Global Marketing, Inc.

Global Marketing, Inc - Market Analysis White Paper
_______________________________________________

Wireless backhaul of 2G, 3G, and 4G traffic during the next 3-5 years will present the same problem to the network and service providers as Internet did in the late 90s – the traffic is rising rapidly, but the revenues will not. End users want video and data applications such as mobile TV and mobile broadband Internet on their smart phones, both bandwidth intensive applications, but are not willing to pay more for it. In fact the prices are falling for bundled triple-play offerings. The equipment providers must provide a solution to handle this sudden rise in bandwidth requirements without incurring the higher costs. Already, wireless operators spend over $3 billion to lease T1/E1 lines from Carriers worldwide to backhaul their traffic.

The situation is further complicated by the need to continue to support legacy applications. That is, the service providers must support new data intensive mobile applications (e.g. HSDPA) as well as accommodate the equipment already deployed for mobile voice services. This is a delicate balancing act. The challenge mobile operators face is to grow data service revenue without having an associated cost per bit that makes the economics of the solution unacceptable.

The primary solution Telecom industry has homed in on is Carrier Ethernet. Migrating from existing backhaul infrastructure to Carrier Ethernet can significantly reduce cost and risk of the project since Carrier Ethernet can cost effectively meet the bandwidth capacity requirement over many types of access infrastructure including fiber, copper, and wireless media. In addition, Carrier Ethernet can carry native IP traffic, thus eliminating the need for conversion, and reducing overall costs. The backhaul network traffic can be carried on GE, 10GE, as well as on SONET/SDH with Ethernet over SONET/SDH protocols.

One possible and compelling solution is the hybrid approach, in which the data traffic associated with the mobile devices is separated from the mobile voice services directly at the cell site. The voice traffic can be carried reliably and cost effectively over existing T1/E1 infrastructure while HSDPA traffic can be backhauled using lower cost broadband technologies such as xDSL, cable modem, and carrier Ethernet.

With this new challenge, the service providers need a next generation of equipment that will enable to them to accomplish the following objectives.

· Provide full end-to-end managed service that offers HSDPA offload capability to the mobile operator.

· Offer a complete technical solution that delivers to the Mobile Network Operator (MNO) the interfaces needed to directly interface to the radio subsystems at both cell site and core aggregation locations.

· Offer guaranteed SLAs in-line with broadband data availability, monitoring, pro-active fault isolation and recovery.

· Accommodate a mixture of transport technologies to deliver the service and perhaps even multiple operators, but these underlying complexities should be transparent to the MNO.

Leading global service providers and equipment vendors are working together in the Metro Ethernet Forum (MEF) to develop a Mobile Backhaul Implementation Agreement (IA) which will define the following UNI interface and Generic Interworking Function (GIWF) and provide the framework for emulated T1/E1 circuits over Ethernet for wireless backhaul. This is expected to be complete this year (2008). The next task will be to define the Network to Network Interface (NNI), so the backhaul can be done over multiple networks owned and operated by multiple network providers.

On the 4G front, WiMAX standards have matured and new deployments have begun, while Long Term Evolution (LTE) is being worked on in the 3GPP standards body. Clearly, as the networks and services continue to evolve, new needs will arise and new standards or updates will be needed to accommodate these new needs.

Some of the questions equipment vendors are dealing with include how they would implement the new standards and future proof their equipment as standards evolve, what goes in hardware and what can be done in software to meet the evolving needs quickly. How would the service provider split the traffic (voice and data) at the base station or at RAN NC? Is high capacity (Ethernet) wireless backhaul needed for 2G at all considering that the traffic is mainly voice that can be handled by T1/E1s?

The Metro Ethernet Forum has developed three technical specifications MEF 3- Circuit Emulation over Ethernet Framework and Requirements, MEF 8 – Circuit Emulation over Ethernet and MEF 18- Abstract Test Suite for Emulated Circuits. These important technical specifications are the foundation for providing standard Circuit Emulation services to support the legacy T1/E1 interfaces. The MEF Carrier Ethernet for Mobile Backhaul technical project is developing an Implementation Agreement specifically for Mobile Backhaul drawing from these three technical specifications.

Early aspects of this technical work include the definition of use cases for legacy transmission support, to accommodate the legacy T1/E1 based equipment and a second set of use cases for using a native Ethernet User Network Interface (UNI) for connecting mobile telephony switching equipment using Carrier Ethernet.

Specifically the MEF Mobile Backhaul Interoperability Agreement will specify a set of service parameters to be implemented in a standard manner in order to comply with the MEF IA. Parameters to be specified include: Class of Service (CoS), Synchronization, Ethernet Operations, Administration and Maintenance functionality, protection requirements and fault tolerances, specific UNI type definitions, capabilities and settings, and finally performance goals. The MEF’s Carrier Ethernet for Mobile Backhaul Interoperability Agreement approved draft is currently (2008) under “Straw Ballot” and is well on the way to be approved by the membership.

