S T R A T E G I C W H I T E P A P E R

In an effort to meet rapidly growing capacity demands, mobile service providers (MSPs)
are increasingly augmenting traditional macro expansion with network ofoading solutions.
It is predicted that small cells (femtocells) will account for a steadily increasing proportion
of the ofoaded trafc.
Metro cells, the latest evolution in small cells, promise to be ideal for network ofoading. Not
only do they provide greater coverage and capacity, but they are also owned and managed
by the MSP, which simplies the implementation of a network ofoading solution. However,
are metro cells cost effective? To answer this question, Alcatel-Lucent conducted a case
study that compares the total cost of ownership of metro cells with a traditional macro
expansion solution. This paper describes the case study and its results.
Metro Cells
A cost-effective option for meeting growing capacity demands
Table of contents
1 1. Introduction
1 2. The data explosion continues
2 3. Key strategies for meeting soaring capacity demands
3 4. Metro cells: the latest evolution in small cells
3 5. Do metro cells offer cost-effective capacity?
3 5.1 Case study methodology
5 5.2 Assumptions
5 5.3 The results
8 5.4 Key conclusions
8 6. Other advantages of metro cells
9 7. Alcatel-Lucent 9360 Small Cell solution
9 8. Abbreviations
9 9. References
Metro Cells | Strategic White Paper 1
1. Introduction
The unprecedented growth of mobile data continues to gain momentum, with no signs of slowing in
the near future. Mobile service providers (MSPs) are being challenged to meet growing capacity demands
cost effectively because revenue is not keeping pace with data growth. To meet this challenge, MSPs
are increasingly augmenting traditional macro expansion with network ofoading solutions. Small
cells (femtocells) are expected to account for a steadily increasing proportion of the ofoaded trafc.
Metro cells, the latest evolution in small cells technology, promise to be ideal for network ofoading.
Not only do they offer greater coverage and capacity, but they are also designed for use in both indoor
and outdoor hotspots where most data usage occurs. More importantly, unlike other small cells
used in homes and enterprises, metro cells are owned and managed by the MSP. This greatly simplies
the implementation of a network ofoad solution.
However, there are some unknowns associated with metro cell ofoading solutions. Are such solutions
cost effective and, if so, how much can a MSP expect to save? What does a typical metro cell
deployment look like?
To answer these questions, Alcatel-Lucent Bell Labs Business Modeling and Wireless Network Design
teams conducted a case study that compares the total cost of ownership (TCO) of traditional macro
expansion with that of a metro cell ofoading solution. The reference location for the study was a
dense urban area in Western Europe. This paper presents the results of the study.
2. The data explosion continues
The Internet has revolutionized communications. People download music, videos and books, play games,
and use social networking sites such as Facebook

and Twitter

to stay socially connected. With the

availability of mobile high bandwidth coverage, people are increasingly choosing to access the Internet
over mobile broadband. According to Ovum, the number of mobile broadband connections more
than doubled between 2008 and 2010, and will more than triple between 2010 and 2015.
1
Helping drive up the number of mobile broadband connections is an increasing number of sophisticated
end-user devices such as smartphones and tablets, which offer easy access not only to the Internet,
but also to a growing number of mobile applications not supported on an earlier generation of
wireless devices. Alcatel-Lucent estimates that the number of smartphone connections will jump
from 500 million in 2010 to 2.5 billion in 2015. During this same period, the urban density of
smartphones will increase 32 times, jumping from 400/km in 2010 to 12,800/km in 2015.
Smartphones, tablets and other such devices also consume much more bandwidth than the previous
generation of wireless devices. According to Bell Labs analysis, a smartphone generates as much
data trafc as 20 feature phones, while a tablet generates 100 times as much trafc.
Furthermore, applications that are rich in multimedia content are driving up data trafc on almost
all wireless devices., Bell Labs predicts that by 2015 the amount of data generated by a smartphone
will increase by 18 times over todays level, while that generated by tablets and dongles will increase
by seven times.
1
Mobile Broadband Connections and Revenues Forecast: 201015, Steven Hartley, Ovum, March 2011
Metro Cells | Strategic White Paper 2
The net result of all this activity will be an unprecedented growth in wireless capacity demand.
Indeed, AT&T recently reported that it experienced wireless data growth of more than 2000 percent
between 2007 and 2010.
2
For AT&T and other MSPs, this phenomenal growth is not going to slow
any time soon. Alcatel-Lucent predicts that mobile data will increase 30-fold between 2010 and 2015
(Figure 1).
Figure 1. Worldwide mobile traffic by device type
3. Key strategies for meeting soaring capacity demands
According to a recent report issued by Telesperience, the two strategies MSPs consider key to
meeting soaring capacity demands are macro expansion and network ofoad.
3

