metro cells white paper

S T R A T E G I C W H I T E P A P E R

In an effort to meet rapidly growing capacity demands, mobile service providers (MSPs)

are increasingly augmenting traditional macro expansion with network offloading solutions.

It is predicted that small cells (femtocells) will account for a steadily increasing proportion

of the offloaded traffic.

Metro cells, the latest evolution in small cells, promise to be ideal for network offloading. Not

only do they provide greater coverage and capacity, but they are also owned and managed

by the MSP, which simplifies the implementation of a network offloading solution. However,

are metro cells cost effective? To answer this question, Alcatel-Lucent conducted a case

study that compares the total cost of ownership of metro cells with a traditional macro

expansion solution. This paper describes the case study and its results.

Metro CellsA cost-effective option for meeting growing capacity demands

Table of contents

1 1. Introduction

1 2. The data explosion continues

2 3. Key strategies for meeting soaring capacity demands

3 4. Metro cells: the latest evolution in small cells

3 5. Do metro cells offer cost-effective capacity?

3 5.1 Case study methodology

5 5.2 Assumptions

5 5.3 The results

8 5.4 Key conclusions

8 6. Other advantages of metro cells

9 7. Alcatel-Lucent 9360 Small Cell solution

9 8. Abbreviations

9 9. References

Metro Cells | Strategic White Paper 1

1. Introduction

The unprecedented growth of mobile data continues to gain momentum, with no signs of slowing in the near future. Mobile service providers (MSPs) are being challenged to meet growing capacity demands cost effectively because revenue is not keeping pace with data growth. To meet this challenge, MSPs are increasingly augmenting traditional macro expansion with network offloading solutions. Small cells (femtocells) are expected to account for a steadily increasing proportion of the offloaded traffic.

Metro cells, the latest evolution in small cells technology, promise to be ideal for network offloading. Not only do they offer greater coverage and capacity, but they are also designed for use in both indoor and outdoor hotspots — where most data usage occurs. More importantly, unlike other small cells used in homes and enterprises, metro cells are owned and managed by the MSP. This greatly simplifies the implementation of a network offload solution.

However, there are some unknowns associated with metro cell offloading solutions. Are such solutions cost effective and, if so, how much can a MSP expect to save? What does a typical metro cell deployment look like?

To answer these questions, Alcatel-Lucent Bell Labs Business Modeling and Wireless Network Design teams conducted a case study that compares the total cost of ownership (TCO) of traditional macro expansion with that of a metro cell offloading solution. The reference location for the study was a dense urban area in Western Europe. This paper presents the results of the study.

2. The data explosion continues

The Internet has revolutionized communications. People download music, videos and books, play games, and use social networking sites such as Facebook® and Twitter™ to stay socially connected. With the availability of mobile high bandwidth coverage, people are increasingly choosing to access the Internet over mobile broadband. According to Ovum, the number of mobile broadband connections more than doubled between 2008 and 2010, and will more than triple between 2010 and 2015.1

Helping drive up the number of mobile broadband connections is an increasing number of sophisticated end-user devices such as smartphones and tablets, which offer easy access not only to the Internet, but also to a growing number of mobile applications not supported on an earlier generation of wireless devices. Alcatel-Lucent estimates that the number of smartphone connections will jump from 500 million in 2010 to 2.5 billion in 2015. During this same period, the urban density of smartphones will increase 32 times, jumping from 400/km² in 2010 to 12,800/km² in 2015.

Smartphones, tablets and other such devices also consume much more bandwidth than the previous generation of wireless devices. According to Bell Labs analysis, a smartphone generates as much data traffic as 20 feature phones, while a tablet generates 100 times as much traffic.

Furthermore, applications that are rich in multimedia content are driving up data traffic on almost all wireless devices., Bell Labs predicts that by 2015 the amount of data generated by a smartphone will increase by 18 times over today’s level, while that generated by tablets and dongles will increase by seven times.

