Mobile wireless operators worldwide use today the Cisco® RAN Optimization solution to optimize their radio access network (RAN) backhaul network, reduce operating expenses (OpEx), and discover new opportunities for expansion and revenue-generating services.
EXECUTIVE SUMMARY
Mobile operators today face stronger competitive pressure to differentiate their services, increase radio coverage and customer satisfaction, deliver new innovative services, and achieve higher profits. All these translate into significant market challenges-which Cisco can help address with an efficient and flexible solution for RAN optimization.
Cisco RAN Optimization delivers significant advantages to mobile operators seeking to:
• Reduce their RAN backhauling OpEx for Global System for Mobile Communications (GSM) and Universal Mobile Telecommunications Service (UMTS) networks.
• Use alternative RAN backhauling technologies-such as Metro Ethernet, Cable, WiMAX, and xDSL-to further reduce their OpEx, provide higher bandwidth, and increase network flexibility.
• Deliver new, innovative IP-based services at the cell site for new revenue-generating streams from an existing infrastructure-The Cisco RAN solution allows operators to use the GSM and UMTS cell sites already in place and deliver IP-based services such as camera broadcast and surveillance, IP telephony, and consumption-based Internet access.
• Ease the deployment of new technologies and the expansion of existing networks-By optimizing GSM traffic, operators can deploy UMTS using the recuperated bandwidth on the existing GSM backhaul, saving OpEx and reducing time to market.
• Offload bandwidth-demanding traffic, such as high-speed downlink packet access (HSDPA), over an alternative backhaul, avoiding expensive expansion of traditional backhaul and providing additional flexibility in bandwidth expansion and resource management.
This document presents the advantages that Cisco RAN Optimization provides to mobile operators worldwide, with a specific focus on three main applications that deliver substantial benefits and serve as successful examples for other uses of the technology:
• GSM optimization
• UMTS rollout over existing GSM backhaul
• HSDPA off-load over an alternative backhaul
Case studies, ROI analysis, deployment scenarios, and other useful information are included for each application, creating a complete perspective on benefits and advantages offered by Cisco's RAN Optimization.
In addition, the document presents some general guidelines on the solution's applications, introduces the ROI Tool developed by Cisco to help analyze financial benefits, and provides an introduction to the hardware components and network management suite that complete the solution.
INTRODUCTION
Cisco RAN Optimization is the leading RAN transport optimization solution for GSM and UMTS operators worldwide. It employs unparalleled features and delivers significant benefits, allowing mobile operators to reduce their RAN backhaul OpEx costs, expand their networks with increased flexibility, and deploy innovative new services based on IP.
This document presents three business-case scenarios, assesses how quickly mobile wireless operators worldwide can expect to recoup their investments, and compares the benefits mobile operators can gain under each scenario. The document begins by describing the market challenges and the mobile operators' needs, and then presents the Cisco RAN Optimization solution.
Next, the document introduces the three business-case scenarios. Each scenario is presented in detail, although the focus is on the business aspects such as ROI and benefits, rather than technical details. For each scenario the document describes the economic drivers, the business challenges, and the solutions offered by Cisco's infrastructure. The goal is to provide a comprehensive analysis of Cisco RAN Optimization value drivers and present the multiple applications where the solution can be deployed.
GLOBAL MARKET CHALLENGES
Mobile operators worldwide are continuously seeking to expand their networks and provide new services, striving in a strongly competitive market to increase their customer satisfaction and their profits. In addition, the market demand for ever-increasing radio coverage, higher bandwidth, and better services poses continuous pressure for technological development and network expansion.
As a mean to keep ahead of competition and satisfy market demand for new services and increased data bandwidth, operators are expanding their networks to enhanced 2G (GPRS, Enhanced Data rates for GSM Evolution [EDGE]) and 3G (UMTS, HSDPA) voice and data broadband wireless service offerings (Figure 1).
Figure 1. Worldwide Evolution of Mobile Operators' Networks
With the increasing drive of data communications services and growing data Average Revenue per User (ARPU), operators are looking for solutions that help them expand their networks, provide additional services, and satisfy customer demand in a flexible and economical way. In addressing market demand for extending network coverage and productive services, operators face multiple challenges:
• Need for expanding their GSM networks for additional coverage, for traffic growth, or for innovative services and data connectivity (GPRS, EDGE)
• Deployment of UMTS 3G network requires OpEx increase for additional T1/E1 lines, but provides low short-term returns while the UMTS subscriber base matures
• 3G data services, such as HSDPA, require large bandwidth backhaul links to the cell site, which causes an increase in OpEx for E1 leased lines, and in operation and maintenance costs
• High OpEx for RAN backhaul makes up to 20 to 30 percent, and in some cases up to 70 percent, of total OpEx; therefore it is very important to control, or even reduce, OpEx
• Competitive pressure urges network expansion and new services, investments in infrastructure, and reduction of OpEx
• Long lead-time when deploying additional T1/E1 lines may slow down growth rate and impact customer satisfaction
• Need to identify new areas for growth and create revenue through innovative services
Reducing the backhaul complexity and keeping OpEx under control is therefore a priority in today's competitive and cost-sensitive business environment. In addition, any means to expand the network as subscribers increase and to provide additional services-avoiding an increase in operating expenses-represents a competitive advantage that mobile operators cannot underestimate.
Cisco RAN Optimization delivers substantial advantages and enables operators to expand their networks and benefit from new services, multiplying their offerings and addressing complex market challenges.
SOLUTION OVERVIEW
Cisco RAN Optimization is the leading solution that delivers standard-based end-to-end IP connectivity for GSM and UMTS RAN transport. The solution frames RAN voice and data frames into IP packets at the cell site, and transports them over an optimized backhaul network. At the central site, the RAN frames are extracted from IP packets and the Abis or Iub data streams are rebuilt. The result is a transparent, radio vendor-agnostic RAN IP transport and optimization solution that delivers a nominal optimization efficiency of 50 percent without any impact on voice quality.
Cisco RAN Optimization offers mobile operators multiple opportunities to optimize their RAN backhaul transport networks and address their market challenges, delivering a next-generation, highly efficient, multiservice RAN optimized backhaul. Cisco's solution consists of a cell-site mobile wireless router, an environmentally strengthened device deployed at cell sites and at the central site that performs aggregation and optimization of both GSM and UMTS traffic. The Cisco RAN Optimization optimizes GSM traffic with nominal compression efficiency of 50 percent. Therefore, an optimized backhaul network only needs half the number of T1/E1 links to transport the same level of GSM traffic. In addition, for UMTS backhaul, idle cells and unused padding are eliminated in Iub traffic, resulting in higher Iub efficiency. Compressed GSM and UMTS traffic are then dynamically aggregated via IP over a reduced number of T1/E1 trunks, sharing bandwidth and thereby utilizing RAN network resources more efficiently.
Cisco's solution for RAN Optimization helps mobile operators to achieve three main goals:
• Reduce OpEx for RAN backhaul network by optimizing and aggregating multiple GSM links
• Use the optimized backhaul network for future growth, without the need to add expensive T1/E1 lines
• Use the recuperated bandwidth on the backhaul to carry additional IP-based traffic that can be used for network management purposes, or to deploy new revenue-generating services at the cell site
The solution is completely RAN vendor-agnostic, and is therefore compatible even with proprietary Abis interface specifications. It provides a transparent end-to-end solution that does not affect voice quality, and does not require any change in the control and software update operations of both base transceiver station/base station controller (BTS/BSC) and NodeB/radio network controller (RNC).
Figure 2. Overview of Cisco RAN Optimization Conceptual Architecture
Cisco RAN Optimization provides the following features:
• GSM and UMTS Optimization-Reduces operating expenses for RAN backhaul links by optimizing and aggregating backhaul bandwidth for both GSM Abis and UTRAN Iub interfaces. GSM traffic is compressed with nominal efficiency of 50 percent by removing idle channels and repeating patterns on the time-division multiplexing (TDM) link. UMTS traffic is compressed up to 30 percent by removing idle cells and unused O&M, and multiplexing small payloads into single cells.
• Efficient Backhaul Transport-Optimized GSM and UMTS traffic is transported using compressed IP and Cisco IOS® Software quality of service (QoS) prioritization, achieving an end-to-end latency shorter than 16 ms (depending on user-adjustable jitter buffer settings).
• QoS-Cisco's products provide industry-leading QoS services that enable reliable transport of GSM and UMTS traffic together with IP traffic. GSM and UMTS traffic is given a high priority and is never delayed, guaranteeing smooth and timely deliver to the other end. IP traffic is fragmented and interleaved within RAN traffic, and is transported on the backhaul as best-effort traffic with a lower priority. Among IP-based services, multiple queues can be defined in order to assign different priorities to different types of IP traffic. This allows creation of a prioritization hierarchy, where the highest level is always reserved to the RAN traffic, and where IP traffic is handled by lower-priority queuing mechanisms.