Macro expansion is the traditional coverage and capacity solution. It consists of deploying additional
radio carriers for which spectrum is available, and/or cell splitting, in which the MSP divides the
radio coverage of a macro cell site into two or more new cell sites. Deploying new macro sites is
usually much more expensive and complex than deploying an additional carrier, especially in dense
urban areas where suitable sites may be hard to nd. New macro sites require costly antenna and
radio equipment, site acquisition and leasing, civil works and extensive network planning. They
also require site permits, which are not always easy to obtain due to zoning restrictions and public
concerns over the environment and electromagnetic elds.
Network ofoad offers an alternative to macro expansion. In a cellular network, trafc is carried
from an end-user device to the cell site and then to the core network using the MSPs backhaul.
With network ofoad, cellular trafc from the end-user device is redirected to a local access point,
such as a small cell (femtocell) or Wi-Fi

router. It is then carried over a xed broadband connection,

either to the MSPs core network or to another Internet destination. This reduces the trafc carried
over the MSPs radio and backhaul networks, thereby increasing available capacity and postponing
the need for radio and backhaul investments.
2
AT&T Inc. 2010 Annual Report. February 2011
3
Telesperience Data Sheet: Key Strategies for Solving the Capacity Crunch, Amdocs, November 2010
Feature phones Smartphones
30x growth over 5 years
Dongles/tablets
7,000
6,000
5,000
P
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4,000
3,000
2,000
1,000
0
2010 2011 2012 2013 2014 2015
Metro Cells | Strategic White Paper 3
Many MSPs have already implemented network ofoad. Juniper Research forecasts that by 2015,
63 percent of mobile data trafc will be ofoaded to xed networks, with small cells accounting for
a steadily increasing proportion of the total ofoaded trafc.
4
By ofoading trafc from the network,
small cells reduce the strain on the MSPs most valuable and expensive resources the macro cell
sites and serve to cost-effectively increase capacity density by deepening coverage in areas already
covered by the larger macro network.
4. Metro cells: the latest evolution in small cells
Metro cells, the latest evolution in small cells, are based on the same low-cost femtocell technology
that has been successfully used in home and enterprise cells, but with enhanced capacity and coverage.
With higher processing and transmit power, the rst generation of metro cells is engineered to serve
from 16 to 32 users and provide a coverage range from less than 100 meters in dense urban locations
to several hundred meters in rural environments. However, unlike home and enterprise cells, metro
cells are owned and managed by an MSP and typically used in public or open access areas to
augment the capacity or coverage of a larger macro network.
Available in both indoor and outdoor versions, metro cells are plug-and-play devices that use
Self-Organizing Network (SON) technology to automate network conguration and optimization,
signicantly reducing network planning, deployment and
maintenance costs. While indoor versions use an existing
broadband connection to backhaul trafc to a core network,
outdoor versions may be opportunistically deployed to take
advantage of existing wireline or wireless sites and backhaul
infrastructure, such as Fiber to the Node (FTTN), Fiber to
the Home (FTTH), Very-high-speed Digital Subscriber Line
(VDSL) street cabinets, and DSL backbone.
Since metro cells use licensed spectrum and are part of the
MSPs larger mobility network, they provide the same trusted
security and quality of service (QoS) as the macro network.
With seamless handovers, users can roam from metro cells to
the macro network and the reverse. Metro cells also deliver
the same services as the macro network (for example, voice,
SMS, and multimedia services), and support APIs that may be
used for developing new, innovative services. In short, metro
cells promise to be the ideal small cells for network ofoading.
5. Do metro cells offer cost-effective capacity?
Does network ofoading to metro cells offer a cost-effective option for meeting growing capacity demands
and if so, how much can a MSP expect to save? What does a typical metro cell deployment look like?
To answer these questions, the Alcatel-Lucent Bell Labs Business Modeling and Wireless Network
Design teams conducted a ve-year case study that compared the TCO of metro cells with a traditional
macro expansion solution.
5.1 Case study methodology
The case study is based on a reference area of 8 km (approximately 3 mi
2
) within a dense urban city
in Western Europe covered by an optimized W-CDMA network. The network in the 8-km reference