1 Mobile Broadband Connections and Revenues Forecast: 2010–15, Steven Hartley, Ovum, March 2011

Metro Cells | Strategic White Paper2

The net result of all this activity will be an unprecedented growth in wireless capacity demand. Indeed, AT&T recently reported that it experienced wireless data growth of more than 2000 percent between 2007 and 2010.2 For AT&T and other MSPs, this phenomenal growth is not going to slow any time soon. Alcatel-Lucent predicts that mobile data will increase 30-fold between 2010 and 2015 (Figure 1).

Figure 1. Worldwide mobile traffic by device type

3. Key strategies for meeting soaring capacity demands

According to a recent report issued by Telesperience, the two strategies MSPs consider key to meeting soaring capacity demands are macro expansion and network offload.3

Macro expansion is the traditional coverage and capacity solution. It consists of deploying additional radio carriers for which spectrum is available, and/or cell splitting, in which the MSP divides the radio coverage of a macro cell site into two or more new cell sites. Deploying new macro sites is usually much more expensive and complex than deploying an additional carrier, especially in dense urban areas where suitable sites may be hard to find. New macro sites require costly antenna and radio equipment, site acquisition and leasing, civil works and extensive network planning. They also require site permits, which are not always easy to obtain due to zoning restrictions and public concerns over the environment and electromagnetic fields.

Network offload offers an alternative to macro expansion. In a cellular network, traffic is carried from an end-user device to the cell site and then to the core network using the MSP’s backhaul. With network offload, cellular traffic from the end-user device is redirected to a local access point, such as a small cell (femtocell) or Wi-Fi® router. It is then carried over a fixed broadband connection, either to the MSP’s core network or to another Internet destination. This reduces the traffic carried over the MSP’s radio and backhaul networks, thereby increasing available capacity and postponing the need for radio and backhaul investments.

2 AT&T Inc. 2010 Annual Report. February 20113 Telesperience Data Sheet: Key Strategies for Solving the Capacity Crunch, Amdocs, November 2010

Feature phones Smartphones

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Many MSPs have already implemented network offload. Juniper Research forecasts that by 2015, 63 percent of mobile data traffic will be offloaded to fixed networks, with small cells accounting for a steadily increasing proportion of the total offloaded traffic.4 By offloading traffic from the network, small cells reduce the strain on the MSP’s most valuable and expensive resources — the macro cell sites — and serve to cost-effectively increase capacity density by deepening coverage in areas already covered by the larger macro network.

4. Metro cells: the latest evolution in small cells

Metro cells, the latest evolution in small cells, are based on the same low-cost femtocell technology that has been successfully used in home and enterprise cells, but with enhanced capacity and coverage. With higher processing and transmit power, the first generation of metro cells is engineered to serve from 16 to 32 users and provide a coverage range from less than 100 meters in dense urban locations to several hundred meters in rural environments. However, unlike home and enterprise cells, metro cells are owned and managed by an MSP and typically used in public or open access areas to augment the capacity or coverage of a larger macro network.

Available in both indoor and outdoor versions, metro cells are plug-and-play devices that use Self-Organizing Network (SON) technology to automate network configuration and optimization, significantly reducing network planning, deployment and maintenance costs. While indoor versions use an existing broadband connection to backhaul traffic to a core network, outdoor versions may be opportunistically deployed to take advantage of existing wireline or wireless sites and backhaul infrastructure, such as Fiber to the Node (FTTN), Fiber to the Home (FTTH), Very-high-speed Digital Subscriber Line (VDSL) street cabinets, and DSL backbone.

Since metro cells use licensed spectrum and are part of the MSP’s larger mobility network, they provide the same trusted security and quality of service (QoS) as the macro network. With seamless handovers, users can roam from metro cells to the macro network and the reverse. Metro cells also deliver the same services as the macro network (for example, voice, SMS, and multimedia services), and support APIs that may be used for developing new, innovative services. In short, metro cells promise to be the ideal small cells for network offloading.

5. Do metro cells offer cost-effective capacity?

Does network offloading to metro cells offer a cost-effective option for meeting growing capacity demands and if so, how much can a MSP expect to save? What does a typical metro cell deployment look like?

To answer these questions, the Alcatel-Lucent Bell Labs Business Modeling and Wireless Network Design teams conducted a five-year case study that compared the TCO of metro cells with a traditional macro expansion solution.

