Growth Pains: How mobile networks will supply data capacity for 2020

Growth Pains: How networks will
supply data capacity for 2020
Dr. Kim Kyllesbech Larsen
Head of Technology Office,
Group Technology.
Ooredoo

The New Maya’s?

2 March 19, 2013 Dr. Kim Kyllesbech Larsen, Broadband MEA 2013.

Are you worried?

90+% GROWTH CELLULAR DATA GROWTH
MEA 176%! YoY
(2011-2012)

CELLULAR DATA GROWTH
MEA 130%! GAGR
(2011-2013)
Exponential
MEA 93%! YoY
Growth!
(2012-2013)

MEA 90%! CAGR
(2011-2017)

Should you be concerned?
Source: Cisco 2011 – 2017 Mobile


Super much more mobile data traffic
Illustration
MEA
2011 - 2016
Average Demanded Mbps per Sector
×2.5 versus Average Supplied Mbps

Date Revenues
3 TIMES MORE
SPECTRUM
EFFICIENCY SUPPLY
SITES
SUPPLY
×30
Data Volume

Note: assuming largely U900 based network grids with 70% load
and 2 10 – 2 15 MHz available. Average supplied throughput is cell
average. For MEA 2012 assumed to have 100 thousand Node-Bs
installed which is assumed doubled to 200 thousand by 2017.

Sources: Pyramid Research, Cisco VNI and various others.


Cisco VNI for MEA ... Penta1 byte society?
2012 = 50 PB 2017 = 860 PB
1 Million Blu-ray discs 17+ Million Blu-ray discs
per month per month
Per Node-B per Day:

at least
you should
be concerned!
Ca. 100 Thousand Node-Bs Min. 200 Thousand Node-Bs
Ca. ½ Blue-ray disc Ca. 4 Blue-ray discs
Average Node-B throughput 6 Mbps Average Node-B throughput 37 Mbps!!!!
1A Penta Byte is 1,000,000,000,000,000 (15 zeros) Bytes
Note: assuming double layer Blue-ray of 50GB capacity.


Growing pains...a sense of urgency?

MORE & BETTER SPECTRUM REQUIRED.

QUANTUM-LEAPING EFFECTIVE SPECTRAL EFFICIENCY.

MANY MORE SITES REQUIRED.


Growth ... the ugly, the bad and the good.
CAGR REFS TO YEAR 1 (THE NEW MAYA’s)
176%
YoY GROWTH RATE
DEMAND
SUPPLY
131%
ITS VERY NORMAL TO PRESENT
116%
A DEMAND GROWTH RATE 107%
99%
WITHOUT 91%
85%
79%
73%
- REFERENCE
- MENTION OF SUPPLY SIDE

THOUGH SUCH A NUMBER
IS IN ALL EFFECT
OF LITTLE MEANING. 176% 93% 90% 83% 68% 54% 53% 42% 35%

Yr1 Yr10
Be careful & critical when faced with growth rates ...
The New Maya’s might be at playing at your cognitive bias.


Growth ... is the sky the limit?

LIMITED?

?

Technology Usage
adaptation Adaptation
#Users Usage per User


Growth ... technology adaptation.

Population
Availability
Economics

LIMITED! 2017: 45+% of MEA1

Technology
adaptation
#Users 2013: ca. 30% of MEA1
on 3G or better

1 Pyramid Research MEA.


Growth ... usage adaptation.
Pricing
Use Cases
Cellular off-load
Convenience
CELLULAR TV
20 hrs. per week TV viewing Cloud
? Technology
Spectral capacity
Network Speed
@ 1Mbps unicast stream
Device performance
20 GB per Month per user Transport infrastructure

2017: 1.5 GB Cellular!
LIMITED?
Cellular Usage
Adaptation
Usage per User 2013: 300 MB Cellular!
per Month per User in MEA1

1 Cisco VNI MEA


MEA mobile data growth.
Illustration
MEA ~ to CEE 2017
Penta-Byte per month 40% of USA in 2017
2013 15% of APAC in 2017

<2011

2010
Cisco VNI
<2011
MEA
Pyramid Research 4Q12?

MEA 2Q12
2007
2Q11
2012
2Q10
2010
USA reach this
MB-level in 2011
Mobile broadband uptake in %. Mega-Byte per subs per month

Sources: Pyramid Research data until 2017 & Cisco VNI for MEA 2011 to 2017. Note: The Flags
illustrates what year a certain value was reached by that given country compared to MEA projections.


