Light Reading

Battling Mobile Backhaul Costs

Light Reading
3/22/2006
50%
50%

There are a lot of expectations surrounding the revenue-generating potential of new broadband cellular technologies such as 1xEV-DO for CDMA carriers and HSDPA for W-CDMA carriers. Can they deliver?

EV-DO is already delivering on those expectations, with more than 24 million subscribers worldwide. First launched by Cingular Wireless at the end of 2005, HSDPA will now be rolled out by W-CDMA carriers in a number of parts of Europe and Asia/Pacific over the course of this year. The revenue-generating potential is clear. In the U.S, for example, the major carriers have locked horns at a price point of $59.99 for "all you can eat" access to HSDPA and EV-DO services.

What's not so clear is the profit potential in deploying these capabilities. One critical factor that will determine what the numbers actually look like is the impact on the mobile carriers' backhaul networks. As discussed in Heavy Reading's latest report, Backhaul Strategies for Mobile Carriers, carriers are typically raising their backhaul spending by 15 to 25 percent to prepare their networks for the higher volumes of traffic that these air-interface enhancements are driving. This entails deploying more transport capacity at the cell sites, typically in the form of more E1/T1 leased lines or more point-to-point microwave links.

Scaling the backhaul network on the basis of this TDM-based network topology will do for now as a means of getting these services off the ground. But with data traffic volumes liable to increase two- or threefold within the next couple of years, relying on this same TDM model risks seeing the cost of carrying this traffic outweigh the new revenue potential.

The key to lowering the cost per bit of carrying data through the mobile network is the adoption of packet technology in the backhaul. While it runs counter to the trends of the wireline networking world, in the case of W-CDMA carriers, ATM is the key to reducing their backhaul costs. Many carriers have deployed ATM aggregation nodes in their backhaul networks. These serve to reduce the length -- and therefore the cost -- of leased lines or microwave links connecting the cell sites to the network.

Another approach is to terminate GSM traffic onto these ATM networks using Circuit Emulation. Within the radio access network (RAN) software, most vendors are only now starting to deploy the more data-oriented ATM QOS features that W-CDMA carriers consider the single most important tool for lowering backhaul costs.

The so-called IP RAN has already been deployed on a large scale by EV-DO carriers. Although W-CDMA base stations don't support IP interfaces yet, the world's first IP RAN for W-CDMA is already in live commercial service in Hong Kong using MPLS-based pseudowire technology. This encapsulates GSM and W-CDMA TDM and ATM traffic streams and transmits them as a pseudowire over lower-cost Ethernet backhaul. Several leading carriers are involved in trials, with the first significant commercial deployments expected in the next 12 months.

These solutions are promising but usually require additional optimization -- such as customized engineering of the Ethernet network, OAM, base station synchronization, and DSL CPE at the cell site -- in cases where carriers are looking to use DSL.

Carriers believe that the current spikes they are seeing in backhaul expenditure can be reined in again with the efficient deployment of such capabilities. The trouble is that data-savviness in mobile carrier circles is still in relatively short supply. They are pretty much on top of their packet core networks now -- their PDSNs in CDMA, their GGSNs and SGSNs in GPRS/UMTS. They are in the relatively early stages of rolling out softswitches in the voice core, with dedicated call servers separated out from media gateways.

Some carriers have deployed ATM for backhaul aggregation, but many of these continue to struggle with integrating this new layer with their SDH/Sonet networks, particularly from a network management and network provisioning perspective. For the most part, mobile carriers don't understand Layer 3 multiservice routers or Ethernet -- and certainly not enough to go running revenue-paying traffic over them with anything other than a lot of caution. And while the network planners continue to grapple with these challenges, EV-DO and HSDPA will be driving a relentless increase in traffic volumes while competition drives lower end-user prices.

The most data-savvy of the mobile carriers are probably right -- they probably can rein in these backhaul costs and make a positive contribution to sustaining current levels of profitability. The risk for others is that they will see their backhaul costs spike upwards and then stay there.