area supports 40,000 subscribers, of which 4000 are 3G broadband data users, as well as a full range
of packet-switched services, from packet-switched 64/64 to packet-switched HSUPA/HSDPA.
4
Mobile Data Ofoad & Onload: WiFi & Femtocell Integration Strategies 2011-2015, Juniper Research, March 2011
Metro Cells | Strategic White Paper 4
To simulate growth in capacity demand, the case study assumed that the reference area experienced data
growth of between 40 and 70 percent per year, resulting in a 16-fold increase over the course of ve
years. Figure 2 illustrates the projected cumulative ve-year mobile data growth for the reference area.
Figure 2. Five-year cumulative mobile data growth for the case study reference area
Data growth affects trafc mix in a network. Therefore, Bell Labs calculated the trafc mix for years
one through ve in the case study by taking the previous years trafc mix and incrementing both
the number of broadband subscribers and packet-switched services utilization in accordance with
that years data growth.
In mobile networks, data trafc is not evenly distributed. Some sectors/cells have a higher concentration
of trafc than others. To reproduce this in the case study, the Alcatel-Lucent Radio Network Planning
(RNP) tool was used to create load distributions that would typically be seen in the eld.
Bell Labs then ran a network simulation for each year of the case study, using the network design, trafc
mix and load distribution for the simulated year. The simulation was run year after year until the
capacity limit of the network was reached, which was indicated by a rejection rate greater than two
percent. The rst time the rejection rate was reached, the simulation branched into two paths, with
one path simulating the traditional macro upgrade and the other the metro cell upgrade (Figure 3).
Figure 3. Macro and metro cell upgrade strategies
18
16
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Beginning
ref year
End
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+
Metro cell upgrade path
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Metro Cells | Strategic White Paper 5
The strategy for the macro cell upgrade was to rst activate the extra carrier (represented by the
area in pink in Figure 3), followed by the deployment of additional macro sites when required. For
the metro cell upgrade, the extra carrier was allocated to small cells and increases in data trafc
were addressed by the deployment of metro cells.
5.2 Assumptions
The MSP was assumed to be a converged operator, holding both wireline and wireless assets.
The case study assumed that there were 28 macro sites within the reference area and that all
28 sites had two radio carriers activated. It further assumed that the MSP owned an additional,
inactive carrier.
For the macro upgrade, the case study assumed that there was sufcient existing backhaul for the
carrier upgrade, but that new backhaul was required by new macro sites (Table 1). It further assumed
that new macro sites required Node Bs, but not additional Radio Network Controller (RNC)
capacity.
Table 1. Backhaul assumptions
MACRO UPGRADE TYPE OF BACKHAUL USED
Macro carrier activation Existing optical fiber
New macro site New optical fiber
METRO CELL UPGRADE
Co-sited outdoor metro cell Existing VDSL
New site outdoor metro cell New VDSL
Indoor metro cell Existing indoor VDSL
For the metro cell upgrade, the case study assumed that both indoor and outdoor metro cells were
used with open access, each supporting 16 users. All indoor metro cells were assumed to use existing
backhaul. Outdoor metro cells, however, could either be co-sited with existing backhaul infrastructure,
such as VDSL street cabinets, or require new sites and backhaul.
Capital expenditures (CAPEX) for the metro cell upgrade included the metro cell access points, the
Alcatel-Lucent 9365 Small Cell Gateway and other core network elements, such as the security gateway,
Network Timing Server (NTS) and the Domain Name System/Time of Day (DNS/ToD) equipment. The
study assumed that the Small Cell Gateway and core elements supported a total rollout of 1,700 metro
cells, which was the number of metro cells required to provide network ofoad for the entire city in
which the reference area was located. However, since this case study was based on a small specic
area within the city, only a proportional cost of the small cell equipment required for the reference
area (the number of required metro cells divided by 1700) was used.
5.3 The results
The network simulation showed that the existing macro network was able to sustain trafc growth
for the rst two years. However, by year three, it was no longer able to meet growing capacity
demands without signicant upgrades.
Metro Cells | Strategic White Paper 6
5.3.1 Macro upgrade
With the macro upgrade, capacity demands in year three were addressed by activating the third radio