A myriad of protocols need to be supported in the wireless backhaul network to accommodate the various traffic types. The solutions are needed to allow transport of TDM, HDLC, and ATM based services over packet-based MPLS, IP and Ethernet networks. Regardless of underlying traffic being xDSL, bonded SHDSL/EFM, native Ethernet on fiber or point-to-point microwave, the equipment must make most efficient use of the bandwidth to ensure viable business models. For UMTS, 3GPP approved use of ATM over T1/E1 for UMTS RAN for GSM installation. HSDPA traffic is has already started while high speed uplink traffic via HSUPA is coming soon. The data rates could reach 100 Mb/s on mobile devices in the near future. The UMTS Base Station (Node B) and Radio Network Controllers (RNC) will have to migrate from ATM based infrastructure to an all-IP based model to carry all traffic types including GSM, UMTS, and CDMA as well as support synchronization and clock recovery over packet networks.

Global Marketing, Inc - Market Analysis White Paper
_______________________________________________

India has a huge pent-up demand for broadband. The Indian IT industry is continuing to grow at an astounding rate and fiber is being deployed on a very large scale in India to build the infrastructure to support broadband and data communications. Still, consumers have been waiting for 4-6 months to get broadband service connected. MTNL has a waiting list of more than 20,000 in Mumbai and New Delhi. The bottleneck in this under-served market seems to be the availability of equipment, which spells opportunity for the consumer electronics and carrier equipment providers worldwide to enter in the India market.

Broadband services were launched in India in 2005. Telecom Regulatory Authority of India (TRAI) reported 2.43 million broadband connections in India at the end of April 2007. BSNL and MTNL, the largest providers of last mile networks in India, are targeting to add 6 million new broadband subscribers during the coming year¹. Bharti Airtel Ltd. the country's largest mobile operator has also launched broadband services and has over 10,000 customers. The goal for India is to have 20 million broadband users by 2010.

Clearly, expanding broadband deployment is a major need for India’s sophisticated and rapidly growing consumer market. Cell phones have grown exponentially in the last 10 years – India has the third largest concentration of cell phones in the world. Now many of these same users, especially in metropolitan areas, want broadband access from their homes at affordable prices.

While in the US, technologies such as GPON, BPON and DOCSIS 3.0 are poised to be deployed in 2008², broadband access via copper and wireless seem to hold the promise in India. A few Indian and international equipment and service integration players have entered the India market to leverage the opportunity. However, the list is still short.

Sterlite Optical Technologies Ltd. will design, develop, and implement a broadband and metro Ethernet network to provide coverage in the cities of Mumbai and New Delhi, with capacity for 500,000 subscribers by 2009. Sterlite is also helping to build an MPLS core for the network.

Australian vendor Arasor Corp. , is also entering India's broadband market by building modems through a partnership with Indian semiconductor firm SemIndia Inc.

UTStarcom will provide DSL Access Muxes to BSNL to enable 1.3 million ADSL2+ lines as the carrier is planning to roll out IPTV services over its network.

One of the major benefactors of broadband in India is VoIP services. Only until about 2 years ago, it was illegal to terminate VoIP calls on PSTN network. Now that the regulations have changed and broadband is being deployed, we expect a boom for the VoIP market in the coming years.

Broadband wireless (WiMAX) may make it easier for new entrants to compete against the incumbent operators³. Companies like Beceem, SOMA and others are promoting this scenario. Although WiMAX Forum has announced the certification of products in the 3.5 GHz frequency band, it is unclear on what spectrum WiMAX could be deployed in India. The issue is that 3.3 GHz is owned by the country’s space program, and other frequencies are used by the military. At the lower end of the spectrum, 700 MHz is a possibility. In addition, of course price is a major issue. The annual 3.3 and 3.5 GHz equipment opportunity is forecasted to be US$256 million in 2012⁴.

Spending power of India and China is expected to reach $9 Trillion by 2015, roughly equal to that of Western Europe today⁵. Even though India's broadband penetration is very low today, major efforts are underway to roll out the infrastructure. Urban Indian consumers will seek out the web more aggressively as soon as they have the right set of devices with a balance between price and quality. Companies like Lenovo and HP are in a prime position to strike this balance for consumers interested in PCs on a par with their Western counterparts. In addition, limited-functionality devices, such as Nicholas Negroponte's $100 computer, will be attractive to consumers in the lower income rural areas.

1. Nicole Willing, “Indian Telcos Tackle Broadband Shortage”, Light Reading, May 2007.

2. Raymond McConville, “2007 Top Ten: Technologies to Watch”, Light Reading, December 2007.

3. Dan O'Shea, “India awaits a broadband breakthrough”, Telephoneonline, January 2006.

4. Carl Townsend, “India Broadband & WiMAX Market Analysis”, WiMax.com, May 2007.

5. Forrester Research, “India's broadband penetration extremely low”, Business Standard, 2006.