Small Cell Economics
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Transcript of Small Cell Economics
Small Cells EconomicsSmall Cells MENAOctober 7th & 8th Dubai, UAE
Dr. Kim Kyllesbech LarsenGroup TechnologyOoredoo Group
Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 2013 2
Small-cell networks addressed in this talk.Other types are pretty cool but for a different time & place.
have inter-cell distances between ca. 50 meter and 300 meter.
are structurally planned & coordinated.
& are based on licensed as well as unlicensed bands.
Femto Cells might not be!
Wearable Area Networks & Femto Cells
exist below and not considered here.
WiFi is considered!
Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 2013 3
Best places for small cells?
NOTE: WiFi is just a bridge to better cellular small-network systems become main stream with controlable spectrum assets and E2E Customer Experience Management.
@ Work(2 – 4 Cells)
@ Home(2 – 3 Cells)
On theGo
@ Home(1 – 2 Cells)
On theGo
00:00 10:00 12:00 22:0017:006:00 8:00
voicedata
Small Cells
14:00
Femto Cell Femto Cell
Up-to 80% of all cellular data traffic
generated in no more than 3 cells.
Illustration
Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 2013 4
Data traffic trend to be considered.
47%
37%
16%
Home
Work
Mobile
“SepNet” “SmallNet” and/or “FemtoNets”
“CorpNet”
“SmallNet”
Source: Detailed data mining study, T-Mobile Netherlands 2011.
SepNet = Separate network (i.e., not integrated)CorpNet = Corporate (work-based) network.SmallNet = Operator controlled heterogeneous network.
Mobile Data Traffic Distribution
Illustration
Between 40% - 50% of all traffic occurs at Home,Other 35% to 40% at Work, & lastly no more than 20% is Mobile.
Migration paths:
Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 2013 5
Cellular Data Mobility Illustration
31
2 3 4 3 3 2 2 2 1 1 1 1
0
5
10
15
20
25
30
35
100% traffic
80%+ traffic
Number CellsEngaged per User
Mobile data usage
Dongle-likeSmartphone-likehandset-like
Up-to 80% of all cellular data traffic
generated in no more than 3 cells.
Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 2013 6
Heuristics for data usage
Users mobile data traffic is highly localized : 80% @ 3 Cells.
The more extreme usage the higher the localization : → 1 Cell.
No more than 20% of data traffic is associated with 4+ cells.
Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 2013 7
Cellular range distribution.Illustration
Small CellDomain
UMTS2100
Small-Cell potential (large-scale)- Outdoor off-load.- Indoor off-load.- Cell split replacement- Capacity addition- “Surgical” coverage
Small-Cell potential (small-scale)- Coverage solutions.- Villages.- Residential areas.
Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 2013 8
Cellular range dynamics.Illustration
NYC
Den Haag
Houston
Leeds
LAChicago
Berlin
Hamburg
London
Houston
0.20
0.40
0.60
0.80
1.00
0 2,000 4,000 6,000 8,000 10,000
City Pop Density (pop/km2)
GSM900
GSM1800
UMTS2100
EffectiveCell
RangeIn km
Small CellDomain
Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 2013 9
The structure of cells.Below illustrates conventional cell planning, small cells can be much more irregular in their grid placement.
Illustration
WiFi 20 MHz @ 2.4 GHzPico cell – omni directional
LTE 20 MHz @ 2.6 GHzPico Cell – omni directional
LTE 20 Mhz @ 1.8 GHzMacro Cell – 3-sectored*
1 km
1 km
ca. 30 APLowest powerca. 700 Mbps
ca. 12 APLow – mediumca. 300 Mbps
ca. 15 AP*High power
ca. 400 MbpsNOTE: Some caution should be taken in direct comparison between the above simulations as system specs are not exactly the same (e.g., radiating power levels, spectral effi, etc)..
4+ thousand popslives there
16+ thousand popswork there
60+ thousand popsvisits per day
Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 2013 10
How small is a small cell?Illustration
Rural / Nation-wide700 MHz to 900 MHz
Pico – Macro
Urban – Suburban:Up-to 2100 MHz
SmallCells (SC)
1.8To
2.6 GHz
Throughput& Capacity
Sub-urban to Rural Range 10+ km
Range300m – 1.0km
Femto
1.8To
5.0 GHz
SC Range50m - 300m
Structured & planned & coordinated
Femto Cell: can be unstructured & unplanned & uncoordinated
Femto RangeUp-to 50m
NOTE: Depicted coverage or interaction range illustrations are not to scale.
