Implications of 4G Deployments (MEF for MPLS World Congress Ethernet Wholesale Summit - Paris)

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Implications of 4G Deployments MEF Workshop – Carrier Ethernet for Mobile Backhaul A presentation for “Ethernet Wholesale Summit 2010”

January 2010

Presented by Javier E. Gonzalez

MEF Representative

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Market Analysis, Scale and Trends

–  Current trends in backhaul deployments –  Growth drivers and challenges worldwide –  Packet-based backhaul cost advantage analysis –  Implications of 4G (WiMAX, LTE) deployments

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Market Analysis, Scale and Trends

– Packet-based backhaul cost advantage analysis –  Implications of 4G deployments

•  Backhaul market drivers + What’s driving 4G ? •  Economics of 4G Networks •  Carrier Ethernet for 4G solutions

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Packet-based backhaul cost advantage analysis The Carrier Ethernet Backhaul Economic Driver

TDM backhaul for 4G is costly and unreliable •  Monthly TDM cost per tower for 10Mbps ~ $20K.

4G builds are capital intensive •  Fiber and microwave costs require significant

investment ($20-$50K per tower) •  Existing tree topologies are cost-inefficient •  Leased services can balance the CAPEX load

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Implications of LTE Deployments Backhaul Market Drivers

Increased bursty data traffic and streaming video •  User Interface Improvements •  Additional cell sites, devices, and increased b/w (10-100x) •  Wildly varying traffic patterns Rapid deployment is a must •  First to market captures market share (WiMax has a 2-3 yr.

lead over LTE) •  Rapid construction requires multiple strategies for backhaul

deployment (self-build, lease)

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Economics of 4G networks

Mobile backhaul is a COST issue!

Carrier Ethernet Backhaul Bends the Curve.

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Keys to Profitable Ethernet Services

•  Bandwidth Control –  Flexible, granular service definitions

•  Scalability –  Wide area coverage with simple, repeatable service

tagging

•  Flexible Interworking –  Cost optimize the right technologies in the right place

•  Resilience –  Robust service protection, high availability

•  Manageability –  Clear diagnostics, service level agreement

•  Low Touch Operations –  Time to service = time to revenue with lower OpEx

Raise Revenues

With Differentiated

Services

Improve Service

Margins via Lowered

Costs

Profitability!

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Carrier Ethernet for 4G Operators need Ethernet for:

–  Greenfield WiMax deployments •  Opportunities limited today but increasing •  All eyes on successful deployments (Clearwire/Xohm)

–  ATM 3G Leapfrogs •  Developing world operators slow to adopt 3G technology

–  Wireline Wholesalers •  May have separate PWE3 requirements (e.g. ATT, BT)

–  4G deployments (2-3 yrs from now) •  Evolution to LTE from GSM/UMTS family à 88% of market •  Key is to commence now during transition from TDM to Packet

•  Ethernet + T1/E1 –  Combined Ethernet + T1/E1 (ATM & TDM) over Ethernet backhaul –  Represent roughly 80-90% of today’s MWB

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4G (WiMAX) Transport Requirements

–  Stable, redundant architecture –  Comprehensive management/provisioning system –  Optimized network utilization –  Scalability in MAC addresses, customers, sites –  Point-to-point and multipoint service models –  Microwave friendly –  Flexible “Best Practices” design –  MPLS / PBB-TE / VLAN (QinQ)

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4G (WiMAX) Transport Challenges •  Operators require a solution that provides:

–  Scalability: Scalable MACs & customers •  Directly at tower site - no MAC learning network between towers

–  Reliability: Redundancy & rapid restoration •  Dedicated Primary & Back-up tunnels from each tower with rapid

restoration –  Predictable QoS: Strict Priority settings

•  Committed & Excess Information Rates per service –  Bandwidth Utilization: Efficient use of network resources

•  Bandwidth engineering, no automatic path disabling for loop prevention (STP)

–  Simplified Provisioning: Reduce complexity •  Provisioning wizards with GUI interface for service creation

–  Management: Comprehensive OAM capabilities •  Service assurance, Fault-Config-Performance Mgmt (802.1ag, 802.3ah, Y.

1731) –  Cost Effective: Economies of Scale of Carrier Ethernet

•  Advantages of a Layer-2 Carrier Ethernet architecture •  Minimize costly Layer-3 devices at head-end.

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Carrier Ethernet OAM

Customer Domain

Provider Domain

Operator Domain Operator Domain

Eth Access MPLS Access

Customer CustomerService Provider

MPLS Domain MPLS Domain

PW/MPLS OAM

Service OAM

MEPMIP

Operator Domain

MPLS Core

Network OAM

IEEE 802.1ag CFM Connectivity Fault Management

Operations, Administration, and Maintenance offering enables service providers to use cost-effective Ethernet networks as the means to reliably deliver high-bandwidth, profitable, retail and wholesale services.

