Implications of 4G Deployments Presentation representing the MEF Metro Ethernet Forum MPLS World Congress Ethernet Wholesale Summit Paris 2010

1. 1
Implications of 4G Deployments
MEF Workshop – Carrier Ethernet for Mobile Backhaul
A presentation for “Ethernet Wholesale Summit 2010”
January 2010
Presented by
Javier E. Gonzalez
MEF Representative

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Market Analysis, Scale and Trends
– Current trends in backhaul deployments
– Growth drivers and challenges worldwide
– Packet-based backhaul cost advantage analysis
– Implications of 4G (WiMAX, LTE) deployments

3. 3
Market Analysis, Scale and Trends
– Packet-based backhaul cost advantage analysis
– Implications of 4G deployments
• Backhaul market drivers + What’s driving 4G ?
• Economics of 4G Networks
• Carrier Ethernet for 4G solutions

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Packet-based backhaul cost advantage analysis
The Carrier Ethernet Backhaul Economic Driver
TDM backhaul for 4G is costly and unreliable
• Monthly TDM cost per tower for 10Mbps ~ $20K.
4G builds are capital intensive
• Fiber and microwave costs require significant
investment ($20-$50K per tower)
• Existing tree topologies are cost-inefficient
• Leased services can balance the CAPEX load

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Implications of LTE Deployments
Backhaul Market Drivers
Increased bursty data traffic and streaming video
• User Interface Improvements
• Additional cell sites, devices, and increased b/w (10-100x)
• Wildly varying traffic patterns
Rapid deployment is a must
• First to market captures market share (WiMax has a 2-3 yr.
lead over LTE)
• Rapid construction requires multiple strategies for backhaul
deployment (self-build, lease)

6. 6
Economics of 4G networks
Mobile backhaul is a COST issue!
Carrier Ethernet Backhaul Bends the Curve.

7. 7
Keys to Profitable Ethernet Services
• Bandwidth Control
– Flexible, granular service definitions
• Scalability
– Wide area coverage with simple, repeatable service
tagging
• Flexible Interworking
– Cost optimize the right technologies in the right place
• Resilience
– Robust service protection, high availability
• Manageability
– Clear diagnostics, service level agreement
• Low Touch Operations
– Time to service = time to revenue with lower OpEx
Raise
Revenues
With
Differentiated
Services
Improve
Service
Margins via
Lowered
Costs
Profitability!

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Carrier Ethernet for 4G
Operators need Ethernet for:
– Greenfield WiMax deployments
• Opportunities limited today but increasing
• All eyes on successful deployments (Clearwire/Xohm)
– ATM 3G Leapfrogs
• Developing world operators slow to adopt 3G technology
– Wireline Wholesalers
• May have separate PWE3 requirements (e.g. ATT, BT)
– 4G deployments (2-3 yrs from now)
• Evolution to LTE from GSM/UMTS family à 88% of market
• Key is to commence now during transition from TDM to Packet
• Ethernet + T1/E1
– Combined Ethernet + T1/E1 (ATM & TDM) over Ethernet backhaul
– Represent roughly 80-90% of today’s MWB

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4G (WiMAX) Transport Requirements
– Stable, redundant architecture
– Comprehensive management/provisioning system
– Optimized network utilization
– Scalability in MAC addresses, customers, sites
– Point-to-point and multipoint service models
– Microwave friendly
– Flexible “Best Practices” design
– MPLS / PBB-TE / VLAN (QinQ)

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4G (WiMAX) Transport Challenges
• Operators require a solution that provides:
– Scalability: Scalable MACs & customers
• Directly at tower site - no MAC learning network between towers
– Reliability: Redundancy & rapid restoration
• Dedicated Primary & Back-up tunnels from each tower with rapid
restoration
– Predictable QoS: Strict Priority settings
• Committed & Excess Information Rates per service
– Bandwidth Utilization: Efficient use of network resources
• Bandwidth engineering, no automatic path disabling for loop prevention
(STP)
– Simplified Provisioning: Reduce complexity
• Provisioning wizards with GUI interface for service creation
– Management: Comprehensive OAM capabilities
• Service assurance, Fault-Config-Performance Mgmt (802.1ag, 802.3ah, Y.
1731)
– Cost Effective: Economies of Scale of Carrier Ethernet
• Advantages of a Layer-2 Carrier Ethernet architecture
• Minimize costly Layer-3 devices at head-end.

11. 11
Carrier Ethernet OAM
Customer Domain
Provider Domain
Operator Domain Operator
Domain
Eth
Access MPLS Access
Customer CustomerService Provider
MPLS Domain MPLS
Domain
PW/MPLS OAM
Service OAM
MEP
MIP
Operator
Domain
MPLS
Core
Network OAM
IEEE 802.1ag CFM
Connectivity Fault Management
Operations, Administration, and Maintenance offering enables service
providers to use cost-effective Ethernet networks as the means to
reliably deliver high-bandwidth, profitable, retail and wholesale services.
IETF RFC 5357 TWAMP
Two-Way Active Measurement Protocol
Layer 2 SLA Monitoring & Metrics: Delay, Jitter, Frame Loss ITU-T Y.1731 Ethernet OAM
Enhanced troubleshooting, rapid network discovery IEEE 802.3ah EFM
Service Heartbeats, End-to-End & Hop-by-Hop fault detection
Layer 3 SLA Monitoring & Metrics: Delay, Jitter
• SLA Assurance
• Rapid Fault Isolation
• Minimized Downtime

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Key drivers for Carrier Ethernet Solutions
Ethernet is Carrier Class & Cost Less
– Universally accepted that Ethernet is less expensive and ubiquitous technology
– By 2008, 89% of providers believed that Carrier Ethernet is mature enough for
“carrier class” deployments
– Solid Ethernet OAM features that provide a comfort factor for providers (SDH like
characteristics)
– Connection oriented Ethernet (COE) solutions provide deterministic & resilient
services (VLANs, PBB-TE, etc..)
Enterprises & Providers want Ethernet
– Reported growth in the Ethernet services revenue ($14.9B in 2008 to $19.9B in 2011)
– Service Providers have lowered the price per bit for Ethernet services, making it
more attractive than legacy services (TDM, ATM, etc…)
Ethernet is integral to Network Transition
– Ethernet is the key component to many NGN packet network transformations
– COE is well-placed to replace legacy SDH applications
– Evolution of 40G and 100G are being driven by data centre applications and are
complimentary to Optical networks
Source: Infonetics Research

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Advantages of Carrier Ethernet
Advantage Benefits
Cost-
Effective
Ø Capex: Ethernet Economics
Ø Opex: Provisioning, Fault Resolution, Network
Engineering
Simple
Ø Flexible network topologies
Ø Avoids L3 routing complexity
Ø Transparent regarding IPv4, IPv6, IPSec
Secure
Ø No network-layer attacks
Ø No misconfigured Access Control Lists (ACLs)
Ø Inherent security of L2 EVCs
Carrier-
Class
Ø Resilient
Ø Ethernet OAM
Ø Deterministic “SONET/SDH-like”
Ø Convergence with business and residential traffic

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… further challenges
Packet bandwidth consumption continues to grow….
But revenue growth is slowing
2004 2006 2008 2010
10%
20%
30%
41%
3%
7%
13%13%
-5%-3%-1%
4%
Broadband
Wireless
Wireline
**
** Sources: Yankee Group and Pyramid Research

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IP-Ethernet Mobile Backhaul:
Preparing for LTE
February 9 MEF Workshop - Carrier Ethernet for Mobile Backhaul
Tuesday, 0915-1000 - Market Analysis, Scale, and Trends
Presented by
Michael Howard
Co-founder and Principal Analyst, Carrier and Data Center Networking
Infonetics Research

16. 16
Copyright © 2009 Infonetics
Research, Inc.
16
Today’s Speaker
Michael Howard
Principal Analyst and Co-founder

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Copyright © 2009 Infonetics
Research, Inc.
17
• Social changes under way, unabated mobile subscriber
growth will prompt 95% of operators to migrate to LTE
• …Creating mobile backhaul challenges
– Mobile subs and their bandwidth grow strongly; ARPU cannot
– Data and video traffic growing fast
– Multiple operators at cell site; transport provider wants single
backhaul
– WiMAX, LTE coming; need to prepare for IP/Ethernet backhaul
• Operators must go to packet backhaul
• Operators need OAM&P and service assurance now
• Conclusions and Q&A
Agenda

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Copyright © 2009 Infonetics
Research, Inc.
18
Social changes underway…
• Social phenomena: consumer, business
– Connected, competitive world
• Anytime, anywhere connections
• More bandwidth, mobile broadband
• Confluence of fixed/mobile, wireless/wireline
– Video inserted into most applications, so traffic never
stops growing

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Copyright © 2009 Infonetics
Research, Inc.
19
…Causing unabated mobile subscriber
growth
Source: Fixed and Mobile Subscribers Annual Worldwide Market Forecasts, March 2008
5.2
0
1
2
3
4
5
6
Billions
CY06 CY07 CY08 CY09 CY10 CY11
Worldwide Mobile Subscribers

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Copyright © 2009 Infonetics
Research, Inc.
20
Backhaul connections are growing quickly
• Connections and bandwidth per connection drive equipment spending;
adding 100,000s of new connections per year
• Mobile operators pay incremental charges for 2x to 10x bandwidth
– Ethernet options solve costs—but need service assurance, OAM&P tools
Source: Mobile Backhaul Equipment, Installed Base, and Services, May 2009
0
1,000
2,000
3,000
4,000
5,000
6,000
Connections(K)
CY07 CY08 CY09 CY10 CY11 CY12 CY13
Worldwide Mobile Backhaul ConnectionsL Installed vs New
Installed connections
New connections

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Copyright © 2009 Infonetics
Research, Inc.
21
…And data dramatically increases traffic
load
Operators rolling out increased capacities via EDGE, EV-
DO, HSPA, WiMAX, then LTE
0
10
20
30
40
TB
Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09
JRA 09 .0 9.2 00 9
0
10
20
30
40
TB
Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09
JRA 09 .0 9.2 00 9
Live network KPI data
Operators: 9 Europe, 4 APAC, 6 Americas
Average Y-Y growth over 500%
Total HSDPA Traffic per Day
Source: Nokia Siemens Networks