Also targets for Small Cell & Femto deployments (small-scale)
Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 2013 11
Small cell fundamentalsIllustration
macro
The Backhaul challenge.The Interference challenges.Planning & Optimization complexity.
The Backhaul challenge.The Interference challenges.Planning & Optimization complexity.
Small Cell off-loading strategies.
What to look out for!
Maybe only capacity & coverage alternative.Might have favorable TCO economics.
New business models to emerge.
Maybe only capacity & coverage alternative.Might have favorable TCO economics.
New business models to emerge.
Small Cell benefits.
macro macro
macromacro
Small cell
Small cell
Small cell
Small cellSmall cell Small cellSmall cellSmall cell
Illustration
Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 2013 12
Capacity fundamentals.CAPACITY Ci = BANDWIDTH Bi
MHz× EFFICIENCY Ei
Mbps per MHz per Cell× CELLS Ni
#
Business as Usual New spectrum New technologies New macro
×
Innovation Re-farming Improvements Small-cells
×
Radical Spectrum sharing Spectrum sharing Site sharing
Total Capacity = ∑A REAS
Ci = ∑A REAS
Bi×E i×N i
VERY COSTLY
(VERY) COSTLY
EFFICIENT
(VERY) COSTLY
COMPLEX + EFFICIENT
COMPLEX BUT EFFICIENT
BaU (COSTLY)
BaU (COSTLY)
𝐸𝐵𝐼𝑇𝐷𝐴2020
𝐸𝐵𝐼𝑇𝐷𝐴2012
≥1𝐹𝐶𝐹 2020
𝐹𝐶𝐹 2012
≥1𝑂𝑃𝐸𝑋2020
𝑂𝑃𝐸𝑋2012
<1
Leapfrog Network Capacity & Quality within Financial KPIsLeapfrog Network Capacity & Quality within Financial KPIs
COSTLY BUT EFFECTIVE
Right frequency large BW → might delay or slow proliferation of small-cells!
Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 2013 13
Capacity fundamentals.
NOTE: It should be well understood that there is a possible disconnect between demand & supply and that to make the two comparable the utilization needs to be considered.
CAPACITY Ci = BANDWIDTH BiMHz
× EFFICIENCY EiMbps per MHz per Cell
× CELLS Ni#
Demand in 2020 to 2012 ratio (Cisco VNI for MEA).
50 × (CAGR 63%)
Supply in 2020 to 2012 ratio
9 – 60 ×4 – 8 ×
Low & high frequency blend
1.5 ×Incl. LTE, but
efficiency blend
2 - 5 ×Macro-based
× ( Ksmall-cell >1) ×Incl. small-cells
2012 Utilization Compensated Demand (i.e., directly comparable to Supply)
10 – 20 ×
2020 Mobile Broadband Networks in MEA likely to cope with expected demandBUT ONLY WITH MUCH MORE SPECTRUM & MANY MORE SITES
SMALL CELLS BIGGEST BANG
Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 2013 14
Economics of a macro rooftop site.Illustration
Note: the above is based on WEU cost distribution. Differences are likely to occur for other markets / regions.
Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 2013 15
The small cell TCO “competition”
Macro Cellular Sectorization.
Macro overlay / co-location of new capacity.
A Macro cellular cell split.
Abundance of bandwidth at Low frequencies (i.e., APT700).
Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 2013 16
Economics of a small cell network.Cost breakpoints in #small-cell nodes to Macro, Overlay and Sector Cost.
For Mature Market Economics *. Illustration
* Note: the above is based on WEU cost distribution. Differences are likely to occur for other markets / regions.
Incremental macro costUp-to 20 Small Cell Nodes have better Capex compared to a macro-cellular rooftop.
Up-to 10 Small Cell Nodes have better Opex economy compared to a macro-cellular rooftop.
Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 2013 17
Small cell cost scaling challenged - Capex.