IETF RFC 5357 TWAMP Two-Way Active Measurement Protocol

Layer 2 SLA Monitoring & Metrics: Delay, Jitter, Frame Loss ITU-T Y.1731 Ethernet OAM

Enhanced troubleshooting, rapid network discovery IEEE 802.3ah EFM

Service Heartbeats, End-to-End & Hop-by-Hop fault detection

Layer 3 SLA Monitoring & Metrics: Delay, Jitter

•  SLA Assurance •  Rapid Fault Isolation •  Minimized Downtime

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Key drivers for Carrier Ethernet Solutions Ethernet is Carrier Class & Cost Less

–  Universally accepted that Ethernet is less expensive and ubiquitous technology –  By 2008, 89% of providers believed that Carrier Ethernet is mature enough for

“carrier class” deployments –  Solid Ethernet OAM features that provide a comfort factor for providers (SDH like

characteristics) –  Connection oriented Ethernet (COE) solutions provide deterministic & resilient

services (VLANs, PBB-TE, etc..)

Enterprises & Providers want Ethernet –  Reported growth in the Ethernet services revenue ($14.9B in 2008 to $19.9B in 2011) –  Service Providers have lowered the price per bit for Ethernet services, making it

more attractive than legacy services (TDM, ATM, etc…) Ethernet is integral to Network Transition

–  Ethernet is the key component to many NGN packet network transformations –  COE is well-placed to replace legacy SDH applications –  Evolution of 40G and 100G are being driven by data centre applications and are

complimentary to Optical networks

Source: Infonetics Research

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Advantages of Carrier Ethernet

Advantage Benefits Cost-

Effective Ø  Capex: Ethernet Economics Ø  Opex: Provisioning, Fault Resolution, Network

Engineering

Simple Ø  Flexible network topologies Ø  Avoids L3 routing complexity Ø  Transparent regarding IPv4, IPv6, IPSec

Secure Ø  No network-layer attacks Ø  No misconfigured Access Control Lists (ACLs) Ø  Inherent security of L2 EVCs

Carrier-Class

Ø  Resilient Ø  Ethernet OAM Ø  Deterministic “SONET/SDH-like” Ø  Convergence with business and residential traffic

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… further challenges Packet bandwidth consumption continues to grow….

But revenue growth is slowing

2004 2006 2008 2010

10%

20%

30%

41%

3% 7%

13% 13%

-5% -3% -1% 4%

Broadband

Wireless

Wireline

**

** Sources: Yankee Group and Pyramid Research

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IP-Ethernet Mobile Backhaul: Preparing for LTE

February 9 MEF Workshop - Carrier Ethernet for Mobile Backhaul Tuesday, 0915-1000 - Market Analysis, Scale, and Trends

Presented by

Michael Howard Co-founder and Principal Analyst, Carrier and Data Center Networking

Infonetics Research

16 Copyright © 2009 Infonetics Research, Inc.

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Today’s Speaker

Michael Howard Principal Analyst and Co-founder


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•  Social changes under way, unabated mobile subscriber growth will prompt 95% of operators to migrate to LTE

•  …Creating mobile backhaul challenges –  Mobile subs and their bandwidth grow strongly; ARPU cannot

–  Data and video traffic growing fast

–  Multiple operators at cell site; transport provider wants single backhaul

–  WiMAX, LTE coming; need to prepare for IP/Ethernet backhaul

•  Operators must go to packet backhaul •  Operators need OAM&P and service assurance now •  Conclusions and Q&A

Agenda


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Social changes underway…

•  Social phenomena: consumer, business –  Connected, competitive world

•  Anytime, anywhere connections •  More bandwidth, mobile broadband •  Confluence of fixed/mobile, wireless/wireline

–  Video inserted into most applications, so traffic never stops growing


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…Causing unabated mobile subscriber growth

Source: Fixed and Mobile Subscribers Annual Worldwide Market Forecasts, March 2008

5.2

0

1

2

3

4

5

6

Bill

ions

CY06 CY07 CY08 CY09 CY10 CY11

Worldwide Mobile Subscribers


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Backhaul connections are growing quickly

•  Connections and bandwidth per connection drive equipment spending; adding 100,000s of new connections per year

•  Mobile operators pay incremental charges for 2x to 10x bandwidth –  Ethernet options solve costs—but need service assurance, OAM&P tools

Source: Mobile Backhaul Equipment, Installed Base, and Services, May 2009

0

1,000

2,000

3,000

4,000

5,000

6,000

Con

nect

ions

(K)

CY07 CY08 CY09 CY10 CY11 CY12 CY13

Worldwide Mobile Backhaul ConnectionsL Installed vs New

Installed connectionsNew connections


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…And data dramatically increases traffic load

Operators rolling out increased capacities via EDGE, EV-DO, HSPA, WiMAX, then LTE

0

10

20

30

40TB

Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09

JRA 09 .0 9.2 00 9

0

10

20

30

40TB

Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09

JRA 09 .0 9.2 00 9

Live network KPI dataOperators: 9 Europe, 4 APAC, 6 Americas

Average Y-Y growth over 500%

Total HSDPA Traffic per DaySource: Nokia Siemens Networks


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3 stages of IP/Ethernet backhaul for LTE

•  IP/Ethernet backhaul solves ARPU-traffic disconnect today and backhaul problem for HSPA today…and LTE tomorrow

2G BTS

3G NodeB

E1/T1

RNC

BSCPDH

Backhaul

2G BTS

3G NodeB

E1/T1

RNC

BSCHybrid/Dual

Backhaul

2G BTS3G NodeB

RNC

BSCAll

IP/Ethernet

Ethernet

EthernetInternetGateway

LTE eNodeB

2G BTS

3G NodeB

E1/T1E1/T1

RNC

BSCPDH

BackhaulPDH

Backhaul

2G BTS

3G NodeB

E1/T1E1/T1

RNC

BSCHybrid/Dual

BackhaulHybrid/Dual

Backhaul

2G BTS3G NodeB

RNC

BSCAll

IP/EthernetAll

IP/Ethernet

Ethernet

EthernetInternetGateway

LTE eNodeB


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Operators already moving to IP/Ethernet backhaul

40%

80%

100%

0%

20%

40%

60%

80%

100%

Perc

ent o

f Res

pond

ents

2008 or before By 2009 By 2010

Year Deployed

•  From Infonetics’ August 2009 IP/Ethernet in Mobile Backhaul Networks: Global Service Provider Survey

•  OAM&P and service assurance tools needed •  Major investments in staffing/operations, procedures changes

–  Rich IP/Ethernet options very complex compared to TDM circuits


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Many triggers for IP/Ethernet backhaul before LTE

•  From the same Infonetics service provider survey

•  LTE is the final, absolute time to move to IP/Ethernet backhaul

47%

93%

80%

80%

73%

60%

47%

0% 20% 40% 60% 80% 100%

Support iPhone or othersmartphones

Deploy HSPA

Need to lower backhaul costs

Deploy HSPA+

Deploy IP base station or basestation

with Ethernet connection

Deploy IP IuB (R6)

Deploy LTE

Even

ts

Percent of Respondents Rating 6 or 7


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Costs drive operators to IP/Ethernet backhaul

•  Ethernet offers huge drop in cost per bit of bandwidth that almost matches the 2x to 10x traffic increases HSPA delivers

•  IP/Ethernet naturally fit WiMAX and LTE as well Source: Mobile Backhaul Equipment, Installed Base, and Services, May 2009

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

$50,000

CY08 CY09 CY10 CY11 CY12 CY13

Calendar Year

Annu

al B

ackh

aul C

harg

es p

er C

onne

ctio

n

PDH and ATM over PDH New wireline Mobile Backhaul

…or move to Ethernet

Stay on TDM

Mobile Backhaul Equipment and ServicesBiannual Worldwide and Regional Market Size and Forecasts


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Worldwide Mobile Backhaul New Connections (by Technology)

-300

-150

0

150

300

450

600

750

900

CY05 CY06 CY07 CY08 CY09 CY10 CY11

Conn

ectio

ns (K

)

Ethernet microwave Ethernet copper and fiber Other

PDH/SDH microwave SONET/SDH ATM over PDH

PDH

Ethernet backhaul—connections of choice

•  De-commissioning legacy (no more hybrid): use Ethernet backhaul to carry voice, data, and video traffic for 2G, 3G, WiMAX, and LTE –  New 1588v2 solves clock synch problem

Source: Mobile Backhaul Equipment, Installed Base, and Services, October 2008

Ethernet


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IP/Ethernet backhaul before LTE and for LTE •  Backhaul costs are the principal driver, due to

traffic growth

•  Operators are making the investment to move to the eventual IP/Ethernet backhaul networks

•  IP/Ethernet backhaul –  Solves ARPU-traffic disconnect today

–  Solves backhaul problem for HSPA today

–  …and LTE tomorrow

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Thank You

Michael Howard Co-founder and Principal Analyst, Carrier and Data Center Networks

Infonetics Research +1 408.583.3351

[email protected] www.infonetics.com

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Accelerating Worldwide Adoption of Carrier-class Ethernet Networks and Services

For more information regarding joining the MEF: Visit: www.metroethernetforum.org Email us at: [email protected] Call us at: +1 310 258 8032 (California, USA)

For in-depth presentations of Carrier Ethernet for business, Ethernet services, technical overview, certification program etc., visit: www.metroethernetforum.org/presentations

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Panelists

Javier E. Gonzalez [email protected] | +33.6.88.21.43.34

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Implications of 4G Deployments (MEF for MPLS World Congress Ethernet Wholesale Summit - Paris)

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