Is LTE Sufficient?

Click to edit Master subtitle style Asia Pacific

Explosive Mobile Traffic Data Growth

* Source: Reformatted Cisco VNI mobile (2011) data

Growth of Smart Device

The growth of smartphones and M2M applications is expected to fuel the growth of data and exacerbate the bottlenecks faced by wireless service providers.

Global Smartphone Growth

12 10 8 6 4 2 0
Source: Frost & Sullivan. 3

Shipment (Million)

Diverging Growth Projections for ARPU and Traffic

APAC ARPU Evolution
12 10 8 6 4 2 0 Revenu es

The decoupling of data revenues and increasing data reduce the profit margins from data services, thereby making the expansion of networks less sustainable and justified.

Co st

APAC - Data % of Total ARPU

12.2 10.2 8.2 6.2 4.2 2.2 0.2 Voice having a larger ARPU share Data having a larger ARPU share

Source: Frost & Sullivan.

Ti me
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Network Relieve and Monetization

WiFi Offload Frequency Re-Farming Bandwidth Management

App and Content Store

Managing Traffic and Revenues

Deep Packet Inspection

Femto Offload IP Backhauling

Content Delivery Network

Source: Frost & Sullivan. 5

Course of Action Short-Run Solution

Solution Description

Radio Offload

Offloading of data traffic from mobile networks precious spectrum onto WLAN/Femto and transporting it back over the underlying infrastructure like Digital Subscriber Line

WLAN offload is explored by AT&T and PCCW. Femto offload is explored by most major Japanese service providers and Sprint. Various implementations would include bitrate limits, bursting, and individual bandwidth cap. These have been explored by many major operators in a bid to manage traffic. Implementations depend on overload conditions, traffic classifications, and self limiting sources. Increasingly deployed in mobile networks, with some vendors like Ericsson integrating the solution across wireless and wireline

Bandwidth Cap

Limits the transfer of data over a period of time; provides a means of achieving higher network efficiency but not necessary to users experience Controlling the rate of different classes of traffic transversing the network and monitoring traffic for compliance with traffic contract With more protocols using tunneling and encryption, deep packet inspection (DPI) is increasingly being used to analyze the traffic and work in conjunction with network policy servers. Traditionally, placing content cached nearer to the edge of the network and to the end user reduces the traffic load across the network and latency and packet loss. With limited licensed spectrum, reuse of the existing 2G spectrum is becoming attractive. Due to the nature of radio propagation, this strategy can provide improved coverage and performance.

Traffic Shaping

Deep Packet Inspection Caching

Mobile and online Content Delivery Network still differ in their capabilities; however, this gap is closing. Many mobile implementations encompass compression, adaptive streaming, and transcoding. Considerations would include frequency planning, re-optimization, underlying 2G service impact, and handset availability. It is explored by Elisa, CSL, Optus, Vodafone, and AIS.
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Frequency ReFarming

Course of Action Long-Term Solution

LTE & Radio Enhancements

Migration to All-IP

LTE providing additional capacity relief, network capabilities and QoS support Software defined radios providing seamless evolution and CAPEX/OPEX savings Planned macro nodes & uncoordinated local node deployments Solutions like ALUs LightRadio and NSN liquid radio with their smaller form factor & cloud like architecture

Converging of disparate networks and converged platforms Improved scalability of networks More effective management across different networks Clearly delineated control and data plane and puts in place mechanisms that can be leveraged on for end-to-end QoS/QoE and network intelligence and exposure

End-End Management and Delivery

Monetization of Network

Deep Packet Inspection, policy management, heuristic analysis, and charging capabilities enable more effective traffic management and enforcement. Support of appropriate quality of experience (QoE) for premium users Cloud-based caching and content distribution while maintaining mobility & Interactivity

Improved QoS, real-time subscriber knowledge, context, content filtering, and policy control to generate new business models Tiered pricing, speed boost or bandwidth on demand, new service offerings, and differentiated pricing options Network API exposures & ecosystem fostering allowing for new business models involving a two-sided model, API licensing, and application revenue sharing

Alleviating Network Constraints

Strategies to address capacity constraint have to address the immediate constraints of the radio interface.

Radio Access

Edge and Core Network

Aggregation Layer

Wireline Access

Source: Frost & Sullivan. 8

Addressing Radio Interface Constraints

Network capacity based on the current technology implementation and strategy of squeezing capacity out of the existing licensed spectrum would soon reach a critical point. Barring the migration to Long Term Evolution (LTE), network operators would soon be faced with a choke point where they are unable to address the demand for data growth.

Data Growth

Network Bandwidth

Traditional Capacity Expansion

Choke Point

Time
Source: Frost & Sullivan. 9

Addressing Radio Interface Constraints

To address the immediate constraints of air interface capacities, network operators can implement various offloading strategies like frequency refarming, WiFi offloading, and Femto deployment. Strategies like WiFi offloading and Femto deployment have additional benefits of offloading radio access network traffic onto the underlying infrastructure like Digital Subscriber Line It is expected that the growth of data traffic will outpace the growth of network capability, and traffic offload will still be a viable solution even after LTE migration.

WiFI Offloading Femto Deployment

Network Bandwidth

Data Growth Frequency Re-Farming Traditional Capacity Expansion

Choke Point

Time
Source: Frost & Sullivan. 10

Analysis of WiFi Offload Strategy

Beyond upgrading of the existing node capacity or introduction of Macro/Micro/Pico nodes, operators are increasingly looking at WLAN/Femto offloading as a costeffective alternative solution to manage the rapid growth in data. Offloading of data traffic onto WLAN and Femto is increasingly becoming attractive as it provides the following benefits:
v v v

Data is offloaded from the Macro nodes and transported over the underlying transport network, which alleviates traffic not only on the radio interface but also on the backhauling Reduced equipment cost, deployment/services cost, leasing and operating expenses Cost savings associated with the spectrum license fee, as WLAN operates in the unlicensed spectrum

However, some factors such as the following have to be considered when implementing these offload strategies:
v v v v v

Constraint on whether the underlying infrastructure is owned by the operator or by a partner, and quality of service (QoS) arrangements have to be considered Whether the underlying infrastructure is itself highly utilized The cost and complexity associated with a large mesh WLAN network Mobility considerations for WLAN likely to involve more complexities and cost WLAN runs on a unlicensed network; its performance would depend on the interference in the area deployed

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Insufficient Capacity Growth to Meet Demand

Acquisition of LTE and re-farming of the existing GSM band will be still insufficient to support the expected X26 increase in capacity growth over the next five years.

Gap has to be filled be by re-farming the additional available spectrum and/or other wireless offload strategies like WiFi, Femto, and coordinated small cells.

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Capacity Growth
*Assumption that operators acquire equal bandwidth in LTE spectrum and re-farm their existing GSM band ** Estimates are based on download capacities

Source: Frost & Sullivan. 12

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For Additional Information

Donna Jeremiah Corporate Communications Asia Pacific +603 6204 5832 djeremiah@frost.com

Carrie Low Corporate Communications Asia Pacific +603 6204 5910 carrie.low@frost.com

Mark Koh Senior Industry Analyst ICT +65 6890 0999 mark.koh@frost.com

Jessie Loh Corporate Communications Asia Pacific +65 6890 0942 jessie.loh@frost.com

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