5.1 Case study methodologyThe case study is based on a reference area of 8 km² (approximately 3 mi2) within a dense urban city in Western Europe covered by an optimized W-CDMA network. The network in the 8-km² reference area supports 40,000 subscribers, of which 4000 are 3G broadband data users, as well as a full range of packet-switched services, from packet-switched 64/64 to packet-switched HSUPA/HSDPA.

4 Mobile Data Offload & Onload: WiFi & Femtocell Integration Strategies 2011-2015, Juniper Research, March 2011


To simulate growth in capacity demand, the case study assumed that the reference area experienced data growth of between 40 and 70 percent per year, resulting in a 16-fold increase over the course of five years. Figure 2 illustrates the projected cumulative five-year mobile data growth for the reference area.

Figure 2. Five-year cumulative mobile data growth for the case study reference area

Data growth affects traffic mix in a network. Therefore, Bell Labs calculated the traffic mix for years one through five in the case study by taking the previous year’s traffic mix and incrementing both the number of broadband subscribers and packet-switched services utilization in accordance with that year’s data growth.

In mobile networks, data traffic is not evenly distributed. Some sectors/cells have a higher concentration of traffic than others. To reproduce this in the case study, the Alcatel-Lucent Radio Network Planning (RNP) tool was used to create load distributions that would typically be seen in the field.

Bell Labs then ran a network simulation for each year of the case study, using the network design, traffic mix and load distribution for the simulated year. The simulation was run year after year until the capacity limit of the network was reached, which was indicated by a rejection rate greater than two percent. The first time the rejection rate was reached, the simulation branched into two paths, with one path simulating the traditional macro upgrade and the other the metro cell upgrade (Figure 3).

Figure 3. Macro and metro cell upgrade strategies

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The strategy for the macro cell upgrade was to first activate the extra carrier (represented by the area in pink in Figure 3), followed by the deployment of additional macro sites when required. For the metro cell upgrade, the extra carrier was allocated to small cells and increases in data traffic were addressed by the deployment of metro cells.

5.2 AssumptionsThe MSP was assumed to be a converged operator, holding both wireline and wireless assets.

The case study assumed that there were 28 macro sites within the reference area and that all 28 sites had two radio carriers activated. It further assumed that the MSP owned an additional, inactive carrier.

For the macro upgrade, the case study assumed that there was sufficient existing backhaul for the carrier upgrade, but that new backhaul was required by new macro sites (Table 1). It further assumed that new macro sites required Node Bs, but not additional Radio Network Controller (RNC) capacity.

Table 1. Backhaul assumptions

MACRO UPGRADE TYPE OF BACKHAUL USED

Macro carrier activation Existing optical fiber

New macro site New optical fiber

METRO CELL UPGRADE

Co-sited outdoor metro cell Existing VDSL

New site outdoor metro cell New VDSL

Indoor metro cell Existing indoor VDSL

For the metro cell upgrade, the case study assumed that both indoor and outdoor metro cells were used with open access, each supporting 16 users. All indoor metro cells were assumed to use existing backhaul. Outdoor metro cells, however, could either be co-sited with existing backhaul infrastructure, such as VDSL street cabinets, or require new sites and backhaul.

Capital expenditures (CAPEX) for the metro cell upgrade included the metro cell access points, the Alcatel-Lucent 9365 Small Cell Gateway and other core network elements, such as the security gateway, Network Timing Server (NTS) and the Domain Name System/Time of Day (DNS/ToD) equipment. The study assumed that the Small Cell Gateway and core elements supported a total rollout of 1,700 metro cells, which was the number of metro cells required to provide network offload for the entire city in which the reference area was located. However, since this case study was based on a small specific area within the city, only a proportional cost of the small cell equipment required for the reference area (the number of required metro cells divided by 1700) was used.

5.3 The resultsThe network simulation showed that the existing macro network was able to sustain traffic growth for the first two years. However, by year three, it was no longer able to meet growing capacity demands without significant upgrades.


5.3.1 Macro upgrade

With the macro upgrade, capacity demands in year three were addressed by activating the third radio carrier at all 28 macro sites within the reference area. This was enough to satisfy capacity require-ments until year four, when two new macro sites were required in the areas with the highest growth. Data growth continued and, by year five, nine additional macro sites were needed. Figure 4 presents a yearly breakdown of the equipment required for the macro upgrade.

The TCO for year three was a modest 77,000 euros. This was because activa-tion of the extra carrier required only a small CAPEX investment for radio equipment. However, in year four, the addition of two new macro sites more than tripled the TCO, causing it to jump to 241,000 euros. The main contributor to the higher TCO was CAPEX for the new sites, which included costly antenna and radio equipment as well as deployment services, such as site acquisition and civil works. Additionally, the new sites also required new backhaul and incurred additional operating expenditures (OPEX) for site rental, power and operations. With the nine additional sites required in year five, the TCO leapt to 1,112,000 euros. Although year five required the same equipment and services as year four, the amount required was more than four times as much, significantly increasing the TCO. Figure 5 presents a yearly breakdown of the TCO for the macro upgrade solution.

The three-year TCO for the macro upgrade totaled 1.43 million euros. Although the TCO for year three was modest, at 77,000 euros, TCO for years four and five topped 1.3 million euros due to the requirement for 11 new macro sites. Notably, civil works and radio equipment combined accounted for 84 percent of the cost of each new site.

Figure 4. Yearly macro cell upgrade requirements

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5.3.2 Metro cell upgrade

The strategy used for the metro cell upgrade was to initially deploy metro cells in dense outdoor hotspots, opportunistically taking advantage of existing VDSL sites, followed by a broader deployment of metro cells, both indoors and out, as overall capacity demands increased.

With the metro cell upgrade, the capacity requirement for year three was satisfied with 31 co-sited outdoor metro cells. By year four, 39 more metro cells were required (37 for indoor hotspots and two for outdoor hotspots) to offload the most loaded cells/sectors. Both outdoor metro cells required new sites. Data traffic continued to grow and, by year five, an additional 74 indoor and two outdoor metro cells were needed in the areas experiencing the highest rejection rates. As with year four, both outdoor metro cells once again required new sites. Figure 6 provides a summary of the equipment required for the metro cell upgrade.

The TCO for the metro cell upgrade in year three was 206,000 euros. Since year three was the first deployment of the Alcatel-Lucent 9360 Small Cell solution, the CAPEX included the cost of the 31 outdoor metro cells, and the total proportional cost of the Alcatel-Lucent 9365 Small Cell Gateway and core equipment. In year four, the TCO decreased to 155,000 euros. It included CAPEX for the 39 new metro cells and their deployment costs, backhaul for two of the metro cells and OPEX for operations and maintenance. Year five was a repeat of year four, but in larger volumes, which drove the TCO up to 279,000 euros. The TCO included CAPEX for the deployment of 76 new metro cells, backhaul for two of the metro cells and OPEX. Figure 7 shows a yearly breakdown of the TCO for the metro cell upgrade solution.

The three-year TCO for the metro cell upgrade totaled 640,000 euros. Compared to the macro upgrade, the TCO of the metro cell upgrade was more evenly distributed between years three and five. Since metro cells are small, low-cost access points that are simple to install (they do not require civil works), their TCO was much less sensitive to capacity increases than macro sites. After the initial investment for the Small Cell Gateway and core equipment in year three, capacity demands were easily satisfied with the deployment of metro cells on an as-needed basis.

Figure 6. Metro cell upgrade requirements

Co-sited outdoor metro cells Indoor metro cells

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5.4 Key conclusionsDoes network offloading to metro cells offer a cost-effective option for meeting growing capacity demands?

Indeed it does. The case study shows that in dense urban areas metro cells are more cost effective in meeting growing capacity demands than expanding the macro network. The three-year TCO for metro cells was 640,000 euros compared to 1.43 million euros for the macro upgrade (Figure 8). The TCO for metro cells was, therefore, 45 percent of the cost of the macro upgrade, giving metro cells a 55-percent cost advantage.

The case study further shows that metro cells are most cost effective in areas where new macro sites are required. The larger the number of macro sites required, the greater the economic benefits offered by metro cells. Metro cells cost much less than macro radio equipment and do not require civil works that heavily contribute to the higher deployment costs of macro sites.

