Shared Back Haul Solutions Network Strategies

Monday 16th November 2009Allan OakmanBusiness Development Manager

1

The case for shared Back Haul

• Current environment impacting strategies

• The response to reduce costs

• The opportunity and solutions

Agenda

2

Your network

Infr

astr

uctu

reSe

rvic

es, p

eopl

e &

sk

ills

App

licat

ions

Broadcast customers

Wireless site customers

Satellite customers

Site management

Full managed service of broadcast networks on long term contracts

Play-out

Teleport

Operations

Developing network

managed services

Arqiva

TV transmission

• All UK TV channels (incl. BBC, ITV, C4, C5) 1,154 UK national TV broadcast site network

• Key focus on analogue to Digital Switchover (DSO) by 2012

Radio transmission• All BBC and circa 300 national, regional and

local commercial radio services on AM, FM, and DAB

TV multiplexing• Own and operate two of the six Freeview DTT

multiplexes

Terrestrial Broadcast Satellite & MediaScale and worldwide footprint • The acquisition and integration of Inmedia &

BT Satellite brings substantial growth in worldwide reach and capability

• 100+ earth stations at 10 teleports in UK, US & France

Services to broadcast, media & enterprise• Playout services, outside broadcast

• Occasional use for sports and news

• Uplinking of over 400 channels worldwide

• Carrier and enterprise connectivity

Wireless AccessWireless Access

Largest independent UK site provider

• 24,000 marketable sites, urban and rural

• 9,000 built sites, ~ 8,000 for cellular

• Provider of design, build and installation services plus backhaul

• Support services to emergency and other public sector organisations

• Private Mobile Radio networks and services

• Mobile data solutions

• Exploits latest generation MW and fibre technology• Tackles infrastructure and investment required for existing and future Back Haul• Proposes flexible managed Back Haul solutions to multiple MNO and Enterprise sectors in

the country –

represents significant opportunity for legacy & future access (LTE) networks

• Arqiva plays key role in

–

Site infrastructure

–

Investment in appropriate technology

–

Optimised use of spectrum

–

Promoting alternative Back Haul solutions to traditional approaches

Back Haul Services

Public Safety customers

Airwave

Private Mobile Radio (PMR)

Services

Managed Services

Mobile Data

3

Mobile Data Traffic Demand

Operators always find it difficult to prepare for demand tomorrow by rolling out capacity today; under or overestimating demand has serious implications on operator’s bottom line

5.76

7.58.1 8.1

0

2

4

6

8

10

Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009

Uni

que

Aud

ienc

es (m

illio

ns)

Growth of UK Mobile internet users

Source : Ofcom Communication Market Report 2009Source : Ofcom Predicting Areas of Spectrum Shortage 2009

Cellular Traffic Demand Growth (TeraBytes/ Hour)

MNO’s Network Challenges

• Prediction of demand for new services

• How much capacity should they build?

• Length of time it takes to upgrade and deploy a back haul network

• Availability of back haul spectrum may impact the strategies that can be deployed

30 TB

70 TB

110 TB

150 TB

190 TB

2009 2012 2015 2108 2021 2024

4

Existing Strategies and Options

• Site Share – towers and sites with separate base station equipment savings of ~ 40% against site Opex costs

• Site Share with RAN share – Recent announcement of merger between Orange UK and T-Mobile savings of more than €4 billion (£3.5 billion)

• Back Haul sharing using both self provide and leased service providers are being implemented

• Cost saving initiatives are dependent on consolidation partnering agreements

• Driving down cost base associated with suppliers will provide limited benefits

• Consolidation is creating uncertainties

Operators have exploited obvious cost reduction strategies through shared network models based on consolidation of infrastructure. Innovative solutions previously considered unacceptable are now being considered

CoreMNO1

RNC/BSC

CoreMNO2

Shared RAN and backhaul

Separate Core

MNO1

MNO2

MNO1

MNO2

5

Shareable Back Haul – leased services

• Typical product in UK assumes delivery by fibre based on incremental bandwidth supporting TDM, ATM and Ethernet

– Synchronisation typically provided by discreet E1– Zero contention to defined bandwidth threshold– Typical Services assume 10Mb, 30Mb and 60Mb

• Current leased services utilising Microwave may require additional connection charges to cater for 3rd

party MW dish rental and cost of hardware changes to support Ethernet based network solutions• Typical architecture assumes network would require ~ 45% of sites served by MW due to lack of available

fibre with aggregation at fibre POP for 2nd mile connection

Access NWDSLAM

TDM/Ethernet using xDSL

TDM/Ethernet over Fibre

TraditionalLeased Service Provider

TDM/Ethernet over Radio

EPC

MNO fibre network

Self Provide MW Leased Services

The extent of leased services varies by MNO strategy but typically for 3G and future LTE ~ 55% of network connectivity is forecast to be delivered by leased services. This is likely to increase.

6

Synergies and Optimised Cost Reductions

• Shared services on common sites provide opportunities in the following areas:

– Site rental– Antenna Sharing– RAN sharing– Back Haul sharing

• Providers capable of delivering aggregated savings offer greatest potential and benefit to MNO’s

• Back Haul sharing is only feasible where both service provider and customer requirements are satisfied

– Contention– Disparate QoS capabilities– Scale & Growth potential– Commercially attractive

• Architectures will involve use of MW and associated Opex costs

Operators are examining cost saving initiatives based on individual Opex sectors. The value of grouping multiple sectors & initiatives under a single service provider will increase due to synergies

Site InfrastructureProvider

Base StationVendor

OutsourcedManaged Svc

Provider

Back HaulServices

Base StationVendor

OutsourcedManaged Svc

Provider

Site InfrastructureProvider

Back HaulServices

Site InfrastructureProvider

Base StationVendor

OutsourcedManaged Svc

Provider

Back HaulServices

Value

New Service Propositions

7

Shared Back Haul potential

A shared transmission network can potentially deliver > 30% cost savings per operator but can be enhanced where 3rd party site providers provide the service.

