Telecom in Transformation

With the staggering increase number of people moving towards mobile broadband for multiple services and other value added services, it is becoming a challenge for the service providers to keep up with all aspects of market’s comprehensive needs of this capital-intensive investment industry where tensions exist between performance factors vs cost, availability and efficiency.

 

The telecommunications industry has changed beyond recognition in the last 10 years, with customer needs and competitive landscapes shifting in ways that few could have predicted

There has seen tremendous changes leading to the integration of several telecommunication networks, devices and services

The rate of this progress and growth has increased particularly in the past decade because people no longer use their devices and networks for voice only, but demand bundle contents such as data download/streaming, HDTV, HD video, 3D video conferencing with higher efficiency, seamless connectivity, intelligence, reliability and better user experience.

Wireless is such a big segment it contributes a disproportionate amount to the company’s top line growth

The US telecom industry has matured. It reached saturation levels in core voice services. Telecom companies don’t have the opportunity to gain access to new untapped customers. Therefore, they compete aggressively to gain their peers’ market shares in their customer segments—consumers and businesses. Price competition is usually high. Wireless telecom is dominated by consumers. In wireline, businesses—especially medium and large enterprises—are a significant customer segment. They aren’t very sensitive to prices.

According to CISCO, in 2019 the world is expected to hit the two Zetabyte (10**21) mark with trend much faster global mobile data traffic than network capacity

The challenges facing modern telecommunication system operators differ by region, by company and marketplace size, and by their area of focus and differentiation. But there are certain themes such as revenue preservation, revenue expansion, brand extension, operational efficiency and speed-to-market cycles that impact all of them.

The US telecom industry has matured. It reached saturation levels in core voice services. Telecom companies don’t have the opportunity to gain access to new untapped customers. Therefore, they compete aggressively to gain their peers’ market shares in their customer segments—consumers and businesses. Price competition is usually high. Wireless telecom is dominated by consumers. In wireline, businesses—especially medium and large enterprises—are a significant customer segment. They aren’t very sensitive to prices.

Around the world, the smartphone, along with its cousin, the tablet, and a fast-expanding family of “wearables” and other “smart” devices are transforming the way people live, work, play, connect, and interact. In the process, they are converting the digital revolution into an increasingly mobile phenomenon.

Improved semiconductor and electronics manufacturing technology, the growth of the internet and mobile telecommunications have been some of the factors which have fueled this growth in telecommunications.

“ Customers are increasingly focused on data. Media and video was less than 10% of traffic in 2010; now it is almost 50% in 2015.”

Telecom is a capital-intensive industry. It requires an extensive network infrastructure to provide fixed line and wireless services. According to USTelecom, since 1996, telecom companies in the US invested $1.1 trillion in the industry. High investment requirements restrict new entrants in the industry. Further consolidation will happen. Telecoms is a capital-intensive industry, but returns on capital are declining

capex trending  inexorably upwards (capital spending of Verizon in 2016 was around $17.7B  in 2016.   Based on UStelecom in the US only operators have spent $1.2T building infrastructures to provide fixed and wireless services)

Wireless operators expected to make an investment of nearly $210 B by 2016 (+15B). The increase came from 4G LTE deployment wrapping up in the major markets (moving on to densification investment in small cell and in-building technologies)

with spectrum costs adding to the investment burden facing operators. Meanwhile, there have been seismic changes in consumption trends. With smartphone usage surging over the same period, mobile has become firmly established as the leading computing platform.

 

In recent report total capex by all communication providers was flat $405B despite telecom cutback.

Annualized communication providers revenue fell in every quarter of 2015 (revenue grew steadily from $2.2 trillion to $2.86)

The cycle of upgrading networks is shorter for wireless companies. The cycle is shorter due to reasons ranging from technological innovations to managing increased network traffic. So, they have to recoup their network investments—in shorter intervals of time—to redeploy them for the next

The US telecom industry has matured. It reached saturation levels in core voice services. Telecom companies don’t have the opportunity to gain access to new untapped customers. Therefore, they compete aggressively to gain their peers’ market shares in their customer segments—consumers and businesses. Price competition is usually high. Wireless telecom is dominated by consumers. In wireline, businesses—especially medium and large enterprises—are a significant customer segment. They aren’t very sensitive to prices.

