Broadband traffic growth and the LTE/FTTx tipping point

Transcription

1 European Summit 2013: Enabling innovation, driving profitability Broadband traffic growth and the LTE/FTTx tipping point 10 October 2013 Rupert Wood EVENT PARTNER:

2 2 Contents The cases for replacement and substitution Capacity and cost of fixed wireless LTE Fixed wireless case studies Conclusion

3 3 Rural lines can be unprofitable Loops too long for ADSL Low level of active usage Decrepit infrastructure High maintenance costs

4 Rural Urban Broadband traffic growth and the LTE/FTTx tipping point Replacing fixed infrastructure with wireless is not the same as demand-led substitution Demand-led substitution has been a cyclical feature of the European broadband scene for several years. Mobile broadband subscriber numbers are falling in many European countries (and data traffic is also falling), but 4G creates excess capacity again. About 15 20% of Swedes depend on FMS services. Better coverage than much of Europe creates unused capacity. FMS users are light users by nature. Internet users in unprofitable areas are not light users (by nature). Heavy The fixed broadband majority Planned replacement Difficult for operators Light Demand-led substitution Opportunity for operators Constrained or light users? 4

5 Supply The business case for LTE fixed replacement is based on a complex set of variables 5Demand Spectrum availability Internet penetration Existing passive infrastructure Public funding, policy targets Average fixed broadband usage Mobile usage Topography Population clustering Presence of other broadband infrastructure Externality

6 6 Contents The cases for replacement and substitution Capacity and cost of fixed wireless LTE Fixed wireless case studies Conclusion

7 7 Capacity of LTE compared to fixed NGA Performance and bottlenecks of main next-generation broadband technologies GPON eurodocsis3.0 FTTC/VDSL LTE macrocell 800MHz BRAS BRAS BRAS Mobile core 10Gbps n*1gbps n*1gbps ODF n*100mbps No contention 2.5/1Gbps 400/100Mbps Cabinet Per <86/86Mbps 10MHz Shared, typically 32 or 64 lines Shared, typically 250 lines Dedicated, usually up to 200 lines per cabinet Speed attenuated by line length: maximum 1400m for 30Mbps on vectored VDSL 17a Shared Shared speed attenuated by distance, 86Mbps is theoretical maximum Rationing necessary to maintain service

8 Downstream access speed (Mbps) Broadband traffic growth and the LTE/FTTx tipping point 8 Access speed and attenuation on LTE and VDSL Attenuation of wireless and xdsl signals Rural macrocell Distance (km) LTE 20MHz (shared bandwidth) LTE 10MHz (shared bandwidth) ADSL2+ (dedicated bandwidth) Vectored VDSL2 17a (dedicated bandwidth) 5200 premises 30Mbps (shared) 10MHz 10km 30Mbps (shared) 20MHz

9 Throughput (TB per month) Number of subscribers (at 25GB per month) Broadband traffic growth and the LTE/FTTx tipping point 9 How much data can an LTE cell-site handle? Average spectral efficiency for LTE release 9: 2 2 MIMO is 1.69bps/Hz 4 4 MIMO is 2.67bps/Hz. Assumptions Busy hour gets 7.5% of the traffic. This is the same as for fixed broadband (higher than mobile). 80% of traffic is downstream. 15% of capacity is taken up by overheads. 20% of capacity is for real mobile traffic (that is, not FMS traffic). Real-life throughput on LTE tri-sector cell site, 20+20MHz LTE 2 2 MIMO LTE 4 4 MIMO

10 GB / month GB per month per connection Broadband traffic growth and the LTE/FTTx tipping point The fixed broadband usage case is the most important variable Usage to grow at least 35% CAGR. OTT TV services on primary sets and tablets replacing secondary TVs 2018: 98% of tablet traffic on fixed 2018: tablets approaching 50% of all FBB traffic in richest economies. Lower-income households consume more. Average Internet usage on fixed broadband Average Internet usage, UK, 2012 and W Europe C and E Europe UK average NGA UK average, all FBB N America UK ISP average FTTC UK ISP average ADSL UK ISP average 0 Dec-11 Jun-12 Dec-12 Jun

11 Maximum users Broadband traffic growth and the LTE/FTTx tipping point How many fixed wireless users will an LTE macrocell support? Assuming 35% per annum traffic growth (conservative) the number of users any cell will support will decline. Could be increased through: traffic shaping shaping by price. Otherwise, new capacity has to be thrown at the problem. Spectrum New, refarmed, pooling arrangements. Infrastructure Macrocell and rural microcell. Maximum LTE subscribers per LTE cell site, 20MHz, by access speed and data usage Average usage In the rural area we modelled, 3000 premises (60%) would need connectivity if operator were sole provider 10 Mbps (50:1 contention) 11

12 Cost (EUR) Broadband traffic growth and the LTE/FTTx tipping point 12 Use of outdoor antennas Pretty well always necessary with >2.1GHz spectrum and often necessary on cell edge for low frequency. BT 800MHz LTE fixed wireless trial: in the five worst-performing cases, downstream speeds increased from an average of 2.21Mbps to an average of 12.68Mbps. Usually engineer-installed, more expensive than VDSL. Outdoor antennas can hide higher orders of MIMO that might not sit happily in a house. Outdoor antenna at BT 800MHz trial, Cornwall Indicative cost of outdoor antenna and indoor modem External integrated External data only Internal Installation Unit cost

13 Cost (EUR thousand) Broadband traffic growth and the LTE/FTTx tipping point 13 Use of microcells Range 1 2km, using >2.1GHz spectrum. Huge variation in cost depending on re-use of existing infrastructure LoS requirements enabling microwave backhaul. Rural microcells do require elevation and LoS or nlos for subscribers, so cost-base will be higher than urban small cells. Little cost advantage if microcell at existing cabinet site. Annual cost of rural microcell (annualised capex + opex) Opex (utilities, maintenance, rent and tax) Spectrum Radio equipment and backhaul 0 Rural site Small town site Infrastructure and support