1 For mature market economics, cost-structure and typical price levels.. 2 his is equivalent to no more than 50 hours of technical labor in US not considering materials.
civil works
equipment+ antenna
transportCore
Macro-siteAnnualized
Capex
100 per unit
50 Node Small-Cell networkAnnualized Capex
<2 per unit Equipment1
US$ 30k Macro Equipment.US$ 6k annualized Capex.
< US$ 120 annualized Capex< US$ 600 per Small-cell Node.
Civil Works1
SimilarlySmall-cell CW should be < US$ 1,200 per Small-cell Node 2
Feasible?
LARGE SCALE SMALL-CELL DEPLOYMENT REQUIRE a QUANTUM-LEAP in ECONOMICS of scale & DEPLOYMENT INNOVATION.
Illustration
Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 2013 18
Small Cell cost scaling challenges – Opex.
Macro-siteAnnualOpex
100 per unit
50 Node Small-Cell network
Annual Opex
<2 per unitRental1:Macro lease of US$ 10k pa would requireSmall-cell node unit lease to be no more than< US$ 200 per anno!
Transport1:Macro transport cost of US$ 8.5k pa would requireSmall-cell nodal transport solution should be better than < US$ 170 per anno or< US$ 15 per month (@25-50Mbps)
rental
O&M
transport
energy
OPEX SCALING is one of the BIGGEST CHALLENGES for LARGE-SCALE SMALL-CELL NETWORK DEPLOYMENT.
Illustration
Feasible?
1 For mature market economics, cost-structure and typical price levels.
Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 2013 19
TCO challenges & possible solutions.
• Wireless backhaul (Sharing?)
• Low cost xDSL or Cable (QoS issue?)
• Fiber connectivity (availability?).
• Wireless backhaul (Sharing?)
• Low cost xDSL or Cable (QoS issue?)
• Fiber connectivity (availability?).
Backhaul Scaling.
• Aggressive price reductions.
• CW: Sharing with other operators.
• CW: Strategic partnerships.
• Aggressive price reductions.
• CW: Sharing with other operators.
• CW: Strategic partnerships.
RF Equipment & Civil Works.
• Securing strategic locations early.
• Strategic Partnerships.
• Sharing with other operators.
• Securing strategic locations early.
• Strategic Partnerships.
• Sharing with other operators.
Site Lease Cost.
• Self Optimized Networks.
• Small Cell outsourced operations.
• Independent SC business model.
• Self Optimized Networks.
• Small Cell outsourced operations.
• Independent SC business model.
Operations.
Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 2013 20
What to be passionate about!
Small-Cell Networks are great remedies for surgicalcapacity & coverage additions.
Small-Cell Networks tend to economical scale well up-to about 20+ nodes* & for inter-cell distances below 300 meters.
Large-scale Small-Cell Networks (>50+ Nodes*) have many economical & physical challenges to be addressed.
Small-Cell Network TCO might appear excessive!often it is only way to deliver demanded capacity & coverage.
Note (*):The size of Small-Cell Networks in terms of Nodes and whether a particular size is economical (in comparison to Macro Cell) will ultimately depend on the local cost structure and pricing levels of active equipment.
Dr. Kim Kyllesbech Larsen, Small Cells Economics @ Small Cells MENADubai, October 2013 21
Oh BTW a little teaser ;-)Can small cells be meaningful in emerging markets?
Myanmar• Fixed lines% <1% → hardly any fixed BB
infrastructure.• Mobile% <10% → less than 2,000 Base Stations.• Internet% <2% → very poor international BW available.• Electrification ca. 20%+ & with large grid stability
issues.
Infrastructure• Top-100 cities with ca. 25% of population.• More than 70% of population lives in rural areas.• Number of villages exceed 67+ thousand.
– Many without electricity.Small Cells can compete with Tower Economics (easier actually than Roof Top).
More cost efficient provision of capacity in urban areas.
Small Cell Networks with Macro Cellular Backhaul (via high towers) more economical
Dr. Kim Kyllesbech LarsenFollow Dr. Kim on Twitter @KimKLarsen
Blog: www.TechNEconomyBlog.comPresentations: http://www.slideshare.net/KimKyllesbechLarsen
Acknowledgement: I am indebted to my wife Eva Varadi for her great support and understanding during the creation of this presentation.