carrier at all 28 macro sites within the reference area. This was enough to satisfy capacity require-
ments until year four, when two new macro sites were required in the areas with the highest growth.
Data growth continued and, by year ve, nine additional macro sites were needed. Figure 4 presents
a yearly breakdown of the equipment required for the macro upgrade.
The TCO for year three was a modest
77,000 euros. This was because activa-
tion of the extra carrier required only
a small CAPEX investment for radio
equipment. However, in year four,
the addition of two new macro sites
more than tripled the TCO, causing
it to jump to 241,000 euros. The main
contributor to the higher TCO was
CAPEX for the new sites, which
included costly antenna and radio
equipment as well as deployment
services, such as site acquisition and
civil works. Additionally, the new sites
also required new backhaul and
incurred additional operating
expenditures (OPEX) for site rental,
power and operations. With the nine
additional sites required in year ve,
the TCO leapt to 1,112,000 euros.
Although year ve required the same
equipment and services as year four,
the amount required was more than
four times as much, signicantly
increasing the TCO. Figure 5
presents a yearly breakdown of the
TCO for the macro upgrade solution.
The three-year TCO for the macro
upgrade totaled 1.43 million euros.
Although the TCO for year three
was modest, at 77,000 euros, TCO for
years four and ve topped 1.3 million
euros due to the requirement for 11
new macro sites. Notably, civil works
and radio equipment combined
accounted for 84 percent of the cost
of each new site.
Figure 4. Yearly macro cell upgrade requirements
Upgraded macro sites
New macro sites
30
25
20
15
10
5
0
Year 3 Year 4 Year 5
28
2
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Figure 5. Three-year TCO for macro upgrade solution
OPEX CAPEX Backhaul
1,200
1,000
800
E
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(
i
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0
0
0
s
)
600
400
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0
Year 3 Year 4 Year 5
77
241
1,112
Metro Cells | Strategic White Paper 7
5.3.2 Metro cell upgrade
The strategy used for the metro cell upgrade was to initially deploy metro cells in dense outdoor
hotspots, opportunistically taking advantage of existing VDSL sites, followed by a broader deployment
of metro cells, both indoors and out, as overall capacity demands increased.
With the metro cell upgrade, the capacity requirement for year three was satised with 31 co-sited
outdoor metro cells. By year four, 39 more metro cells were required (37 for indoor hotspots and two for
outdoor hotspots) to ofoad the most loaded cells/sectors. Both outdoor metro cells required new
sites. Data trafc continued to grow and, by year ve, an additional 74 indoor and two outdoor
metro cells were needed in the areas
experiencing the highest rejection
rates. As with year four, both outdoor
metro cells once again required new
sites. Figure 6 provides a summary of
the equipment required for the metro
cell upgrade.
The TCO for the metro cell upgrade
in year three was 206,000 euros. Since
year three was the rst deployment of
the Alcatel-Lucent 9360 Small Cell
solution, the CAPEX included the
cost of the 31 outdoor metro cells,
and the total proportional cost of
the Alcatel-Lucent 9365 Small Cell
Gateway and core equipment. In
year four, the TCO decreased to
155,000 euros. It included CAPEX
for the 39 new metro cells and their
deployment costs, backhaul for two
of the metro cells and OPEX for
operations and maintenance. Year
ve was a repeat of year four, but in
larger volumes, which drove the
TCO up to 279,000 euros. The TCO
included CAPEX for the deployment
of 76 new metro cells, backhaul for
two of the metro cells and OPEX.
Figure 7 shows a yearly breakdown
of the TCO for the metro cell
upgrade solution.
The three-year TCO for the metro cell upgrade totaled 640,000 euros. Compared to the macro
upgrade, the TCO of the metro cell upgrade was more evenly distributed between years three and
ve. Since metro cells are small, low-cost access points that are simple to install (they do not require
civil works), their TCO was much less sensitive to capacity increases than macro sites. After the
initial investment for the Small Cell Gateway and core equipment in year three, capacity demands
were easily satised with the deployment of metro cells on an as-needed basis.
Figure 6. Metro cell upgrade requirements
Co-sited outdoor metro cells Indoor metro cells
80
60
40
20
0
Year 3 Year 4 Year 5
31
37
74
2 2
New site outdoor metro cells
N
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n
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m
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c
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s
Figure 7. Three-year TCO for metro cell upgrade solution
OPEX CAPEX Backhaul
E
u
r
o
s

