modeled using a leading router vendor s IP/MPLS Ethernet/switch router product line. It also is capable of carrying both packet and TDM traffic where TDM traffic using pseudowire technology is handled as CES. However, as is the case for the MPLS-TP solution only pure packet traffic is addressed in the first TCO analysis. TCO Analysis Results Figure 2 compares the TCO of the MPLS-TP solution with the IP/MPLS solution for the pure packet network. Figure 2 Five-Year TCO Comparison of MPLS-TP with IP/MPLS Solution for Pure Packet Network The five-year TCO, CapEx and OpEx of the MPLS-TP solution are 55% lower than that of the IP/MPLS solution. The lower CapEx and OpEx of MPLS-TP are attributed to the reduced complexity of the MPLS- TP protocol. This is compared to IP/MPLS and the centralized control plane approach of the MPLS-TP implementation versus the distributed control plane implementation associated with IP/MPLS routers. 4
The simplified MPLS-TP protocol reduces the work of implementing, operating and maintaining the mobile backhaul network. The centralized control plane approach takes cost out of each network element and achieves higher economies of scale and scope via the centralized design. Figure 3 compares the individual OpEx elements for the two solutions. Figure 3 OpEx Comparison for Pure Packet Network Service contract expense shows the largest savings for MPLS-TP compared to IP/MPLS. Service contract expense consists of the annual fee systems vendors charge for 24x7 field support of their products as well as for software upgrades. Service contract expense is directly tied to the purchase price of the network equipment; consequently, the savings produced by the MPLS-TP solution has the same root causes as the CapEx savings. Network care is the second largest savings for MPLS-TP compared to IP/MPLS. Cost of MPLS-TP as compared to IP/MPLS is lower because fewer hours are required for network care activities such as fault isolation, service provisioning and network monitoring. Network care expense also is reduced because less skilled technical staff with lower pay rates is required to perform the work. Floor space cost also is 5
reduced because network elements are simplified by removing control plane functions from the individual nodes. Simpler network elements also require less power and associated cooling, which results in lower expense levels. Engineer, furnish, and install (EF&I) expenses are lower for the MPLS-TP solution for the same reasons that were discussed for network care expense. Simplified operational procedures also result in increased service velocity. The time from the customer s order to revenue recognition is reduced, new services are implemented more quickly, and network faults are resolved more rapidly. This grows revenue while simultaneously increasing customers satisfaction. Higher satisfaction from customers supports higher profit margins and increases customers stickiness. TCO Comparison for Combine Packet and TDM Service Requirements The TCO study in the preceding section showed that an MPLS-TP solution has lower cost than an IP/MPLS solution when deployed across an actual mobile operator s packet-based mobile backhaul network carrying packet-only traffic. This section extends the analysis by considering what the TCO effect is of adding TDM services to the service mix as is usually the case in mobile networks supporting 2G and 3G mobile technology. In this analysis TDM/SDH service requirements are added to the packet traffic previously analyzed. ECI Telecom s Packet Optical Transport product family uses native TDM transport (NPT) to carry the TDM/SDH services. The IP/MPLS solution carries the TDM/SDH services using CES. Table 2 shows the requirements for each port type at each node. Network Layer Node Type Nodes FE Ports GE Ports 10 GE Ports E1 Ports STM1 Ports Access Metro Aggregation A 50 8 4 16 B 50 16 16 C 17 32 2 48 4 D 17 40 4 48 4 E 16 40 8 48 4 Metro Core F 6 80 12 96 4 Table 2 Configuration of Multi-service Nodes Figure 4 compares the CapEx for the NPT and CES solutions carrying packet-only traffic and packet plus TDM traffic. 6
