Network Cost Cutting Rural Cellular Association October 22, 2009

Transcription

1 Network Cost Cutting Rural Cellular Association October 22, 2009 page 1

2 Agenda > Market Drivers > The Problem with Leased Lines > The Problem with Fiber > Economics of Microwave > TDM to IP Migration > Licensed vs. License-exempt Microwave > About Exalt page 2

3 Mobile Operator Market Driver Geometric Capacity Expansion Peak Backhaul Capacity Requirements per Access Technology > 3G / 4G requires x the 2G backhaul capacity per site > Mix of TDM and IP base stations at each site IP Mbps TDM 50 WCDMA HSPA EV-DO 25 0 TDMA GSM/ CDMA GPRS EV-DO EDGE 1G 2G 2.5G 2.75G 3G 4G Access Technology page 3

4 Usage vs. Revenue Mobile Operator Scenario > Data revenues are decoupled from actual data usage > Delivery of data services requires 10x - 100x more capacity per site than in 2G networks > Rise in costs to support data services exceeds rise in revenue from those services 2G Voice Dominant Services (legacy backhaul) Revenue $1.00 Cost of Service $0.57 SG&A $0.35 Profit $0.08 3G/4G Data Dominant Services (legacy backhaul) Revenue $1.00 Cost of Service $5.70 SG&A $0.35 Profit (Loss) ($5.05) page 4 Cost per bit must be reduced!

5 Traditional Approach: Leased Lines They Don t Scale 6 T1 Practical T1 provisioning limit $2,022 4 T1 $1,348 2 T1 $674 1 T1 $337 $500 $1,000 $1,500 $2,000 $2,500 Monthly T1 Leased Line Expense Price scales linearly with capacity page 5

6 The Problem with Fiber Fiber Installation Cost per Mile by Population Density (Rule of Thumb) $300,000 $250,000 Installed Cost per Mile $200,000 $150,000 $100,000 $50, ,000 U.S. office buildings Rural Suburban Urban Dense Urban Fiber, if it even can be provisioned, is expensive to install and subject to 6-9 month delays page 6

7 Fiber vs. Microwave Cost and Time-to-Deployment 1 Gbps connection over 1 mile Avg Cost ($K) Today page 7

8 page 8 Economics of Microwave

9 Assumptions Leased Lines vs. Microwave for BTS Backhaul Leased line #1 Leased line #2 PSTN PSTN CO CO BSC Microwave BSC page 9

10 Assumptions Leased Line Costs Cost Category Monthly lease cost Assumptions / Comments $337 per T1 per month (national average) Varies by region and distance Set-up cost per line $625 page 10

11 Assumptions Microwave Costs Cost Category Radio link Installation of radio link Spectrum license Radio maintenance Antenna lease cost Assumptions / Comments Variable, from < $5K to $20K per link, depending upon capacity, band and configuration Variable, from <$7K to $14K per link depending upon: > Tower vs. rooftop > Length and # of cable runs > Size, type and # of antennas Zero for license-exempt, ~$2500 for licensed 5% of equipment cost per year; in practice, radios are near-zero maintenance Variable, from zero to ~$500 per month depending on site ownership and characteristics page 11

12 Microwave Payback 4xT1 $70,000 Microwave Payback vs. 4xT1/E1 Leased Line Cumulative Cost (US$) $60,000 $50,000 $40,000 $30,000 $20,000 Microwave Leased line 5-month payback period $10,000 $ Months page 12

13 Microwave Payback Sensitivity to LL Cost 4xT1 $90,000 Payback Sensitivity to 4xT1 Leased Line Cost $80,000 $70,000 $200/mo $300/mo $400/mo Cumulative Cost $60,000 $50,000 $40,000 $30,000 $500/mo $600/mo $700/mo Microwave 2-month to 7- month payback period $20,000 $10,000 $ Months page 13

14 Microwave Payback Sensitivity to Antenna Lease Cost - 4xT1 30 Payback Sensitivity to Antenna Lease Cost (4xT1) Payback (months) Microwave payback 5 $- $100 $200 $300 $400 $500 $600 $700 Monthly Lease Cost per Antenna page 14

15 Microwave Payback 1xDS3 $120,000 Microwave Payback vs. 1xDS3 Leased Line $100,000 Microwave Leased line Cumulative Cost $80,000 $60,000 $40,000 3-month payback period $20,000 $ Months page 15

16 Microwave Payback Sensitivity to LL Cost 1xDS3 $100,000 Payback Sensitivity to 1xDS3 Leased Line Cost Cumulative Cost $90,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $2,000/mo $3,000/mo $3,500/mo $4,000/mo $4,500/mo $5,000/mo Microwave 2-month to 6-month payback period $20,000 $10,000 $ page 16 Months

17 Microwave Payback Sensitivity to Antenna Lease Cost 1xDS3 14 Payback Sensitivity to Antenna Lease Cost (1xDS3) Payback (months) Microwave payback 2 $- $100 $200 $300 $400 $500 $600 $700 Antenna Lease Cost per Month page 17

18 page 18 Migrating from TDM to Ethernet

19 Migrating to IP Benefits Overview > Reduced capital and operating expenditures > Improved capacity utilization > Backhaul capacity reduction > Simpler, lower cost redundancy alternatives > Access to wider array of applications page 19

20 Backhaul Architecture Daisy Chain > IP-based backhaul more flexible than TDM > Ring is simpler, less costly to implement using Ethernet Ring Constrained Mesh - East-west > Constrained mesh (path redundancy) possible only with Ethernet > Less need for equipment redundancy with Ethernet page 20

21 page 21 Licensed vs. License-exempt Microwave

22 Which is Better? Frequency Spectrum Licensed Licenseexempt Benefits > Dedicated, coordinated spectrum > Short, medium, and long haul spectrum available > Many products available > Over 8 GHz of free spectrum > Immediately available > No licensing required > Immediate deployment > Short and long haul spectrum available > Next-generation carrier-class products available Trade-Offs > Requires licensing > Must re-license if relocating, replacing equipment, or upgrading capacity > Spectrum not guaranteed for licensing > Subject to interference from illegal transmitters > Though regulated, not actively monitored nor policed by FCC > Requires professional installation > Longer lead times to deployment > Shared spectrum subject to interference > Carrier-class type products are scarce > Lots of low performing best effort products page 22

23 FCC Licensed Bands Weather Resiliency Distance Capacity > GHz > GHz Reallocated by the FCC for Advanced Wireless Services > 4940 MHz to 4990 MHz (Public Safety) > 5925 MHz to 6245 MHZ (6L Band) > 6525 MHz to 6875 MHz (6U Band) > MHz to MHz (11GHz Band) > MHz to MHz (18GHz Band) > MHz to MHz (23GHz Band) > MHz to MHz (38 GHz Band) > Others: 70/80GHz Advice: Evaluate distance, capacity requirements. Consider the optimum physical configuration for the application. page 23

24 License-Exempt Bands Weather Resiliency Distance Capacity > 2400 MHz to MHz ISM* > 5250 MHz to 5350 MHz U-NII > 5470 MHz to 5725 MHz U-NII > 5725 MHz to 5825 MHz U-NII 5 GHz Band > 5725 MHz to 5850 MHz ISM > MHz to MHz > MHz to MHz *Next generation PTP products can deliver 5 GHz-level capacities over 2.4 GHz. page 24