Wireless operators expected to make an investment of nearly $210 B by 2016 (+15B). The increase came from 4G LTE deployment wrapping up in the major markets (moving on to densification investment in small cell and in-building technologies)

Annualized communication providers revenue fell in every quarter of 2015 (revenue grew steadily from $2.2 trillion to $2.86)

Plenty of digital growth opportunities but profitability pressure persists (ROI is downward because of factors such as regulated price reductions to cannibalization of legacy revenues by OTT, along with high capital intensity required to support demand for data.

 

A successful transition to 5G is not just new antennas that pump out more data. This detail is important: 5G represents the first major architectural shift since the move from 2G to 3G ten years ago, and the consumer experience expectation that operators have bred needs some serious network surgery to make it happen.

The key enabling technologies driving the next generation of mobile networks being discussed in joined forums of industries, academia and organizations are areas such as multi-technology carrier-aggregation and multi-access networking, 3D and massive MIMO, spectrum efficiency and GHZ (mmWave) utilization, cognitive radio, radio virtualization, content-aware solutions, fog networking, multi-RAT integration, new modulations and waveforms, and implementation of small cells for a secured and agile infrastructure.  

By 2020 LTE network will generate$800 billion in annual service revenue

2g, 3G, 4G revenue in 2016 stood at nearly $ 465 billion ( flat as 2015   ) largely due to declining macro cell RAN and mobile core investment. The estimation is that CAGR decline 1% eventually shrinking to $61 by  the end of 2020.

 

there’s always a concern about fragmentation. Some might remember years ago, before LTE sort of settled the score, when the biggest challenge in wireless tech was keeping track of the various versions: UMTS/WCDMA, HSPA and HSPA+, cdma2000, 1xEV-DO, 1xEV-DO Revision A, 1xEV-DO Revision B and so on. It’s a bit of a relief to no longer be talking about those technologies. And most likely, those working on 5G remember the problems in roaming and interoperability that stemmed from these fragmented network standards.

But the short answer to why the industry is in such a hurry to get to 5G is easy: Because it can.

Before we begin our discussion of modern mobile broadband systems, it is instructive to briefly review the history of mobile wireless communications to gain an appreciation of the remarkable achievements leading to the wireless services that we enjoy today.

network performance was cited as a key factor for ensuring a positive customer experience, on a relatively equal footing with network coverage and pricing. By a wide margin, these three outstripped other aspects that might drive a positive customer experience, such as service bundles or digital services.

Decent coverage, of course, is the bare minimum that operators need to run a network, and there isn’t a single subscriber who is not price-sensitive. As pricing and coverage become comparable between operators, though, performance stands out as the primary tool at the operator’s disposal to win market share. It is also the only way to grow subscribers while increasing ARPU: people will pay more for a better experience.

 

 

This figure shows another data projection, predicting 45% annual growth in data for the 2013 to 2019 period, resulting in tenfold growth.

Global Mobile Data Growth

 

Technology Drives Demand

Although it might seem that a more efficient technology would address escalating demand, the more efficient technology generally also provides higher performance, thus encouraging new usage models and increasing demand even further, as illustrated in Figure 4. Operators have observed this with LTE deployments, in which monthly usage amounts have been higher than for 3G networks. One vendor reported a 168% increase of LTE data consumption over 3G: 46 MB per day versus 17 MB per day.

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Cloud Computing

Another trend that increases traffic is cloud computing, which can result in increased data flow through multiple types of services, as shown in Table 2.

Types of Cloud Services Type of Cloud Service	Examples
Data synchronization and backup	Box, Dropbox, Google Drive, Apple iCloud, Microsoft OneDrive, enterprise data backup
Cloud-hosted applications	Google Docs, Microsoft Office 365
Music and video streaming	Netflix, Pandora, Spotify, Amazon Cloud Player
Machine-to-machine	Cloud-based services from operators and third-party providers
Mobile commerce	Cloud-based wallets (Apple Passport, Google Wallet, PayPal, Square), loyalty programs

 

The following are some of the important observations and conclusions of this paper:

·         The wireless technology roadmap now extends through International Mobile Telecommunications (IMT)-Advanced, with LTE-Advanced defined to meet IMT-Advanced requirements. LTE-Advanced is capable of peak theoretical throughput rates exceeding 1 gigabit per second (Gbps). Operators began deploying LTE-Advanced in 2013. Key capabilities include carrier aggregation, more advanced smart antennas, and better HetNet support.