14 Annualised incremental cost of network Broadband traffic growth and the LTE/FTTx tipping point Operators have to weigh the long-term costs of wireless against those of FTTN for rural broadband LTE has lower up-front costs than FTTN, especially with RAN-refresh to MSR. But adding capacity on LTE is more expensive than FTTN. Adding microcells to boost capacity and coverage brings cost profile closer to FTTN. Re-use of towers and other infrastructure makes a big difference to cost of additional capacity. Decommissioning copper altogether has one-off cost, but opex savings. Customer connection usually more expensive than FTTN. Illustrative annualised cost-base of fixed and wireless rural broadband Macro only Data volume (growing over time) 14 Macro plus micro FTTN Cost saving from decommissioning copper

15 15 Contents The cases for replacement and substitution Capacity and cost of fixed wireless LTE Fixed wireless case studies Conclusion

16 16 NBN Co Fixed Wireless, Australia Only serious attempt to create an LTE FWA network with performance approaching that of FTTx. Will pass 520K premises, rural, light suburban, but not outback. >EUR2000 per premises passed, state-funded. Dedicated 20MHz of TD 2.3GHz spectrum, up to 8km range (!!) Wholesale pricing equivalent to FTTP. Generous retail caps (up to 1000GB). But speeds still limited to 25/5Mbps. Outdoor antenna mandatory but free. VoBB provided by SPs. NBN Co FW mast and customer antenna

17 17 Verizon Home Fusion, USA Sells HomeFusion as an alternative to DSL in 30% of its franchise area (which has shrunk as it sells off rural areas). Only of interest to consumers with no cable, competes against Clear WiMAX on coverage, not price. 700MHz spectrum shared with mobile service. USD120 per month for 30GB service. Speeds 5Mbps-12Mbps DL. Outdoor antenna mandatory: USD200 per installation. Voice uses separate box. Verizon cantenna and router AT&T has recently launched with homephone ATA and jack built into router. Verizon wishes to decommission all copper, leaving FTTP and LTE only.

18 18 Vodafone Germany 800MHz licence obligation to cover areas DSL not-spots with >3Mbps DL. 3 speed tiers each with different datacap. Maximum up to 50Mbps and 30GB EUR42.49 per month. >300K users, >15GB/month average (Germans are very light Internet users). VF Germany cellular traffic 4 times higher than VF UK. ATA and phone-jack in 4G router, voice included in offer. Basic service (7.2Mbps, 10GB) same price as ADSL. External antenna needed in 10% of cases, self-install (kinderleicht!) Vodafone LTE router and external antenna

19 Verizon HomeFusion 10GB Verizon HomeFusion 20GB Verizon HomeFusion 30GB Verizon HomeFusion 10GB + voice Verizon HomeFusion 20GB + voice Verizon HomeFusion 30GB + voice PT MEO Móvel 50Mbps PT MEO Móvel 150 Mbps Vodafone RealLTE Zuhause 7.2Mbps Vodafone RealLTE Zuhause 21.6Mbps Vodafone RealLTE Zuhause 50Mbps Telekom Call & Surf Comfort via Funk 16Mbps Telekom Call & Surf Comfort via Funk 50Mbps Telekom Call & Surf Comfort via Funk 100Mbps A1 Telekom Austria 21Mbps A1 Telekom Austria 42Mbps A1 Telekom Austria 150Mbps Telenor 30GB Internode (Australia) 30GB Internode (Australia) 300GB Internode (Australia) 600GB Internode (Australia) 1000GB Tele2 Sweden 4G 25Mbps Tele2 Sweden 4G 80Mbps Netcom Norway Mobilt Hjemmebredbånd SiOL Instant Internet LTE/4G Price (EUR per month) Price per gigabyte (EUR) Broadband traffic growth and the LTE/FTTx tipping point Pricing of LTE fixed wireless is generally higher than ADSL Equivalent to ADSL2+ Equivalent to FTTP Price per month Without voice With voice Price per gigabyte

20 20 Contents The cases for replacement and substitution Capacity and cost of fixed wireless LTE Fixed wireless case studies Conclusion

21 21 Conclusions Without new spectrum or new infrastructure, LTE fixed-replacement will deliver a comparable service to ADSL2+, but with datacaps: Consumers can expect about 10 12Mbps, and a cap of about 30GB per month. Initial costs are cheaper than rural FTTC, but traffic will inexorably push the annualised cost upwards. We estimate that with 20MHz of low frequency spectrum, annualised costs in our modelled area will rise above FTTC within three years Microcells are a halfway house between FTTC and LTE cost-structure. Where fixed copper infrastructure exists, there are few scenarios where replacement makes long-term economic sense, and we note that few operators are actually doing this. LTE should be used as a work-around, preferably as part of a hybrid onloading solution. LTE is viable, however, as a demand-led light-user substitution service.

22 22 Contact details Rupert Wood Principal Analyst Boston Tel: Fax: Cambridge Tel: +44 (0) Fax: +44 (0) Dubai Tel: +971 (0) Fax: +971 (0) Dublin Tel: +353 (0) Fax: +353 (0) Edinburgh Tel: +44 (0) Fax: +44 (0) London Tel: +44 (0) Fax: +44 (0) Madrid Tel: Fax: Manchester Tel: +44 (0) Fax: +44 (0) Milan Tel: Fax: New Delhi Tel: Paris Tel: +33 (0) Fax: +33 (0) Johannesburg Tel: Fax: Singapore Tel: Fax: