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Elastic Telecom networks: a path towards cellular network virtualization

Over the last few months we saw two big announcements for Telecom consolidation in the US from the 3rd and 4th largest carriers. Is this a surprise or what? By all means it is not – I have been busy lately studying demand and supply curves for my micro-economics class (part of my MBA program) and viola – this all makes perfect sense! It is all due to the economy of scale – the larger the firm is the better it is able to supply the service needed at a better rate (meaning lesser dollars!). The one graphic that is always hurting the budgets for carriers is the ARPU distribution and the long tail economics.

So what will happen over the next few years is a change from selling voice and data for MNOs to service enablers. This requires several market plays which require – two main factors investment dollars and partnerships with several niche market players and this will allow MNOs to move into the VAS space.

Several years ago Microsoft had a similar competition from the likes of Google which challenged the whole notion of selling licenses for an OS, Google brought in the concept of freemium play – give Android for free and sell the apps! A similar shift is happening today in the wireless ecosystem – old models need to be thrown out and value creation needs to shape the networks!

Operators need to take these steps for survival or be bought out –

Who is the competitor? The primary competitors for the telecom service providers had been the other service providers. However, over the course of last few years, players have been migrating and surfing in segments across the board – from Android, Apple to PayPal, from P&G to AT&T, from Facebook to Time Warner, from Google to Best Buy, every company wants to capture the mindshare and piece of the consumer’s pocketbook. The fine line between partners and competitors can get obliterated in a quarter. One product launch or one acquisition can change the game in an instant.

Deploy end-to-end framework starting with the mobile packet core & IMS: Innovation is not just for the edge network or the devices, but rather the entire mobile network from RNC, SGSN, GGSN, Billing systems to the devices should be available as a platform for innovation. Obviously, one can’t just open up all the critical pieces of information at once, it should be done in a methodical and thoughtful manner. In order to provide a good experience for the customer and a robust API framework for the developers, the various network component need to work in sync that help understand the user behavior at a granular level and turn observations into insights that can be exposed to the developers who can leverage the input by building new experiences.

Charge for OTT services: The consequences of not playing an active role in the OTT services can be severely detrimental to the operator profitability. Given that there is a significant pressure on the margins of the voice, access, and messaging businesses respectively, operators have to find new sources of sustainable revenues in the next 5 years or else accept to live with the decline of margins by 30-50%. Netflix, Pandora and several OTT products have created enormous inroads in terms of capital generation while the MNOs have passively seen their ARPU slip! Toll-free apps from AT&T are one step to correct that direction. A detailed explanation of the concept has been provided here in my blogpost.

Exploit the long tail: Voice, Access, and Messaging will continue to be the three dominant revenue generating applications for mobile operators for some time. However, the next bucket of revenue isn’t in any one or two applications but rather in the long-tail that can include hundreds of applications. While individually, they might not generate a significant amount of revenue, collectively, they can rival the top three in generating billions of dollars in the coming years. By focusing the vertical areas such as health, retail, education, energy and horizontal areas such as security, cloud computing, payments, and others, mobile operators can create a sustainable revenue source for the future.

Foster developer ecosystem and provide tools: Mobile operator VAS revenues are tightly linked to the developer ecosystem they are able to foster. Just like Android and iOS have huge developer following which is helping them dominate the mobile OS platform landscape, mobile operators who open up the APIs for network, billing, profile, authorization, location, performance, security, quality of service, etc. will build a robust ecosystem that churns up new services and applications that help drive enormous value to the end-customer. Directly or indirectly, this will add to the bottom line and the operator will be seen as a service innovator in the market place.  Application developers primarily focus on how their application or the service works. They rarely spend time on examining how the API request will impact the network. Operators need to setup testing labs and provide simulation tools to developers so that they are more informed about the traffic and signaling load generated by their applications and are better prepared to address data consumption issues. Here are some examples of the developer outreach that has happened over the years – AT&T, Verizon, Sprint, T-Mobile & Clearwire.