Cos

t per

sha

rer

Number of shares1 2 3 4 5

Neutral host transmission network Independent transmission network

Cost savings of circa 30% if two operators share transmission

• Back haul networks are a mixture of self provide MW and leased services

• Leased service providers often limit service to a single MNO/Entity

• Prediction of demand for new services split across geographic locations is not clear

• Uncertainty of bandwidth demand is impacting upgrade strategies associated with upgrading legacy networks

• Implementation of network upgrades take longer than expected and impact both customer experience and costs

• Latest generation MW can compete with fibre service offerings but spectrum availability & costs are problematic*

* Estimated to ~ 400Mbp

MNO’s Network Challenges

Delivery by MW may be limited by licensed spectrum but can be managed through use of hybrid architectures

Constraints

8

Use of Flexible Leased Services

Key Advantages of Flexible Network Outsourcing Solutions

• Predictable cost to MNO’s without need for large scale Capex programmes

• SLA’s/ QoS capable of managing real and non real time traffic tailored to MNO requirements

• MNO’s need not worry about Network/Technology where service provider guarantees performance

• Options to consider extend lifecycle legacy networks through gradual migration onto leased services

• New options to provide both permanent and temporary network connectivity solutions

• Providers who own spectrum can provide an alternative managed service proposition to traditional providers

XLegacy TDM PDH Link

Logical Overlay Point to MultipointPoint to Point

9

Integrating Point to Point/Multipoint Solutions

• Developed network Back Haul strategies tend to use a mix of PTP and fibre based solutions

• The deployment of PMP solutions is inhibited by the availability of licensed spectrum or risks associated with using unlicensed spectrum

– WiMax options on Back Haul may provide an additional alternative

– Lack of capacity is considered to be a problem but capacities of 250Mb – 600Mb per sector are achievable

• PMP solutions are capable of integrating PtP within the same platform, extending range and service options

• Arqiva owns suitable spectrum and sites and is well placed to offer hybrid solutions

• LTE PMP Backhaul solution for London:

• 145 Cell sites – 30Mbps (Mean)

• 8 Hub sites (4x28MHz)Source: Cambridge Broadband

10

Use of Optimised Bandwidth on Leased Services

• Source: Cambridge Broadband

• MNO Self Provide networks dimensioned to assumed growth for future use

• Bandwidth and Opex related spectrum fixed limits scope for optimisation of costs relative to service

• Managed service provider has a reduced cost base through aggregation and optimisation to ensure PCR and SLA’s are achieved.

• New Managed services can provide mix of guaranteed + best effort within defined QoS class across multiple customers

• Increased competition between service providers benefiting MNO’s

• Customer self provide provision bandwidth x Mbps and associated opex costs. Utilisation < 100%

• Managed service provider dimensions total bandwidth to target customers’ PCR

• Actual aggregated traffic levels typically below sum of customer PCR

• Statically multiplex gain over managed service provider network

11

Managing Disparate Service Requirements

Technology Impacting Strategies

• Adaptive Modulation and increased spectral efficiencies providing increased bandwidth on MW back haul

• Ability to use both PtP and PtMP overlay solutions using service provider spectrum

• Transmission optimisation techniques increasing overall customer experience

• Reduced costs to provider are passed on to customers with low cost per Mb

Management & Control

• Each customer has unique SLA and QoS capable of being managed within a total bandwidth domain

• Compliance and reporting capabilities through NMS on a per link basis and/or network

• Use of VLAN and QoS parameters to discriminate and manage traffic flows

• Capable of hand off to 2nd mile service provider or MNO fibre/exchange aggregation point

Managed back haul services are changing with increased interest by MNOs’ in aggregating benefits and disparate savings associated with Back Haul and site related costs.

• Move from traditional approaches to flexible wider ranging managed services will be critical in achieving cost reduction across the sector. A growth of more cost effective solutions will deliver enhanced savings

• Migration to a flat I.P based network can be achieved including the provision of optimised back haul for legacy networks

Service Solution

12

Challenging the Total Cost of Ownership

A managed transmission service can deliver >30% NPV savings on TCO over five years per operator

£0

£100

£200

£300

£400

£500

£600

Year 1 Year 2 Year 3 Year 4 Year 5

Mill

ions

TCO - MNO TCO - Neutral host

Year 1 Year 2 Year 3 Year 4 Year 5

TCO – MNO1 £204 m £286 m £368 m £450 m £532 m

TCO - Neutral host1 £94 m £187 m £281 m £374 m £468 m

1 Based on total 13,000 links a mixture of fixed line and Microwave links

13

Summary

• Delays associated with network consolidation will lead to poor customer experience through back haul bottlenecks

• A new flexible managed service solution will support network growth

• Grouped cost reduction strategies are most effective

• Cost savings are most likely to be achieved through innovative Back Haul strategies

• Legacy infrastructure can have an extended life cycle

• Hybrid solutions and managed services will resolve Back Haul bottlenecks

14

allan.oakman@arqiva.comhttp://uk.linkedin.com/in/allanoakman

Thank you

15

Typical Gains using Transmission Optimisation

• Use of Back Haul optimisation is not new

• Historically limited use in last mile access network

• Clear advantages• Multiple vendors

providing solutions– Cost of integration

and operational managed issues

Source: Cambridge Broadband