Monday, May 10, 2010

NSN: HSPA/LTE Costs Can Be Below EUR3 per GB per Month

Even without voice services, mobile broadband operators can keep their monthly capital and operating expenditure to EUR 3 per subscriber and profitably provide up to 5 GB of data per month for every subscriber, according to a new techno-economic study published by Nokia Siemens Networks. The study examines the costs and opportunities of using HSPA and LTE radio technology in existing sites and by using spectrum on multiple frequency bands.

Nokia Siemens Networks also found that the higher the mobile broadband penetration, the lower the cost of delivering a gigabyte of data per subscriber.

"While the data boom is finally upon us, the viability of the business has eluded most -- operators have become increasingly preoccupied with the associated high costs of data delivery versus the lag in expected revenues," said Marc Rouanne, head of Network Systems, Nokia Siemens Networks. "Our study proves that success in mobile broadband can deliver efficiencies -- radio access networks can enable sustainable, cost-efficient broadband offerings to subscribers by leveraging existing base station sites to their fullest capacity."

The NSN study makes a number of assumptions. First, traffic is never equally distributed between sites -- typically during a busy hour 50% of the traffic is carried by 15% of the cells -- the majority of cells remain underutilized. Adding more users can in effect lead to a more equal traffic distribution between sites and a more profitable use of available capacity.

Further, since traffic distribution is not equal between subscribers -- 20% of the subscribers take more than 80% of the bandwidth -- network efficiency can be greatly improved by balancing the traffic. For example, radio capacity can be boosted by deploying additional macro sites in hot spots, using 6-sector configurations, applying QoS differentiation, and by offloading traffic in highly populated areas.

The study observes that CAPEX + OPEX per subscriber are relatively high when the subscriber density is low. Similarly, the cost of delivering a GB of data is highly dependent on the network utilization. If total data use is high, either due to a high number of subscribers or to high use per subscriber, the cost per GB can be below EUR1.

The study finds that operating expenditure (OPEX) as the main component in an operator's cost base and that the largest contributors to OPEX are backhaul transport, site rental, network maintenance and electricity. Costs not considered in the calculations include customer acquisition and marketing.

"The key to maximizing profit from the network will depend upon the accuracy of upgrading capacity of the existing HSPA network vis-à-vis deploying a LTE network," added Tommi Uitto, head of Network Systems product management, Nokia Siemens Networks. "Our Flexi Multiradio Base Station with software-based evolution will allow operators to efficiently and simultaneously build high capacity on multiple bands with GSM, HSPA and LTE radio access technology, proving to be a huge differentiator and success factor."