Figure 4 CapEx Comparison of NPT and CES Solutions CapEx increases 5% when TDM/SDH services are added to the packet-based network using the NPT solution. CapEx increases 37% when TDM/SDH services are added using CES. NPT has this economic advantage over CES because native TDM transport is optimized to handle TDM traffic. CES incurs substantial overhead costs when transporting TDM over packet infrastructure. Consequently, native TDM transport of TDM services in a network serving packet and TDM services is much less costly than the CES alternative. Figure 5 compares the OpEx for the NPT and CES solutions carrying a mix of packet and TDM traffic. Figure 5 Comparison of OpEx for NPT and CES Solutions OpEx increases by 3% when TDM/SDH traffic is added to the NPT solution. OpEx, however, increases by 29% when TDM/SDH is added to the CES solution. The sharp increase in OpEx for the CES solution is 7
caused by the increased complexity of handling TDM traffic using CES as compared to handling it as native TDM. Figure 6 provides a breakout of the individual OpEx categories for the NPT solution compared with the CES solution when carrying a mix of packet and TDM/SDH traffic. Figure 6 Comparison of OpEx for NPT and CES Solutions Mixed Packet and TDM The service contract expense category produces the largest OpEx savings when NPT is compared to CES. Service contracts are the annual fees that systems vendors charge for 7X24 vendor support and annual software releases. The fee schedule is tightly linked to the purchase price of the equipment. The routerbased CES solution has a higher purchase price (CapEx) than the NPT solution and consequently CES vendor support fees also are higher for the CES solution. Network care and EF&I expenses also are 8
higher for the CES solution because its complexity creates additional work to install and maintain the equipment. Conclusion Metro transport networks are undergoing a gradual transition from circuit-based to packet-based services and technologies. Service providers face the challenge to control cost as they manage this transition. Though control of CapEx is a concern as traffic continues to grow rapidly, OpEx control is an even greater worry. Day-to-day operations and service provisioning activities are major OpEx components, and service providers seek technology that minimizes operational complexity because it is a root cause of high OpEx. MPLS-TP extends IP/MPLS beyond the core network and into the metro network by providing a reliable packet-switching transport between these networks. MPLS-TP simplifies MPLS by eliminating elements of MPLS that are not necessary in a transport-oriented network. An actual service provider s mobile backhaul network topology was used to compare the TCO of an MPLS-TP solution with an IP/MPLS solution carrying packet-only traffic. The comparison showed that relative to the IP/MPLS solution over five years MPLS-TP has 55% lower TCO, CapEx, and OpEx. MPLS-TP has lower cost because it is a less complex than IP/MPLS, and its centralized control plane approach takes cost out of each network element. A second TCO analysis was performed where TDM/SDH services were added to the traffic requirements of the first study. This was done to compare ECI Telecom s native packet transport solution to the CES solution used by IP/MPLS. CapEx increases 5% when TDM/SDH services are added to the packet-based network using the NPT solution. CapEx increases 37% when TDM/SDH services are added using CES. NPT has this economic advantage over CES because native TDM transport is optimized to handle TDM traffic. The 55% OpEx savings advantage of the MPLS-TP (NPT) solution when handling packet-based traffic increased to 64% OpEx savings when TDM services were added to the packet-only network. ACG Research ACG Research is an analyst and consulting company that focuses in the networking and telecom space. Our best-inclass subject matter analysts have a combined 120+ years of experience and expertise in telecom segments that address both technology and business issues. We offer comprehensive, high-quality, end-to-end business consulting and syndicated research services. ACG Research delivers telecom market share/forecast reports, consulting services, business case analysis, product and service message testing. ACG provides you with accurate market share data, strategic and tactical advice, services and products, and timely answers to the industry questions so that you can better understand market dynamics and grow your telecom operations more efficiently and profitably. Coverage areas focus on the service provider and enterprise spaces in the following domains: Carrier Architecture, IP Video/CDN, Managed Services, Security, Business Case Modeling and Analysis, CPE/Broadband, Telepresence, Packet Optical Transport, Mobility, Cloud, Data Center, Carrier Routing and Switching, and All-IP. Copyright 2012 ACG Research. 9