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Americas Issue: October 2005
Bringing Business Brains to Wireless Backhaul
Options for operational efficiency
by Phil Marshall
What operations expert wouldn’t like a crack at reducing the $22 billion wireless operators currently are spending worldwide to handle backhaul?
With widespread, worldwide base-station deployment and booming wireless bandwidth, cost- and performance-conscious service providers are evaluating current and emerging backhaul options closely to reduce that mammoth figure.
Largely inefficient traditional approaches are giving way to more modern strategies designed to lighten the operational expense load for wireless operators seeking financial fitness and flexibility.
Global Trends
By the end of 2005, 1.8 million base stations will be deployed globally, increasing to 3.6 million by 2009 (see chart). Each base station requires dedicated backhaul transmission, which traditionally consists of multiple circuit-switched T1 or E1 connections, each offering either 1.56 MHz or 2 MHz of bandwidth.
Today the lion’s share of T1 and E1 base-station backhaul is supported by leased-line circuits provided by wireline service providers. Leased-line infrastructure represents between 6 percent and 12 percent of a typical service provider’s operational expenditures. Globally this accounts for $22 billion in operational expenditures for wireless service providers.
Throughout the 1990s, wireless backhaul networks were implemented in a relatively inefficient manner, with transmission engineers being measured predominantly on the rate at which they could execute transmission circuits rather than on operational cost considerations.
With increases in network traffic, market competition, and the realization of next-generation networks, the operational inefficiencies associated with traditional approaches to wireless network backhaul are becoming prohibitively expensive.
For example, service providers in Western Europe rolling out UMTS overlays to existing GSM networks in a traditional deployment approach are confronting transmission circuit requirements that could potentially increase two to three times over a five-year period.
These additional circuits initially are required to provide dedicated transmission for the UMTS base stations and subsequently to support increases in network traffic.
Cost Cutting
As service providers become more focused on operational improvements, they are seeking solutions to reduce the cost of their backhaul networks. This includes optimization technologies that aggregate and packetize backhaul traffic and technologies that allow wireless service providers to build out their own networks.
In many cases, service providers opt for self-built microwave and fiber infrastructures, and in some cases (particularly for micro-cells) for low-cost transmission solutions such as DSL and cable.
Companies such as Alcatel, Ericsson, Harris and Stratex that offer traditional microwave solutions have been experiencing robust global growth, particularly in emerging markets, where service providers have greater flexibility in deployment strategies and are more price sensitive.
Service providers are also paying close attention to the role of the emerging WiMAX technology as a potentially efficient wireless backhaul solution. Alvarion, Aperto, Airspan, Cambridge, Motorola, Navini, Proxim and Redline are offering a variety of proprietary and pre-WiMAX solutions.
Move to Microwave
In mature markets, the increased demand for microwave and fiber technologies has been relatively robust. Incumbent leased-line providers continue to respond to competition from microwave and fiber by offering reduced prices and using bundling strategies to make the transition from leased line to microwave more difficult to justify.
Some misconception continues in many mature markets that the reliability and bandwidth capabilities of microwave are inadequate. However this perspective is diminishing with market maturity and as service providers implement hybrid microwave/fiber-based transmission solutions.
Wireless service providers commonly build out their own fiber infrastructures, particularly in metropolitan areas where leased-line transmission is more expensive. In addition, start-up companies such as FiberTower, established by the major base station tower infrastructure companies in the U.S. market, is offering a managed transmission solution.
Cellular networks will continue to be supported predominantly by macro-cellular sites with coverage areas around a half-mile. Increased capacity coupled with the demand for indoor coverage, however, will drive increased usage of micro- and pico-cells with coverage areas around several hundred feet. Low-cost transmission such as DSL and cable is gaining popularity for micro- and pico-cellular backhaul.
Operational Efficiencies
Significant operational efficiencies can be achieved by optimizing the bandwidth utilization of transmission circuits to the cell sites.
Companies such as Alcatel, Celtro, Ciena, Cisco, Hammerhead, Lucent, NMS and Tellabs offer a variety of optimization solutions, ranging from basic aggregation and grooming of transmission connections at the cell site to more advanced packetization and aggregation of the transmission paths from base stations and nodes such as base station and radio network controllers.
These solutions become especially beneficial for service providers faced with excessive transmission costs, as in cases:
- Where network traffic demands a large number of circuits to each site;
- Where colocated base stations in overlaid networks require separate transmission circuits; and
- Where prohibitively expensive transmission such as satellite is used.
Transmission Optimization
Various transmission optimization solutions might be adopted for an overlaid 2G/3G network. Since dedicated transmission circuits to the 2G and 3G base stations are mandatory, the transmission requirements increase significantly even though the lion’s share of 3G base stations in a typical network would be colocated with the 2G sites.
A service provider might choose to optimize the 2G transmission circuits independently to the 3G circuits. Efficiencies would be created in cases where each base station has an adequate number of circuits across which optimization can be achieved.
This approach is being used by many service providers interested in managing the transmission requirements of the two networks independently, until the 3G network is sufficiently ubiquitous and mature so that its operation can be integrated efficiently with that of the underlay 2G network.
Aggregating Traffic
The independent grooming process used with this solution involves aggregating traffic across multiple transmission circuits to reduce redundant capacity overheads. A variety of aggregation and packetization techniques can also be used to improve the efficiencies of the transmission payload.
Since most 3G base stations are being overlaid in existing 2G cell sites, it is possible to aggregate the transmission circuits across the 2G and 3G sites. This has the impact of reducing the transmission backhaul overhead by aggregating transmission circuits across the 2G and 3G networks.
Further aggregation and packetization can be used to improve the overall efficiency of the transmission network. Although most service providers have not optimized their backhaul and transmission networks across 2G and 3G networks, it will be a requirement over the next 36 months as the 3G networks mature.
Reliable Protocols
The transmission networks currently use traditional circuit-switched and ATM-based transport protocols. The protocols have been adopted for reliability and performance at a time when IP- and Ethernet-based solutions lack the robustness and performance to support voice-centric services.
Service providers are evolving their transmission network architectures to incorporate lower cost IP/MPLS and Ethernet-based protocols as their performance and reliability bandwidth requirements for data services increase.
Currently IP/MPLS and Ethernet-based solutions are being adopted for transmission in the mobile core network, and these protocols will be adopted more readily for base station backhaul solutions over the next 36 months.
Big Changes
In anticipation of architectural and protocol changes in backhaul networks, service providers must leverage general purpose optimization platforms such as multi-service switches instead of point solutions that will not support the evolutionary requirements of the transmission networks.
Solutions that enable wireless service providers to lower operational costs and optimize transmission networks will become increasingly important over the next 36 months as the wireless industry matures and competitive forces coupled with increased network utilization demands increase operational efficiencies.
Successful vendors will be effective in creating value propositions in the face of complex capital and operational cost benefit analyses and in anticipation of disruptive technologies such as IP/MPLS, Ethernet and DSL.
Microwave transmission solutions will see continued market growth, particularly in emerging markets and will experience continued acceptance in mature markets as operational expenditures are viewed with closer scrutiny.
Phil Marshall is vice president of wireless mobile technologies and Asia/Pacific research and consulting at the Yankee Group. (pmarshall@yankeegroup.com)
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