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

1

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

2

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

3

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

4

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

5

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)

6

Economics of 4G networks

Mobile backhaul is a COST issue!

Carrier Ethernet Backhaul Bends the Curve.

7

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!

8

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

9

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)

10

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.

11

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

12

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

13

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

14

… 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

15

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.

16

Today’s Speaker

Michael Howard Principal Analyst and Co-founder


17

•  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


18

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


19

…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


20

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


21

…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


22

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


23

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


24

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


25

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


26

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


27

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

28

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

29

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

30

Panelists

Javier E. Gonzalez [email protected] | +33.6.88.21.43.34

31

BACKUP

Presentations & Public Speaking

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