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Copyright © 2009 Infonetics
Research, Inc.
22
3 stages of IP/Ethernet backhaul for LTE
• IP/Ethernet backhaul solves ARPU-traffic disconnect today and
backhaul problem for HSPA today…and LTE tomorrow
2G BTS
3G NodeB
E1/T1
RNC
BSC
PDH
Backhaul
2G BTS
3G NodeB
E1/T1
RNC
BSC
Hybrid/Dual
Backhaul
2G BTS
3G NodeB
RNC
BSC
All
IP/Ethernet
Ethernet
Ethernet
Internet
Gateway
LTE eNodeB
2G BTS
3G NodeB
E1/T1E1/T1
RNC
BSC
PDH
Backhaul
PDH
Backhaul
2G BTS
3G NodeB
E1/T1E1/T1
RNC
BSC
Hybrid/Dual
Backhaul
Hybrid/Dual
Backhaul
2G BTS
3G NodeB
RNC
BSC
All
IP/Ethernet
All
IP/Ethernet
Ethernet
Ethernet
Internet
Gateway
LTE eNodeB

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Copyright © 2009 Infonetics
Research, Inc.
23
Operators already moving to IP/Ethernet
backhaul
40%
80%
100%
0%
20%
40%
60%
80%
100%
PercentofRespondents
2008 or before By 2009 By 2010
Year Deployed
• From Infonetics’ August 2009 IP/Ethernet in Mobile Backhaul
Networks: Global Service Provider Survey
• OAM&P and service assurance tools needed
• Major investments in staffing/operations, procedures changes
– Rich IP/Ethernet options very complex compared to TDM circuits

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Copyright © 2009 Infonetics
Research, Inc.
24
Many triggers for IP/Ethernet backhaul before
LTE
• From the same Infonetics service provider survey
• LTE is the final, absolute time to move to IP/Ethernet backhaul
47%
93%
80%
80%
73%
60%
47%
0% 20% 40% 60% 80% 100%
Support iPhone or other
smartphones
Deploy HSPA
Need to lower backhaul costs
Deploy HSPA+
Deploy IP base station or base
station
with Ethernet connection
Deploy IP IuB (R6)
Deploy LTE
Events
Percent of Respondents Rating 6 or 7

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Copyright © 2009 Infonetics
Research, Inc.
25
Costs drive operators to IP/Ethernet
backhaul
• Ethernet offers huge drop in cost per bit of bandwidth that almost matches the 2x
to 10x traffic increases HSPA delivers
• IP/Ethernet naturally fit WiMAX and LTE as well
Source: Mobile Backhaul Equipment, Installed Base, and Services, May 2009
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
$45,000
$50,000
CY08 CY09 CY10 CY11 CY12 CY13
Calendar Year
AnnualBackhaulChargesperConnection
PDH and ATM over PDH New wireline Mobile Backhaul
…or move to
Ethernet
Stay on TDM
Mobile Backhaul Equipment and Services
Biannual Worldwide and Regional Market Size and Forecasts

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Copyright © 2009 Infonetics
Research, Inc.
26
Worldwide Mobile Backhaul New Connections (by Technology)
-300
-150
0
150
300
450
600
750
900
CY05 CY06 CY07 CY08 CY09 CY10 CY11
Connections(K)
Ethernet microwave Ethernet copper and fiber Other
PDH/SDH microwave SONET/SDH ATM over PDH
PDH
Ethernet backhaul—connections of choice
• De-commissioning legacy (no more hybrid): use Ethernet backhaul to carry
voice, data, and video traffic for 2G, 3G, WiMAX, and LTE
– New 1588v2 solves clock synch problem
Source: Mobile Backhaul Equipment, Installed Base, and Services, October 2008
Ethernet

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Copyright © 2009 Infonetics
Research, Inc.
27
IP/Ethernet backhaul before LTE and for
LTE
• Backhaul costs are the principal driver, due to
traffic growth
• Operators are making the investment to move to
the eventual IP/Ethernet backhaul networks
• IP/Ethernet backhaul
– Solves ARPU-traffic disconnect today
– Solves backhaul problem for HSPA today
– …and LTE tomorrow

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Thank You
Michael Howard
Co-founder and Principal Analyst, Carrier and Data Center Networks
Infonetics Research
+1 408.583.3351
michael@infonetics.com
www.infonetics.com

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Accelerating Worldwide Adoption of
Carrier-class Ethernet Networks and Services
For more information regarding joining the MEF:
Visit: www.metroethernetforum.org
Email us at: manager@metroethernetforum.org
Call us at: +1 310 258 8032 (California, USA)
For in-depth presentations of Carrier Ethernet for business, Ethernet services, technical
overview, certification program etc., visit: www.metroethernetforum.org/presentations

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Panelists
Javier E. Gonzalez
jgonzale@ciena.com |
+33.6.88.21.43.34

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