·         5G research and development has started for possible networks in 2020 or beyond. Unofficial initial goals include a broad range of usage models, throughput speeds 100 times higher than what is possible today, sub-1-msec latency, and the ability to harness spectrum at extremely high frequencies.

 

 

·         Despite industry best efforts to deploy the most efficient technologies possible, overwhelming demand has already led to isolated instances of congestion, which will become widespread unless more spectrum becomes available in the near future.

·         Operators have begun installing small cells; the industry vision is that millions of small cells will ultimately lead to vast increases in capacity. However, to achieve cost-effective deployment, complex issues must be addressed, including self-optimization, interference management, and backhaul.

·         Unlicensed spectrum is playing an ever more important role as a means to increase data capacity. Innovations include tighter Wi-Fi coupling to mobile broadband networks, automatic authentication and network selection, and more secure communications. 3GPP is also studying a version of LTE that will operate in unlicensed

spectrum.

 

 

·         New network function virtualization (NFV) and software-defined networking (SDN) tools and architectures enable operators to reduce network costs, simplify deployment of new services, and scale their networks.

 

Wireless vs. Wireline

Wireless technology is playing a profound role in networking and communications, even though wireline technologies such as fiber have inherent capacity advantages.

Relative to wireless networks, wireline networks have had greater capacity and historically have delivered faster throughput rates.

While wireless networks can provide a largely equivalent broadband experience for many applications, for ones that are extremely data intensive, wireline connections will remain a better choice for the foreseeable future. For example, users streaming Netflix movies in high definition consume about 5 Mbps. Typical LTE deployments use 10 MHz radio channels on the downlink and have a spectral efficiency of 1.4 bps/Hertz (Hz), providing LTE an average sector capacity of 14 Mbps. Thus, just three Netflix viewers could exceed sector capacity. In the United States, there are approximately 1,100 subscribers, on average, per cell site8, hence about 360 for each of the three sectors commonly deployed in a cell site. In dense urban deployments, the number of subscribers can be significantly higher. Therefore, just a small percentage of subscribers can overwhelm network capacity. For Blu-ray video quality that operates at around 16 Mbps or Netflix 4K streaming that runs at 15.6 Mbps, an LTE cell sector could support only one user.

 

 

A dilemma of mobile broadband is that it can provide a broadband experience similar to wireline, but it cannot do so for all subscribers in a coverage area at the same time. Hence, operators must carefully manage capacity, demand, policies, pricing plans, and user expectations. Similarly, application developers must become more conscious of the inherent constraints of wireless networks.

Mobile broadband networks are best thought of as providing access to higher-capacity wireline networks. The key to improving per-subscriber performance and bandwidth is reducing the size of cells and minimizing the radio path to the wireline network, thus improving signal quality and decreasing the number of people active in each cell. These are the motivations for Wi-Fi offload and small-cell architectures.

 

Bandwidth Management

To manage bandwidth, one can either attempt to reduce demand or increase capacity. With operators in some countries or markets shifting pricing for data usage from unlimited to tiered, users have become more conscious of how much data they consume. Application (app) developers have also provided tools for managing bandwidth by, for instance, allowing users to specify the maximum size of emails to automatically download. Nevertheless, average usage keeps growing.

Three factors determine wireless network capacity, as shown in Figure 6: the amount of spectrum, the spectral efficiency of the technology, and the size of the cell. Because smaller cells serve fewer people in each cell and because there are more of them, small cells are a major contributor to increased capacity.

 

Given the relentless growth in usage, mobile operators are combining multiple approaches to increase capacity, as per the dimensions just discussed:

·         More spectrum. Spectrum correlates directly to capacity, and more spectrum is becoming available globally for mobile broadband. In the U.S. market, the FCC National Broadband Plan seeks to make an additional 500 MHz of spectrum available by 2020. Multiple papers by Rysavy Research and others10 argue the critical need for additional spectrum.