6. Other advantages of metro cells

Metro cells provide MSPs with a low-cost option for quickly expanding capacity and coverage. They offer other advantages as well.

Because metro cells are small, unobtrusive devices with low transmit power, they can be deployed just about anywhere, giving MSPs added flexibility in radio planning. They may be mounted on the side of a building or street pole, or placed inside a building, either affixed to a wall or the ceiling. Metro cells also do not require site permits.

Unlike macro cells that only provide generalized capacity, metro cells provide targeted, localized capacity that significantly improves performance. Users enjoy higher data rates since fewer devices share the available bandwidth, higher throughput, and faster, more reliable data connections that come with the increased signal strength. Therefore, the use of metro cells results in an improved quality of experience (QoE) for the end user.

Metro cells also improve QoE for users on the macro network. By offloading the heavy data users from the macro network, small cells free up limited resources for subscribers on the go. With fewer users per cell, there is more bandwidth available for all.

By offering a better QoE, metro cells can also increase the usage of such services as mobile TV, TV clips, and gaming, and increase the uptake of value-added 3G multimedia services already offered by the MSP. Additionally, metro cells provide APIs that the MSP can use to develop new revenue-generating services.

Figure 8. Three-year TCO comparison for macro and metro cell upgrade

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7. Alcatel-Lucent 9360 Small Cell solution

The Alcatel-Lucent 9360 Small Cell solution is transforming today’s networks by extending capacity and coverage to residences, businesses and public places, lowering costs and opening the network to new revenue opportunities. The carrier-grade, end-to-end solution is fully compliant with 3GPP standards and includes innovations that position operators to rapidly penetrate markets and gain cost and revenue benefits. In addition, application enablement features help operators create new mobile services, while SON automated deployment and configuration features deliver optimal network functionality without the need for manual user intervention.

Alcatel-Lucent has more than 20 trials and 19 commercial deployment agreements, including commercial contracts with Chunghwa Telecom in Taiwan, Telefonica in Spain, Etisalat and du in the United Arab Emirates and Vodafone in the United Kingdom and New Zealand.

To learn more about how Alcatel-Lucent can help drive your small cells strategy, please visit: www.Wilson-Street.com and www.alcatel-lucent.com/femto, or contact your customer team representative.

8. Abbreviations3G Third Generation

3GPP 3rd Generation Partnership Project

API Application Programming Interface

CAPEX Capital Expenditure

DNS Domain Name System

DSL Digital Subscriber Line

FTTH Fiber to the Home

FTTN Fiber to the Node

HSDPA High Speed Downlink Packet Access

HSUPA High Speed Uplink Packet Access

MSP Mobile Service Provider

NTS Network Timing Server

OPEX Operational Expenditure

QoE Quality of Experience

QoS Quality of Service

RNC Radio Network Controller

RNP Radio Network Planning

SMS Short Message Service

SON Self-Organizing Network

TCO Total Cost of Ownership

ToD Time of Day

VDSL Very-high-speed Digital Subscriber Line

W-CDMA Wideband Code Division Multiple Access

9. References

1. Mobile Broadband Connections and Revenues Forecast: 2010–15, Steven Hartley, Ovum, March 2011

2. AT&T Inc. 2010 Annual Report. February 2011

3. Telesperience Data Sheet: Key Strategies for Solving the Capacity Crunch, Amdocs, November 2010

4. Mobile Data Offload & Onload: WiFi & Femtocell Integration Strategies 2011-2015, Juniper Research, March 2011

www.alcatel-lucent.com Alcatel, Lucent, Alcatel-Lucent and the Alcatel-Lucent logo are trademarks of Alcatel-Lucent. Facebook is a registered trademark of Facebook Inc. Twitter is a trademark of Twitter, Inc. in the United States and other countries. All other trademarks are the property of their respective owners. The information presented is subject to change without notice. Alcatel-Lucent assumes no responsibility for inaccuracies contained herein. Copyright © 2011 Alcatel-Lucent. All rights reserved. CPG1111110504 (06)

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