• Voice Quality Transparency-Cisco MWR 1900 Series and ONS products employ proprietary, RAN vendor-agnostic, no-loss compression and optimization techniques that do not alter the Abis and Iub bit-streams and do not impact voice quality and data services. Multiple tests performed in live networks around the world have demonstrated full compatibility with all major RAN vendors, and full transparency of BTS/BSC and NodeB/RNC software operations across the solution.
• Remote Management-The Cisco Mobile Wireless Transport Manager (MWTM) platform is the leading edge management software application that enables mobile operators to control and administer their Cisco RAN Optimization infrastructure from a single location, with ease and speed. Cisco MWTM provides remote management of nodes, statistic collection, and real-time backhaul bandwidth monitoring for increased serviceability.
• IP Services at Remote Cell-Site-By running Cisco IOS Software, the de facto IP network routing software, the Cisco MWR platform provides advanced IP-based services to the cell site, thus allowing mobile operators to create cell-site PoPs and deploy new revenue-generating services. For example, by providing IP access to remote areas served by backhaul links, mobile operators can deploy WLAN services at cell sites using the excess bandwidth on existing backhaul links-creating new revenue-generating services without increasing operating expenses. Another application of IP services is the use of a cell site IP camera to distribute real-time or on-demand still images or video streaming. The service can be employed by a network operations center (NOC) for site surveillance purposes, or provided to mobile users for weather or road traffic monitoring.
CISCO RAN OPTIMIZATION APPLICATIONS
Cisco RAN Optimization is a flexible solution that provides significant benefits to mobile operators in different applications. Table 1 lists common deployment scenarios for Cisco's solution, with a short description.
Table 1. Cisco RAN Optimization Applications
Application
Description
GSM Optimization
Delivering a nominal compression efficiency of 50 percent, Cisco RAN Optimization enables GSM mobile operators to reduce the number of T1/E1 lines they employ for RAN backhaul, and achieve significant benefits in OpEx reduction, network expansion and management, and new advanced services.
UMTS Rollout
By compressing GSM and aggregating UMTS traffic over existing backhaul networks, mobile operators can deploy their UMTS networks without the need to deploy additional landlines, and reduce their deployment time.
HSDPA Data Offload
HSDPA requires a huge deployment of additional T1/E1 lines to provide the required bandwidth for the service. Cisco RAN Optimization offloads HSDPA traffic to cheaper and more flexible backhaul technologies than T1/E1 leased lines, such as xDSL, WiMAX, cable, and Metro Ethernet.
Satellite Optimization
Satellite T1/E1 links are very expensive, when compared to landline leased costs. Cisco RAN Optimization compresses GSM and UMTS traffic with a nominal compression efficiency of 50 percent, and allows transport of the compressed traffic over satellite links using lower bandwidth, or transport of additional traffic without increasing satellite bandwidth. Either way, it provides OpEx savings and greater flexibility in managing the RAN backhaul network.
Alternative Backhaul
Cisco RAN Optimization makes available a whole set of alternative technologies to transport RAN traffic across the backhaul. These technologies provide greater flexibility in bandwidth and network management, and are much cheaper than traditional terrestrial leased-lines.
Cell-Site PoP
By delivering IP connectivity end-to-end from the central site to the cell site, Cisco RAN Optimization transforms the cell site into an IP-based point of presence (PoP), allowing mobile operators to deliver new innovative services at the cell site-Wi-Fi, camera monitoring and surveillance, Internet connectivity, and IP telephony.
This document analyzes three of these applications in detail, providing examples and guidelines to understand all the possible scenarios.
The three scenarios presented here are the most typical deployment scenarios for Cisco's RAN Optimization. They encompass the needs of most mobile operators worldwide-GSM optimization, UMTS rollout, and HSDPA data offload.
GSM OPTIMIZATION
GSM RAN backhaul optimization is the most sought-after application for GSM mobile operators worldwide. It compresses and optimizes GSM traffic, reducing the required number of T1/E1 lines to carry the same amount of RAN traffic, and saves on OpEx. It offers mobile operators multiple opportunities to optimize their RAN backhaul transport networks and reduce operating expenses, delivering a next-generation, highly efficient, multiservice RAN optimized backhaul.
The Cisco solution uses an environmentally strengthened cell-site router, such as the Cisco MWR 1941-DC-A Mobile Wireless Router to aggregate GSM short-haul links from the BTS and compress GSM traffic (voice, data and signaling). Once compressed, the traffic can be transported over the backhaul using fewer T1/E1 lines and lower bandwidth as shown in Figure 3 below. This solution helps operators reduce the number of T1/E1 backhaul lines between cell site and central site, and save on OpEx accordingly. It also provides additional valuable benefits to mobile operators, allowing them for easier network management, possibility to use alternative backhaul technologies that deliver higher bandwidth and lower costs, and new revenue-generating services at the cell site based on IP, where Cisco is the undisputed worldwide leader.
Cisco RAN Optimization allows mobile operators to reduce the number of T1/E1 landlines and achieve significant benefits as reported in Table 2.
Table 2. T1/E1 Optimization & Line Reduction
Compression Ratio
Original Number of T1/E1 Lines
Number of T1/E1 Lines After Optimization
Benefits
1:1
1
1
• Deliver IP-based cell-site services
• Prepare for GSM expansion
2:1
2
1
• Save one T1/E1 line
• Deliver IP-based cell-site services
3:2
3
2
• Save one T1/E1 line
• Use excess bandwidth for GSM expansion
• Deliver IP-based cell-site services
4:2
4
2
• Save two T1/E1 lines
• Deliver IP-based cell-site services
Figure 3. Conceptual Overview of GSM 2:1 Optimization Scenario
Cisco RAN Optimization employs multiple features that increase efficiency and enhance the overall reliability of the infrastructure:
• Signaling protection provides guaranteed delivery and assigns the highest priority to signaling channels, ensuring that end-to-end signaling traffic is never delayed or dropped.
• Graceful degradation intervenes when network resources are over provisioned and the backhaul approaches saturation. It starts dropping few packets at random on voice channels-without impacting channel control and signaling-and frees up bandwidth, allowing passing over the traffic peak until saturation is cleared.
• QoS employs prioritization of GSM traffic, fragmentation and interleaving of large packets, and jitter control. In presence of other traffic, such as IP-based management and monitoring traffic, QoS helps ensure reliable transport of RAN traffic across the backhaul, and if necessary, delays IP best-effort traffic until enough resources are available to serve it.
Since the backhaul network constitutes a large part of an operator's OpEx (between 20 and 30 percent, often up to 70 percent), optimizing GSM traffic and reducing the number of T1/E1 lines provides substantial OpEx savings, usually as soon as the first day of deployment. OpEx savings can be large enough to guarantee a return on investment (ROI) in less than 12 to 18 months, depending on the network configuration and the achievable optimization efficiency.
Cisco's optimization solution not only allows for OpEx saving by reducing the number of backhaul T1/E1 lines, but also allows the use of the recaptured bandwidth on the backhaul to carry IP traffic to the cell site, and delivery of innovative IP services. Examples of these IP services include network management and control from a central site, IP camera services at the cell site for monitoring and security, and IP telephony services for free maintenance calls to the NOC from a technician at the cell site.
GSM Landline Reduction with Cisco Optimization
The main advantage of Cisco RAN Optimization is a substantial reduction of GSM backhaul OpEx. However, along with OpEx savings, Cisco's solution provides additional benefits in terms of reduction in network complexity, easier maintenance and alarm control, faster network expansion, and new revenue-generating services. Mobile operators can profit from these benefits soon after deploying Cisco's RAN optimization in their networks, delivering increased network coverage, higher customer satisfaction, higher profits, and new differentiating services at the cell sites.
This case study focuses on the OpEx saving for the backhaul network when using Cisco's solution. Figure 4 shows the reduction in T1/E1 lines achievable with Cisco RAN Optimization for a generic GSM operator. It considers a generic mobile operator whose RAN network counts 5000 GSM cell sites. Each cell site is connected to the backhaul using either two or three T1/E1s, with a distribution of 80 percent for the two T1/E1 cell sites, and 20 percent for the three T1/E1 cell sites.
The two T1/E1 cell sites are compressed with 2:1 compression ratio, achieving a compression efficiency of 50 percent and saving one T1/E1 line per cell site. The three T1/E1 cell sites are compressed with 3:2 compression ratio, achieving a compression efficiency of 33 percent and saving one T1/E1 line per cell site. These are considered the most common scenarios, as remote cell sites in rural areas are often reached by few T1/E1 lines. In urban areas, the cell sites may be connected with a larger number of T1/E1 lines. Our analysis considers only the two former cases, but it is not limited in its validity since larger cell sites can obtain the same level of compression efficiency, and save a corresponding number of T1/E1 lines.
GSM networks have reached 95 to 99 percent of geographical coverage in most countries. In these countries, cell-site growth rate is considered very low, as fewer cell-sites are added when GSM reaches near-total coverage. In the case of developing countries where the GSM networks have not yet reached total coverage, the year-over-year growth rate of cell sites can be substantially higher. In this case it would translate into an higher growth rate of T1/E1 lines, and therefore a higher number of T1/E1 lines to be saved using the Cisco RAN Optimization solution.
Figure 4. Number of T1/E1 Lines Saved with Cisco's RAN Backhaul Optimization
In Figure 4, the red bars on the left represent the number of T1/E1 lines that a mobile operator needs to deploy without optimization. The bars represent the aggregate number of T1/E1 lines for both two and three T1/E1 cell-sites. The analysis also considers a five-percent upgrade rate of two T1/E1s to three T1/E1s year over year, as two T1/E1 cell sites reach saturation and need to be updated to three T1/E1 cell sites.
The blue bars on the right represent the number of T1/E1 lines for the same cell sites, when the Cisco RAN backhaul optimization solution is used. They show substantial reduction of T1/E1 lines that corresponds to a significant reduction in operating expenses for the GSM backhaul.
In yellow, the diagram shows the total number of cell sites (two T1/E1s with 2:1 optimization and three T1/E1s with 3:2 optimization). It assumes a slow growth rate of cell sites, around two percent year over year. This is a common situation in developed countries, where the GSM networks are already fully deployed. In developing countries the growth rate can be substantially higher, involving an increasingly higher number of T1/E1 lines.
GSM Case Study
In order to provide mobile operators enough financial data to evaluate the benefits of the optimization solution, Cisco has performed extensive ROI analysis considering various scenarios, and has developed a specific tool to perform this analysis. This document presents a sample ROI analysis that considers a common deployment scenario (2:1 and 3:2 optimization) and average costs for T1/E1 landlines as applied in the United States and Europe.
This business case considers a GSM operator that starts optimizing 700 cell sites (80 percent with two T1/E1 lines, and 20 percent with three T1/E1 lines) in the first year. It then optimizes additional cell sites following a high-rate deployment speed, optimizing 700 more cell sites in year two, 560 in year three, 490 in year four, and 245 in year five. Each year, additional capital expenditure (CapEx) is required to deploy the new Cisco mobile wireless routers necessary to optimize new cell sites.
Table 3 shows the optimization deployment schedule assumed in the analysis.
Table 3. Deployment Schedule
Year 1
Year 2
Year 3
Year 4
Year 5
New Cell Sites Optimized
700
700
560
490
245
Total Cell Sites Optimized
700
1400
1960
2450
2695
E1 Lines Saved
700
1400
1960
2450
2695
Total OpEx Savings
$ 4,475,520.00
$8,951,040.00
$12,531,456.00
$15,664,320.00
$17,230,752.00
The following assumptions on leased-line costs were used to prepare this business case:
• Average monthly price of US$800 for a 4-to-20-km long T1/E1 line
• First T1/E1 line contracted at a 10 percent discount off the official price
• Second and third T1/E1 lines contracted at 20 and 50 percent discounts off the first T1/E1 line price, respectively
The business case considers installation and maintenance costs at five percent of CapEx spent in the year. In the case of maintenance, the cost is incurred in the year the capital investment is expensed, and for two additional years.
License costs for the Cisco MWTM platform are also considered as CapEx-they are incurred to deploy the central management solution for the whole Cisco RAN.
With this data, the business case is comprehensive in terms of capital investments in assets and direct costs for the deployment of the RAN optimization solution. The analysis shown in Figure 5 presents the financial benefits of the solution, including:
• Leased-Line Savings-Total OpEx savings per year from optimized leased lines, depending on the number of T1/E1 lines saved with Cisco optimization and their monthly cost.
• CapEx-Capital investments for each year, required to deploy the Cisco RAN optimization solution.
• Net Savings-Difference, year by year, of leased-line savings and CapEx.
• Cumulative Savings-Cumulative net savings, year over year. Break-even point and payback time are calculated when the present value of cumulative net savings equals $ 0.00 (when the line crosses the X axis).
Figure 5. Financial Analysis and ROI for Cisco RAN Backhaul Optimization
The analysis shows that within the assumptions of this business case Cisco RAN Optimization provides a positive ROI in about one year, allowing for quick recovery of the capital investment and significant benefits from reduced OpEx.
In the case of satellite or microwave links, usually more expensive than landline links, Cisco RAN Optimization optimizes RAN traffic and reduces the required bandwidth, delivering even larger OpEx savings.
Benefits of GSM Optimization
Cisco RAN Optimization provides the following benefits:
• OpEx reduction for RAN backhaul from compression and optimization of voice, data, and signaling GSM traffic.
• Faster and cheaper expansion of GSM networks.
• New revenue-generating IP-based services at cell site. Cisco RAN Optimization delivers end-to-end IP connectivity from cell sites to central nodes, allowing for advanced IP services to be provided at the cell site.
• Reduces BTS expansion costs and E1/T1 line card addition. BTS E1/T1 interfaces can now be fully provisioned on the short-haul link to the mobile wireless router-carrying up to 120 full-rate or 240 half-rate GSM channels on a single T1/E1-reducing the number of T1/E1 ports and providing savings on BTS line-card expansion costs.
• Cisco's RAN vendor-independent solution is compatible with proprietary Abis interfaces and does not affect the vendor-specific bit streams.
• Cisco QoS mechanisms provide reliable end-to-end delivery of all RAN traffic, and protection against oversubscription of GSM channels.
• No impact on voice quality since bit stream is not affected.
• Transparent BTS/BSC operations and software updates.
• Support for all GSM codecs, sub-rates, and signaling types.
UMTS ROLLOUT OPTIMIZATION
Mobile operators worldwide need to preserve their market positions against strong competition and quickly evolving technologies, and UMTS represents a clear differentiation advantage for many. The UMTS rollout is an important part of their differentiation strategy, which aims at increasing and strengthening the customer base, decreasing the churn rate, providing innovative services, and achieving a broad UMTS customer penetration in a few-years time span. This means not only significant CapEx in fixed assets and UMTS base stations, but also large OpEx in additional leased T1/E1 lines necessary to connect remote cell sites with regional central sites.
In addition to CapEx/OpEx increase, mobile operators that are planning to deploy their 3G UMTS networks face additional challenges:
• Increasing OpEx for Backhaul Network-Adding a new T1/E1 to carry UMTS traffic increases per-site leased line costs. In addition, operating revenues from UMTS services are expected to be low in the beginning, making it difficult to cover operating expenses for the new network. Thus, in order to keep their financial performance under control and preserve their operating margins, mobile operators need to deploy their UMTS networks with controlled increase in operating expenses, and in number of T1/E1 lines.
• Unutilized Bandwidth Resources-Deploying a 3G NodeB at a cell site, usually already served by a 2G GSM BTS, means adding an additional T1/E1 line to transport UMTS traffic. At first, UMTS traffic will be much lower than GSM (although it is expected to increase in the upcoming years), and adding a new T1/E1 line to support the UMTS traffic will mean wasted resources, as the unused bandwidth would remain unutilized.
• Meet Targets-Some operators need to deploy UMTS cell sites and ensure adequate population coverage by specific deadlines, in order to meet government license requirements and avoid financial penalties.
• Balance OpEx for Network Expansion-Reducing OpEx for existing GSM network and for its continuous expansion helps operators achieve better financial performance and counterbalance additional OpEx for UMTS networks.
• Delay in E1 Deployment-Landline providers are often unable to deploy new T1/E1 lines fast enough for mobile operators to keep their UMTS deployment pace. Thus, avoiding the need for additional T1/E1s allows for time saving and faster deployment of new cell sites.
Cisco's solution helps mobile operators addressing these issues, reducing OpEx for both GSM and UMTS, and delivering a significant advantage in UMTS rollout with ease, speed, and cost-efficiency. By compressing GSM traffic with nominal efficiency of 50 percent, Cisco RAN Optimization carries the same amount of GSM traffic over half the bandwidth offered by T1/E1 links. The recuperated bandwidth can then be used to transport UMTS traffic without the need to add expensive T1/E1s. This solution determines a saving of a T1/E1 line for each cell site, and a corresponding leased line costs reduction of about 30 to 50 percent.
Table 4 reports examples of supported UMTS rollout scenarios.
Table 4. UMTS Rollout Scenarios
Compression Ratio
Original Number of T1/E1 Lines
Number of T1/E1 Lines after Optimization
Benefits
2:1
• 1 UMTS
• 1 GSM
1 optimized
• Deploy UMTS using existing GSM backhaul network
• Reduce OpEx and time to market for UMTS rollout
3:2
• 1 UMTS
• 2 GSM
2 optimized
• Deploy UMTS using existing GSM backhaul network
• Reduce OpEx and time to market for UMTS rollout
• Excess bandwidth leaves room for future expansion
4:3
• 1 UMTS
• 3 GSM
3 optimized
• Deploy UMTS using existing GSM backhaul network
• Reduce OpEx and time to market for UMTS rollout
• Excess bandwidth leaves room for future expansion
Figure 6. Conceptual Overview of GSM + UMTS Optimization Scenario
Cisco's solution for RAN optimization helps worldwide mobile operators achieve three main goals:
• Reduce OpEx for RAN backhaul by optimizing and aggregating UMTS backhaul links over existing GSM links
• Deploy the UMTS base stations and RAN networks in time to meet the government's deadlines
• Introduce flexibility in bandwidth management at the cell site, allowing for gradual RAN expansion with reduced OpEx
UMTS Business Case
Deploying thousands of UMTS cell sites and connecting T1/E1 lines for backhauling represents a huge task and a significant increase in OpEx. By using Cisco's solution, operators can use their existing GSM backhaul infrastructure to deploy UMTS cell sites, avoiding additional backhaul resources and OpEx increase.
This represents a saving of at least a T1/E1 line per cell site, and a significant reduction in OpEx. The capital investment in Cisco's products is largely offset by OpEx savings and additional benefits achieved with the Cisco solution. It allows mobile operators to start deploying their UMTS networks avoiding additional leased-line costs, and delaying the investment in dedicated UMTS backhaul networks until after the UMTS users' traffic has grown up enough to require further expansion.
Since the prices for T1/E1 lines are the same for GSM and UMTS applications, the business case and ROI analysis are similar to the GSM case. The ROI is very short, since Cisco RAN Optimization delivers a payback in less than 18 months. This helps mobile operators recovering CapEx in a short time and enjoy subsequent higher profits from OpEx savings and additional services.
Benefits of UMTS Rollout Optimization
By using Cisco's RAN Optimization solution, mobile operators achieve the following benefits:
• Rapid deployment of new UMTS network using recaptured bandwidth on optimized T1/E1 GSM links
• No need for new T1/E1 lines to be deployed for UMTS deployment
• Reduction of OpEx for both GSM and UMTS, allowing faster expansion of RANs for additional coverage and services
• Ease of maintenance of all remote nodes from a central location using Cisco MWTM management platform
• No impact on voice and data quality, full transparency for end nodes, and no change in cell-site operational procedures
• IP services at the cell site for innovative services base on IP, such as WLAN, camera monitoring, and IP telephony
• Ready for future upgrade to an all-IP RAN network, or for using cheaper alternative backhaul solutions for RAN transport
• Reduced workload for network design and operations to deploy UMTS
• Avoidance of NodeB's Circuit Emulation Service (CES) transport of GSM traffic over Iub links-NodeB's CES is inherently inefficient and requires capital investments in NodeB's expansion to be supported. Cisco's RAN Optimization allows operators to optimize both UMTS and GSM traffic using highly efficient optimization mechanisms and lower investments
HSDPA OFFLOAD
With increasing demand for data services and growing data ARPU, it is increasingly important for mobile operators to provide broadband access anywhere, and HSDPA is seen as a significant differentiating technology. Furthermore, the launch of HSDPA provides competitive advantages against other mobile operators, allowing for increased customer satisfaction, decreased churn rate, and higher profits. It is not surprising that HSDPA is receiving rising attention by the largest mobile operators worldwide, as they are planning significant investments to expand their UMTS networks and deploy HSDPA services. However, HSDPA requires not only large capital investments to deploy the new technology in the RAN network, but also increasing operating expenses for the additional T1/E1 lines necessary to provide larger bandwidth at the cell site.
Currently, each UMTS NodeB cell site requires a minimum of one T1/E1 link for voice and data transport. With the deployment of HSDPA, the number of lines would increase from one to three-the initial release of HSDPA supports a maximum bandwidth of 3.8 Mbps, which translates to two additional T1/E1 lines. Therefore deploying HSDPA-with two new T1/E1 lines per cell-site-would require contracting many new T1/E1 lines, and would increase OpEx accordingly.
With Cisco RAN Optimization solution , mobile operators can carry all HSDPA data traffic over a cheaper alternative broadband backhaul such as Metro Ethernet, xDSL, cable, or WiMax, saving on OpEx and increasing the available bandwidth as needed. Unlike T1/E1 lines that require increasing available bandwidth by 2-Mbps steps, broadband networks allow for a smoother bandwidth upgrade and higher flexibility as shown in Table 5. Not only can operators save on OpEx, but they can also expand network capacity as demand arises, following an on-demand network expansion strategy with increased flexibility and reduced costs.
Table 5. Example of RAN Optimization with HSDPA Offload
Original Number of T1/E1 Lines
Number of T1/E1 Lines after Optimization
Benefits
• 1 UMTS
• 2 HSDPA
• 2 GSM
• 1 optimized T1/E1 line for GSM and UMTS
• 1 alternative backhaul for HSDPA
• Lower OpEx
• Shorter time to market for HSDPA roll out
• Higher flexibility in bandwidth increase and management, as needs arise
• Broader IP-based services using available bandwidth on alternative backhaul
For sites where the actual number of T1/E1 lines is large enough that adding an additional line comes nearly for free-mostly urban areas-an optimization solution may not introduce enough benefit. However, when taking into consideration HSDPA data services, which require two new T1/E1 lines to start providing the service, and possibly new T1/E1 lines in the future as demand grows, major cell sites in highly populated areas become the ideal target for HSDPA data offload.
The great benefit for mobile operators is the ability to add bandwidth as needed, and thereby avoid leasing expensive T1/E1 links. With the foreseeable increase in both data ARPU and traffic in the near future, any HSDPA broadband service would require a lot of T1/E1 lines to provide the required bandwidth. With Cisco's alternative backhaul and HSDPA offload solution, mobile operators can save substantial money on OpEx and have the flexibility to expand the network in the future.
Figure 7. Conceptual Overview of HSDPA Data Offload Scenario
SDPA offload and GSM/UMTS RAN backhaul optimization are two complementary solutions that may be deployed together-gaining the benefits from both-or separately, depending on the topology of the network.
In short, Cisco's HSDPA data offload solution offers mobile operators the possibility to start deploying HSDPA services today with little increase in OpEx. By offloading data traffic on cheaper alternative broadband backhaul, operators can avoid deploying expensive T1/E1 lines and can save on OpEx. In addition, broadband networks allow for smooth, easy, and fast increase of available bandwidth when needed, reducing time to market for network expansion and for the provision of new services.
Benefits of HSDPA Data Offload
By using Cisco's HSDPA data offload solution, mobile operators achieve the following benefits:
• Deployment of broadband HSDPA data services using an alternative backhaul solution (such as ADSL) provides OpEx savings and flexibility in network expansion without the need for additional T1/E1 lines
• Possibility to start deploying HSDPA today with little increase in OpEx
• No impact on voice and data quality, full transparency for end nodes, and no change in cell-site operational procedures
• Ready for future upgrade to an all-IP RAN network, and for using cheaper alternative backhaul solutions for RAN transport
• Cisco MWTM suite provides network wide management and control of all nodes from a centralized position, allowing for increased performance monitoring, efficiency analysis, and operation and support cost savings
FACTORS THAT INFLUENCE PAYBACK
In this section, we examine the factors that most influence payback periods. This insight can help service providers better understand the effects of various cost and revenue drivers, and comprehend the resulting financial advantages in using Cisco's RAN Optimization solutions.
Payback is calculated considering the time it takes for cumulative net savings to become positive (in present value). Net savings are calculated as OpEx savings (from reduced backhaul OpEx) minus the CapEx required in network investments to deploy Cisco's solution. Therefore OpEx savings, offsetting CapEx investments, are the most important driver for a positive ROI.
Mobile operators in regions with high leased line pricing can achieve significant backhaul cost savings with Cisco RAN Optimization. As Figure 8 indicates, Cisco RAN Optimization provides an attractive payback in less than 14 months in most cases.
Figure 8. Sensitivity Analysis on GSM Optimization Payback with Various Leased Line Prices
Table 6 provides an overview of the main factors affecting payback.
Table 6. Factors Affecting Payback
Factor
Description
Backhaul Costs and Progressive Discounting Mechanisms
Leasing costs for backhaul lines and contractual arrangements for progressive discounting on additional lines determine OpEx reduction and directly influence payback time. In general, the higher the leasing costs, the shorter the payback period.
Number of Cell Sites, Aggregation Sites, and Aggregation Factor
The aggregation ratio (number of cell sites per aggregation site) determines how many central-site nodes are needed. In general, the higher the aggregation factor, the shorter the payback period.
Deployment Rate
OpEx savings and other benefits are achieved immediately after deployment is completed. Therefore, the faster the deployment, the sooner Cisco's solution can deliver beneficial cost savings and competitive advantages.
Installation and Maintenance Fees
Installation and maintenance fees are often a percentage of the whole CapEx. Cisco's solution requires low effort for installation, and very low maintenance, thanks to its high reliability and the Cisco MWTM's centralized management suite. However, high installation or maintenance fees may negatively affect the payback period.