Creating value rather than nickel & dime for bytes: MNOs must manage their data margins but the pricing of data shouldn’t exclusively focus on the amount of data transmitted. A byte during a financial transaction or for a medical application is far more valuable than a byte transferred doing social networking updates. A health care application that provides peace of mind to family members might not send gigabytes of data but consumers are more interested in reliability and immediacy than the app tonnage. Remote monitoring apps can lower the overall cost for healthcare and insurance providers and they will not be measuring the cost of the app by amount of data transmitted but rather by the value it provides.

How can the MNOs play the space and get ahead of the game with the changes that will happen over the next few years. Below is a very good video describing the change model for next few years.

Read more…

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Understanding the Signaling Tsunami

A recent development of Tekelec as the diameter supplier for T-Mobile LTE deployment has once again brought forth the discussion of control plane congestion and the operator readiness to address the issues. I have been working on this area for a long time and have seen the impact first hand on several customer outages. 3GPP and the Infrastructure vendors have come a long way since the days when the first smartphones changed the trend of user behavior and network congestion. It is not just an improvement on the ‘plumbing’ of smart pipes but the overall change end-to-end that has helped mitigate many problems, both from a signaling as well as performance. QOE (quality of experience) plays a big role in network planning and management today, as users now demand more from a handset/tablet than ever before. Signaling plane control gives the operator a better leverage and control over the various elements of the network that handles customer management and quality of service along with it.

 

Understanding user behavior with Smartphones

User behavior in consuming more content than what is produced, the popularity of multimedia services and the lack of processing power on Smartphones results in far greater traffic flowing downstream into Smartphones than flowing upstream from Smartphones into the cloud. Naturally, communication channels are typically asymmetric reserving greater bandwidth for the downlink vs. the uplink. In spite of the asymmetric bandwidth allocation, mobile networks are seeing significant traffic pressure on the downlink due to the sheer number of applications using the networks and the multimedia heavy nature of the traffic generated by many of the applications.

In addition, a number of symmetric applications such as file sharing or Peer-to-Peer (P2P), mobile Voice over IP (VoIP) and gaming contribute to traffic on the downlink. However, P2P traffic has been on the decline over the last several years as first audio content and then video content became readily available through legitimate storefronts. In addition, relative to other traffic types, Mobile VoIP and Mobile Gaming are low bit rate services, which do not impact the overall traffic as much in spite of a very large number of concurrent sessions in use.

As Smartphones become more capable, services such as video conferencing, User Generated Content (UGC) uploads, P2P applications, video surveillance and augmented reality are gaining popularity. Further, as voice services transition to VoIP in LTE networks, the potential increased traffic from voice will also contribute to the uplink traffic mix. The aggregate of these services is making network capacity requirements more symmetric and resulting in significant pressure on the uplink capacity. Foreseeing this trend, HSPA and LTE have increased the relative throughput of the uplink vs. the downlink compared to earlier technologies18 and further LTE also allows for more flexible spectrum allocation to account for evolving network traffic usage patterns.

Nevertheless, until LTE is widely deployed, accelerated growth in uplink traffic will require immediate and unique solutions on deployed HSPA and HSPA+ networks. Machine-to-Machine (M2M) devices are expected to grow into a significant share of the devices on the network. These M2M applications have diverse network requirements varying from heavy signaling-low throughput in the case of geo-tracking to low signaling-high downlink throughput in the case of Near-Video On Demand (VOD) to low signaling-high uplink throughput in the case of webcams. Further, M2M applications may also be widely distributed in large numbers due to the low cost low maintenance nature of the Smartphones resulting in rapid growth in M2M traffic. In addition, the wide distribution of these devices will require remote manageability using OTA software updates further adding to the traffic demands on the network. Read more…

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BYOD, Toll-free Data – Operator Strategies for ARPU

BYOD – Bring your own device has become the new nightmare for CIOs and security folks in the world of IT. I remember a ticket assigned to a security analyst while working with a Mobile operator that had a BYOD policy, he left me a cryptic message to meet him with my laptop.  It so happened that the outlook and Windows accounts were the cause of conflict, flooding the account servers with authentication requests. Can this happen over the air for mobile operators? Read more…