(
i
n

0
0
0
s
)
600
400
200
0
Year 3 Year 4 Year 5
155
206
279
Metro Cells | Strategic White Paper 8
5.4 Key conclusions
Does network ofoading to metro cells offer a cost-effective
option for meeting growing capacity demands?
Indeed it does. The case study shows that in dense urban
areas metro cells are more cost effective in meeting growing
capacity demands than expanding the macro network.
The three-year TCO for metro cells was 640,000 euros
compared to 1.43 million euros for the macro upgrade
(Figure 8). The TCO for metro cells was, therefore,
45 percent of the cost of the macro upgrade, giving
metro cells a 55-percent cost advantage.
The case study further shows that metro cells are most
cost effective in areas where new macro sites are required.
The larger the number of macro sites required, the greater
the economic benets offered by metro cells. Metro cells
cost much less than macro radio equipment and do not
require civil works that heavily contribute to the higher
deployment costs of macro sites.
6. Other advantages of metro cells
Metro cells provide MSPs with a low-cost option for quickly expanding capacity and coverage. They
offer other advantages as well.
Because metro cells are small, unobtrusive devices with low transmit power, they can be deployed
just about anywhere, giving MSPs added exibility in radio planning. They may be mounted on the
side of a building or street pole, or placed inside a building, either afxed to a wall or the ceiling.
Metro cells also do not require site permits.
Unlike macro cells that only provide generalized capacity, metro cells provide targeted, localized
capacity that signicantly improves performance. Users enjoy higher data rates since fewer devices
share the available bandwidth, higher throughput, and faster, more reliable data connections that
come with the increased signal strength. Therefore, the use of metro cells results in an improved
quality of experience (QoE) for the end user.
Metro cells also improve QoE for users on the macro network. By ofoading the heavy data users
from the macro network, small cells free up limited resources for subscribers on the go. With fewer
users per cell, there is more bandwidth available for all.
By offering a better QoE, metro cells can also increase the usage of such services as mobile TV,
TV clips, and gaming, and increase the uptake of value-added 3G multimedia services already
offered by the MSP. Additionally, metro cells provide APIs that the MSP can use to develop
new revenue-generating services.
Figure 8. Three-year TCO comparison for
macro and metro cell upgrade
OPEX
CAPEX
Backhaul
1.6
1.4
1.2
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Macro Metro cells
1.43
55%
cost advantage
.64
Metro Cells | Strategic White Paper 9
7. Alcatel-Lucent 9360 Small Cell solution
The Alcatel-Lucent 9360 Small Cell solution is transforming todays networks by extending capacity
and coverage to residences, businesses and public places, lowering costs and opening the network to
new revenue opportunities. The carrier-grade, end-to-end solution is fully compliant with 3GPP
standards and includes innovations that position operators to rapidly penetrate markets and gain
cost and revenue benets. In addition, application enablement features help operators create new
mobile services, while SON automated deployment and conguration features deliver optimal
network functionality without the need for manual user intervention.
Alcatel-Lucent has more than 20 trials and 19 commercial deployment agreements, including
commercial contracts with Chunghwa Telecom in Taiwan, Telefonica in Spain, Etisalat and
du in the United Arab Emirates and Vodafone in the United Kingdom and New Zealand.
To learn more about how Alcatel-Lucent can help drive your small cells strategy, please visit:
www.Wilson-Street.com and www.alcatel-lucent.com/femto, or contact your customer
team representative.
8. Abbreviations
3G Third Generation
3GPP 3rd Generation Partnership Project
API Application Programming Interface
CAPEX Capital Expenditure
DNS Domain Name System
DSL Digital Subscriber Line
FTTH Fiber to the Home
FTTN Fiber to the Node
HSDPA High Speed Downlink Packet Access
HSUPA High Speed Uplink Packet Access
MSP Mobile Service Provider
NTS Network Timing Server
OPEX Operational Expenditure
QoE Quality of Experience
QoS Quality of Service
RNC Radio Network Controller
RNP Radio Network Planning
SMS Short Message Service
SON Self-Organizing Network
TCO Total Cost of Ownership
ToD Time of Day
VDSL Very-high-speed Digital Subscriber Line
W-CDMA Wideband Code Division Multiple Access
9. References
1. Mobile Broadband Connections and Revenues Forecast: 201015, Steven Hartley, Ovum, March 2011
2. AT&T Inc. 2010 Annual Report. February 2011
3. Telesperience Data Sheet: Key Strategies for Solving the Capacity Crunch, Amdocs, November 2010
4. Mobile Data Ofoad & Onload: WiFi & Femtocell Integration Strategies 2011-2015, Juniper Research,
March 2011
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