— Patrick Donegan, Senior Analyst, Heavy Reading

(0)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Flash Poll
From The Founder
Network architects aiming to upgrade their networks to support agile, open, virtualized services in the 21st century need to consider new criteria when choosing between technology suppliers.
Live Streaming Video
CLOUD / MANAGED SERVICES: Prepping Ethernet for the Cloud
Moderator: Ray LeMaistre Panelists: Jeremy Bye, Leonard Sheahan
LRTV Documentaries
PSA: The Perils of a Hyper-Connected Society

7|6|15   |   1:38   |   (0) comments


A public service announcement calling attention to the perils of a hyper-connected society.
LRTV Interviews
Guavus Takes Analytics on the Road

7|6|15   |   4:09   |   (1) comment


Guavus CEO Anukool Lakhina tells Light Reading CEO and founder Steve Saunders how the analytics tools developed for telcos are applicable to the transportation industry.
Telecom Innovators Video Showcase
Mellanox's New 25/50/100Gb/s Ethernet Products

7|6|15   |   2:44   |   (0) comments


Mellanox offers a complete 10/25/40/50/56/100Gbit/s solution that delivers industry-leading performance, scalability, reliability and efficiency for optimal application performance and data center ROI.
Telecom Innovators Video Showcase
Arista's CloudVision

7|6|15   |   6:01   |   (0) comments


Anshul Sadana answers questions from Steve Saunders, Light Reading’s founder and CEO, about Arista’s CloudVision, a global cloud network controller for workload orchestration and workflow automation delivering a turnkey solution for cloud networking.
LRTV Custom TV
Red Hat Demo

7|2|15   |   10:53   |   (0) comments


Red Hat's Nicolas Lemieux demonstrates how Red Hat is driving innovation through open source communities.
LRTV Custom TV
Red Hat's Approach to OpenStack Adoption

7|2|15   |   5:17   |   (0) comments


Red Hat's Radhesh Balakrishnan outlines his company's open source strategy for both enterprises and telcos.
LRTV Custom TV
The New IP Goes Mobile With vEPC

7|2|15   |   1:12   |   (0) comments


Heavy Reading's Gabriel Brown discusses results of a Light Reading survey sponsored by Brocade that shows a clear commitment by mobile operators to move quickly to virtual EPC deployment.
LRTV Custom TV
Making Business Sense of SDN

7|2|15   |   1:42   |   (0) comments


Results of a Brocade-sponsored survey show that CSPs have a clear sense of SDN use cases but are wrestling with the business case. Sterling Perrin of Heavy Reading looks behind the numbers.
LRTV Custom TV
NFV Will Be Here Sooner Than You Think

7|2|15   |   2:22   |   (0) comments


Forget the usual ten-year cycle for new technologies – NFV will be a core part of CSP networks in five years, based on results of a Brocade-sponsored survey, says Heavy Reading's Caroline Chappell.
LRTV Custom TV
The New IP Gains Traction With CSPs

7|2|15   |   1:42   |   (0) comments


Roz Roseboro of Heavy Reading analyzes results of a Light Reading survey sponsored by Brocade showing that CSPs are getting serious about making the transition to the New IP era.
LRTV Custom TV
It's (Real) Time for Analytics

7|2|15   |   1:42   |   (0) comments


Heavy Reading's Jim Hodges looks at how CSPs say they plan to use analytics to deploy new services in real time as part of The New IP, based on results of a survey sponsored by Brocade.
LRTV Documentaries
IoT in Action

6|30|15   |   1:39   |   (8) comments


Two co-workers discuss the benefits of IoT technology.
Upcoming Live Events
September 16-17, 2015, The Westin Galleria Dallas, Dallas, TX
September 29-30, 2015, The Westin Grand Müchen, Munich, Germany
October 6, 2015, The Westin Peachtree Plaza, Atlanta, GA
October 6, 2015, Westin Peachtree Plaza, Atlanta, GA
October 14-15, 2015, New Orleans Ernest N. Morial Convention Center, New Orleans, LA
November 5, 2015, Hilton Santa Clara, Santa Clara, CA
All Upcoming Live Events
Infographics
Equinix walks through the past four digital economy eras from computing to network to connected to today's interconneted world.
Hot Topics
What's a Gigabit Good For?
Carol Wilson, Editor-at-large, 7/1/2015
Colt to Jettison Ailing IT Business
Iain Morris, News Editor, 6/30/2015
Eurobites: Activist Investor Takes Stake in AlcaLu
Paul Rainford, Assistant Editor, Europe, 6/30/2015
IoT in Action
, 6/30/2015
FCC Chairman Talks Up SDN/NFV
Mari Silbey, Senior Editor, Cable/Video, 7/2/2015
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
Casa Systems has been going from strength to strength over the last couple of years. In 2013, it became the first vendor to ship an integrated CCAP device -- the ...
Cedrik Neike, SVP of Global Service Provider, Service Delivery, at Cisco, talks to Light Reading founder and CEO Steve Saunders about solving service provider customer problems in a virtualized, DevOps world, including multivendor support and the future of network procurement.
Cats with Phones