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Radio Network Sharing – new paradigm for LTE

Network sharing or Radio Access Network sharing between two or more operators will become a reality in near future as ARPU trend decreases, CAPEX(Capital Expenditure)and spectrum costs become speculative. The time is coming when operators have to decide to either evolve or go out of business being swallowed by bigger rivals. The days when a voice centric network paid for itself in time are gone, as the data-centric networks evolve it has to be supplemented with value added services like apps, faster download speeds, etc. Wouldn’t it be wonderful if we could do multiple things with our phones – monitor our home, watch Football, control home appliances, monitor kids, be on top of work email, control our work computers, GPS, do video chat on- demand and all of the above at one flat rate! This is going to be the reality in the next 5-7 years as vendors are looking to provide these services in collaboration with the operators and smart phones.
What does this mean for an operator? More fatter pipes, new investments on hardware infrastructure upgrades, more space, more power and above all more capacity in terms of bandwidth and spectrum. So the path now for an operator would be to either chose the upgrade path or become obsolete. Is there a third way a middle ground that mitigates spending so much for infrastructure investments, well it comes in the form of a sharing agreement, where Operator A shares the network or other resources with Operator B, as pooled resources mean greater reach in terms of capacity and coverage.
Why do we need RAN sharing or for that matter any network-sharing models?

Capacity

Ironically, there is much talk of an impending spectrum crisis, an alleged shortage of spectrum for cellular networks. A survey commissioned by NSF in 2005 concluded that radio spectrum is underutilized; they found only 5.2% of the spectrum occupied in the range from 30 MHz to 3000MHz. And how can there be a spectrum shortage?

There is a contradiction that the problem at hand is not the lack of spectrum but because it is so inefficiently used. Pockets of spectrum are quite heavily used – for example, the cell phone and specialized mobile radio (SMR) band (a narrow band from 806 MHz to 902 MHz) is 46.3% utilized in New York City; while other bands are barely used at all. Cognitive radios seem like one approach to provide more efficient usage of the spectrum. It might be argued that there is, in fact, not really a shortage of capacity. It’s simply off limits to most users, most of the time. Switch on a cell-phone in most locations in the world and you can see 5-10 different cellular networks, and several Wi-Fi networks. However, most users can only use one of the visible cellular networks, constrained by the contract they are locked into. Nearby Wi-Fi networks are usually off-limits too, because they are secured by their owners.

If we really want to give users access to the abundant wire-less capacity around them, why don’t we make it easier by design and by policy for a mobile client to move freely between the spectrum, and networks, owned by different cellular and Wi-Fi providers? While this approach is clearly counter to current business practices and would require cellular providers to exchange access to their networks more freely than they do today. I believe it is worth exploring because of the much greater efficiencies it would bring; and the much greater capacity that could be made available to end users. Interestingly, a several-fold increase in capacity could be made available for little or no additional infrastructure cost. Read more…

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SDR implementation with LTE

ZTE, a global provider of telecommunications equipment and network solutions, today announced a contract with Telenor Hungary, a subsidiary of one of the Telenor Group, to build a GSM/UMTS/LTE network in Hungary. ZTE will provide the company with radio and core infrastructure over the next five years, including its industry leading End-to-End and Uni-RAN solutions.

“As part of our vision of a Digital Hungary, we predict a growing need for simple- to-use, value-for-money mobile communications services across Hungary, especially mobile broadband and we now see that the time has come to switch to the next gear and take the lead in providing even faster and even more reliable services to our customers,” said Anders Jensen, CEO of Telenor Hungary.

ZTE will switch, expand and operate the GSM/UMTS/LTE network and deploy over 6,000 base stations, including LTE eNodeBs throughout the country. With its SDR-based solution, ZTE will help Telenor Hungary achieve a unified 2G/3G/LTE core network, supporting multi-mode and multi-band wireless services. This technology eliminates the need for further infrastructure upgrades, providing the operator with the flexibility to roll-out new services and a smooth evolution path to LTE.
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Categories: 3GPP, Broadband, FCC, LTE Tags: ,

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