·         Unpaired spectrum. LTE TDD operates in unpaired spectrum. In addition, technologies such as HSPA+ and LTE permit the use of different amounts of spectrum between downlink and uplink. Additional unpaired downlink spectrum can be combined with paired spectrum to increase capacity and user throughputs.

·         Supplemental downlink. With downlink traffic five to ten times greater than uplink traffic, operators often need to expand downlink capacity rather than uplink capacity. Using carrier aggregation, operators can augment downlink capacity by combining separate radio channels.

Spectrum sharing. Policy makers are evaluating how spectrum might be shared between government and commercial entities. Although a potentially promising approach for the long term, sharing raises complex issues, as discussed further in the section “Spectrum Developments.”

Increased spectral efficiency. Newer technologies are spectrally more efficient, meaning greater aggregate throughput using the same amount of spectrum. Wireless technologies such as LTE, however, are reaching the theoretical limits of spectral

 

efficiency, and future gains will be quite modest, allowing for a possible doubling of LTE efficiency over currently deployed versions.

·         Smart antennas. Through higher-order MIMO and beamforming, smart antennas gain added sophistication in each 3GPP release and are the primary contributor to increased spectral efficiency (bps/Hz).

·         Uplink gains combined with downlink carrier aggregation. Operators can increase network capacity by applying new receive technologies at the base station (for example, large-scale antenna systems) that do not necessarily require standards support. Combined with carrier aggregation on the downlink, these receive technologies produce a high-capacity balanced network, suggesting that regulators should in some cases consider licensing just downlink spectrum.

·         Small cells and heterogeneous networks. Selective addition of picocells to macrocells to address localized demand can significantly boost overall capacity, with a linear increase in capacity relative to the number of small cells. HetNets, which also can include femtocells, hold the promise of increasing capacity gains by a factor of four and even higher with the introduction of interference cancellation in devices. Distributed antenna systems (DAS), used principally for improved indoor coverage, can also function like small cells and increase capacity. Actual gain will depend on a number of factors, including number and placement of small cells11, user distribution, and any small-cell selection bias that might be applied.

·         Wi-Fi offload. Wi-Fi networks offer another means of offloading heavy traffic. Wi-Fi adds to capacity because it offloads onto unlicensed spectrum. Moreover, since Wi-Fi signals cover only small areas, Wi-Fi achieves both extremely high frequency reuse and high bandwidth per square meter across the coverage area.

·         Higher-level sectorization. For some base stations, despite the more complex configuration involved, six sectors can prove advantageous versus the more traditional three sectors, deployed either in a 6X1 horizontal plane or 3X2 vertical plane12.

 

Strategies to manage demand include:

·         Off-peak hours. Operators could offer user incentives or perhaps fewer restrictions on large data transfers during off-peak hours.

·         Quality of service (QoS). Through prioritization, certain traffic, such as non-time-critical downloads, could occur with lower priority, thus not affecting other active users.

 

Figure 7 demonstrates the gains from using additional spectrum and offload. The bottom (green) curve is downlink throughput for LTE deployed in 20 MHz, with 10 MHz on the downlink and 10 MHz on the uplink, relative to the number of simultaneous users accessing the network. The middle (purple) curve shows how using an additional 20 MHz doubles the throughput for each user, and the top (orange) curve shows a further possible doubling through aggressive data offloading onto Wi-Fi.

 

Benefits of Additional Spectrum and Offload

 

Spectrum Developments

Spectrum continues to challenge the industry. Given this limited resource, the industry is:

·         Deploying technologies that have higher spectral efficiency.

·         Adapting specifications to enable operation of UMTS-HSPA and LTE in all available bands.

·         Designing both FDD and TDD versions of technology to take advantage of both paired and unpaired bands.

·         Designing carrier aggregation techniques in HSPA+ and LTE-Advanced that bond together multiple radio channels (both intra- and inter-frequency bands) to improve peak data rates and efficiency.

·         Deploying as many new cells (large and small) as is economically feasible.

 

 

Relative Adoption of Technologies

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