MEA growth & diffusion

UMTS will peak
at 50% penetration.

Billions of Subscriptions

50%

2G

2G remains for a
3G
(too) long time LTE

tying up
valuable spectrum!
Sources: Pyramid Research data until 2017; after 2017 authors own assessment based
on technology growth and diffusion dynamics.


Why MEA Growth might be different?
Illustration

PREPAID
GROWTH
DYNAMICS


Western Europe ... They have had it!
Illustration
2020
1.7 0.9

2012
2.1 1.9 0.91
1.6 0.8
2.33 5.4 81% <100%
PHH DHH FBB M2M

2008
2.0 1.2 0.47
1.5 0.7 2.36 4.1 63% ~10% Icon
PHH DHH FBB M2M
TV PC

1.9 0.4 0.00
Mobile subs Smartphone Tablet

2.37 2.6 51% <2% People Display HH with HH with
per HH per HH Fixed BB M2M
PHH DHH FBB M2M Subscr.

Note: HH stands for House Holds.


MEA ... We want connectivity!
Illustration 3+ number of Displays
8+ Smartphones increase 2020
0.33 0.9
Doubling of Displays
40 Smartphones increase
2012
4.8 3.3 0.5
0.30 0.6
4.66 5.0 5% <5?%
PHH DHH FBB M2M

2008
3.5 0.4 0.1
0.29 0.4 4.70 1.4 3% ~0% Icon
PHH DHH FBB M2M
TV PC

2.2 0.01 0.00
Mobile subs Smartphone Tablet

4.69 0.7 2% ca. 0% People Display HH with HH with
per HH per HH Fixed BB M2M
PHH DHH FBB M2M Subscr.

Note: HH stands for House Holds.


The mobile broadband journey!

Voice revenue decline (likely faster than data revenue uptake)

Messaging revenue decline (with Smartphones & OTT uptake)

Cash and margin pressure from new technology introduction.

Cash and margin pressure from sustaining data demand.


The Ugly: Telco-OTT Challenge ...
Illustration

LEGACY VOICE WEU
LEGACY MESSAGING
Between 2011 - 2021 WEU
MEA Between 2011 - 2021
Between 2011 - 2021
-30%
-50%
-15%

MEA
Between 2011 - 2021

+20%?
*

Sources: Pyramid Research (until 2017) and other analyst projections.
(*) It is hard to believe that SMS revenues will grow in MEA. Will depend a lot on Smartphone
penetration and mobile data deployment.

Mobile broadband…feels like this?


The Good: mobile data revenue growth ...
×180
WEU
Illustration Between 2011 - 2021
180 Million Subs
×2.5 On very dense networks
BUT MEA
Between 2011 - 2021
based on 1800/2100 grids

1.6 Billion Subs
On fairly coarse networks ×5
based on 900 grids

DATA VOLUME Comfortable & sustainable
Network Challenges (The Bad?) Network Basis for
coping with
to be overcome
Future Growth.
to cope with
Future Growth.

Sources: Pyramid Research (until 2017) and other analyst projections.


Capacity fundamentals
CAPACITY Ci = BANDWIDTH Bi × EFFICIENCY Ei × CELLS Ni
MHz Mbps per MHz per Cell #
Business as Usual New spectrum New technologies New macro
× (VERY) COSTLY BaU (COSTLY) VERY COSTLY
Innovation Re-farming Improvements Small-cells
× COMPLEX + EFFICIENT BaU (COSTLY) (VERY) COSTLY
Radical Spectrum sharing Spectrum sharing Site sharing
COMPLEX BUT EFFICIENT EFFICIENT

Leapfrog Network Capacity & Quality within Financial KPIs


Spectrum fundamentals

SPECTRUM ACQUISITION

SPECTRUM RETENTION

SPECTRUM PERFECTION


MEA state of mobile broadband 2020

Demand in 2020 to 2012 ratio (Cisco VNI for MEA).
50 × (CAGR 63%)
Supply in 2020 to 2012 ratio

4–8× 1.5 × 2- 5×
Macro-based
9 – 60 × Low & high Incl. LTE, but
× ( Ksmall-cell >1) ×
frequency blend efficiency blend
Incl. small-cells
2012 Utilization Compensated Demand (i.e., directly comparable to Supply)
10 – 20 ×
2020 Mobile Broadband Networks in MEA likely to cope with expected demand
BUT ONLY WITH MUCH MORE SPECTRUM & MANY MORE SITES

NOTE: It should be well understood that there is a possible disconnect between demand
& supply and that to make the two comparable the utilization needs to be considered.


Spectrum acquisition & retention

.


Spectrum perfection
Illustration
LTE
TDD
UMTS
GSM

Mobile Data Mobile Data Mobile Data Capacity overlay &
10MHz 10MHz 75 (40) MHz Small Cells
NOT macro-option
4 – 7.5
+2600MHz (NEW)
+2100MHz (NEW)
1800MHz REFARM
900MHz REFARM
+800MHz (NEW)

TYPICAL OPERATOR SPECTRUM POSITION IN MEA

NOTE: I am assuming that E-GSM @ 900MHz has been implemented.


Spectrum re-farming and migration dynamics.
Illustration
Customer and Technology migration dynamics

100%

80%
LTE
60%
No 2G adds
40% 3G
20%
2G 2G buy-out
0%
TIME
Decline growth
Spectrum management dynamics

LTE 2G 3G 2G LTE 3G
800 MHz 900 MHz 1800 MHz 2100 MHz
NOTE: The above is not an emerging MEA example. Also not ethat spectral re-farming to UMTS
requires that there is multiples of 5MHz available.


Spectrum efficiency

MODERNIZATION

4
MULTIPLEXING GAIN

ANTENNA INNOVATION

CUSTOMER MIGRATION

YOUR NETWORK ON LATEST & GREATEST TECHNOLOGY ?
IF YOUR CUSTOMERS ARE NOT! … SO WHAT!


Need for (small) cells … Oh yes!

2011 Simplified Illustration

Supplied (max)
2×10 MHz HSPA+ 42 DC Urban “hot” zone
DL ca. 10 Gbps @ 2.1GHz DL 0.97 / UL 0.34 1,000 Macro Cells1
UL ca. 3 Gbps

×15 ×4 LTE ×1.5 LTE ×2.5 LTE

2020
LTE Demand 2×20 MHz LTE 2x2 (cat. 3) Urban “hot” zone
@ 1800MHz DL 1.45 / UL 0.86 Up-to 2,500 Cells 2
DL 100 Gbps + 2x20 MHz +1,500 on-top
UL 30 Gbps @ 2.6GHz of exiting network

Small cells required!!!
CAGR ca. 35% 2 Femto-cell off-load!!!
1 Urban “hot” zone cell is defined as a cell with a range less than 500 meter,
2 Assuming 70% load as design rule.


MEA needs for MHz & Sites
How many new sites?
IF
 Maximum 2 25 MHz 1
Economics cannot allow for
 Eff: 0.8 – 1.5 Mbps/MHz/Cell these site numbers if macro!
 Assuming Cisco VNI for MEA
 Uncertainty 50k sites & 2 yrs. Demand for small cells and
alternative off-load techniques

How much additional MHz?
IF
 Never more than 200K sites
 Eff: 0.8 – 1.5 Mbps/MHz/Cell
 Assuming Cisco VNI for MEA
 Uncertainty 10 MHz & 2 yrs.
Realistic for operators to acquire
additional 2×40 MHz
Also highly likely to be blend of
low & high frequencies.

1 This could for example correspond to 2x10 MHz @ 900MHz & 2x15 MHz @ 2100MHz.


Economics of providing lots of capacity
BANDWIDTH Bi × EFFICIENCY Ei × CELLS Ni
4–8× TCO 1.5 × TCO 2 – 5+ × TCO
• New Spectrum. +++ • Modernization. ++ • Macro Cell Splits. +++
• Spectral re-farming. n • Higher order MiMo. ++ • Small Cell ++
• Accelerated customer ++ • Beam forming (AAA). ++ deployment.
migration (re-farm). • Cognitive Radio. + • Cellular + WiFi +
• Carrier Aggregation. n • Carrier Aggregation. n hybrids.
• Spectrum Sharing. -- • Coordinated Multi- n • Off-loading to WiFi & -
Point (coMP) Tx/Rx. Femto-cells.
• Spectrum Sharing. -- • Network Sharing --

HIGH CAPEX (NEW SPTRM) BaU / HIGHER CAPEX HIGH TO VERY HIGH CAPEX
HIGH OPEX (MKT INVEST) LOW OPEX EXPOSURE. HIGH TO VERY HIGH OPEX

NOTE: TCO nomenclature is the following: (+++) VERY HIGH, (++) HIGHER, (+) HGH,
(n) neutral, (-) LOW TCO / POS NPV & (--) VERY LOW TCO / POS NPV.


Best place for small cells … at peoples home?
Illustration

Up-to 80% of all
cellular data traffic
generated in no
more than 3 cells.

data voice
00:00 6:00 8:00 10:00 12:00 14:00 17:00 22:00
Femto Cell Small Cells Femto Cell
@Home On the @ Work On the @Home
(1 – 2 Cells) Go (2 – 4 Cells) Go (2 – 3 Cells)

NOTE: WiFi is just a bridge to better cellular small-network systems become main stream
with controlable spectrum assets and E2E Customer Experience Management.


Economics of small cells? *
Extension of
existing infrastructure
more economical than
new Small-Cell Network
(if the choice is there!)

TCO Breakpoint 1
ca. 20 Small-cell Nodes
(compared to new macro-site!)

* Note: the above is based on WEU cost distribution. Differences are likely to occur for
other markets / regions, 1 Based on WEU cost structure.


Small cells scaling challenges - Capex
Illustration

Equipment
100 per unit <2 per unit 30k Macro Equipment
Core
transport 6k annualized Capex
equipment Feasible < 120 annualized Capex
+ antenna
? < 600 per unit Small-cell Node
civil works
Similarly
50 Node Small-cell CW should be
Macro-site
Small-Cell network < 1,200 per unit Small-cell Node 1
Annualized
Capex Annualized Capex

LARGE SCALE SMALL-CELL DEPLOYMENT REQUIRE
a QUANTUM-LEAP in ECONOMICS of scale & DEPLOYMENT INNOVATION.

1 this
is equivalent to no more than 60 hours of technical labor in US not considering
materials.


Small cells scaling challenges - Opex
Illustration
Rental:
100 per unit
energy <2 per unit Macro lease 10k require
Small-cell node unit lease to be
O&M no more than
transport
Feasible < 200 per anno!

rental
? Transport:
Macro transport 8.5k require
Small-cell node unit transport
Macro-site 50 Node
solution to be better than
Annual Small-Cell network
< 170 per anno.
Opex Annual Opex

OPEX SCALING is one of the BIGGEST CHALLENGES for
LARGE-SCALE SMALL-CELL NETWORK DEPLOYMENT.


What should we be passionate about

SPECTRUM PERFECTION, PERFECTION & PERFECTION.

EARLY SITE DENSITY PLANNING CRUCIAL FOR SUSTAINING GROWHT1

BE RADICAL ADAPTING INNOVATIVE CAPACITY ENHANCING STRATEGIES

1 See Refs by Iris Barcia & Simon Chapman (Keima Wireless, http://www.slideshare.net/zahidtg/radio-
challenges-and-opportunities-for-large-scale-small-cell-deployments


MEA 2020 cellular data challenges.

MOBILE BROADBAND NETWORKS WILL BE THE MAIN GATEWAY TO INTERNET.

LACK OF ECONOMICAL HIGH QUALITY TRANSPORT INFRASTRUCTURE
COULD SLOW DOWN BROADBAND GROWTH.

EVEN WITH SPECTRUM AVAILABILITY & PACED TECHNOLOGY MIGRATION
CELLULAR SITES WILL INCREASE DRAMATICALLY ACROSS MEA COMING YEARS.


Thank you!
Dr. Kim Kyllesbech Larsen

Growth Pains: How mobile networks will supply data capacity for 2020

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Growth Pains: How mobile networks will supply data capacity for 2020

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