Future Wireless Network Architecture Driven by Broadband Data Traffic MIT CIPS Workshop October 28, 2009 Berge Ayvazian, Senior Advisor, Yankee Group Principal Consultant, Wireless 20/20 10/28/09 © Copyright Wireless 20/20, LLC. – All rights reserved 1 1

Introduction to Wireless 20/20 Consulting group focused on the emerging broadband wireless market – 3G, LTE, Wi-Fi, WiMAX Expertise in Broadband technology, market and modeling Provide support to the “Broadband Wireless Ecosystem” Component Vendors, Equipment Vendors, Service Providers, Regulators Developed over 30 Wireless Business Cases around the world North America, South America, China, Europe, Africa, Middle East Developed comprehensive tools to model broadband wireless networks What is the impact on ROI? 10/28/09 © Copyright Wireless 20/20, LLC. – All rights reserved

Mobile Industry Trends Evolution to Data-centric Mobile Networks Data is growing faster than voice on today’s 2G and 3G networks Need for scalable backhaul as all-IP 4G networks develop Emergence of Smartphone Applications Driven by mobile email, SMS/MMS, ringtones and content Hosted apps specific for mobile smartphone devices Growth of Mobile Internet Traffic Transition from mobile email/SMS to internet-based multimedia content and information exchange: YouTube and social networking Mobile access to cloud computing services, eg. Salesforce.com 10/28/09 © Copyright Wireless 20/20, LLC. – All rights reserved

Mobile Device and Application Trends Mobile Broadband Smartphone Handsets, Notebooks and Netbooks and DataCards Drive Data Traffic Growth Emergence of Smartphone Applications and Widgets Laptops/ DataCards Netbooks 3G Smartphones MIDs Consumer Electronics 10/28/09 © Copyright Wireless 20/20, LLC. – All rights reserved 4

Global Mobile Data Forecast Global mobile traffic will increase 66X between 2008-13 Broadband will drive 80% of mobile traffic, and exceed two exabytes per month Global mobile data traffic reached one exabyte/month in half the time it took fixed data traffic to do so High-end 3G smartphone generates more data traffic than 30 basic-feature 2G cell phones Laptop Aircard or Netbook generates more data traffic than 450 basic-feature cell phones Almost 64% of world’s mobile traffic will be video by 2013 including streaming, downloading and interactive video communications Mobile Data/Video Challenge - Scalable Core and Backhaul 10/28/09 © Copyright Wireless 20/20, LLC. – All rights reserved

Mobile Data Traffic Tsunami Source: Cisco Global Mobile Data Traffic Forecast Informa Telecoms and Media, 2009 10/28/09 © Copyright Wireless 20/20, LLC. – All rights reserved 6

© Copyright Wireless 20/20, LLC. – All rights reserved Massive Data Traffic Growth Forecast Tier 1 US Mobile Service Providers Year Source: Yankee Group, 2009 Mobile Broadband Data Traffic Growth Drives Backhaul Requirements Data ARPU 10/28/09 © Copyright Wireless 20/20, LLC. – All rights reserved 7

US Mobile Operator Network Evolution HSPA+ in 2010 No Announced Date for LTE HSPA (R6) in 2010 Maximum 7.2 Mbps Average 700 Kbps – 1 Mbps GSM Voice HSDPA - Data T-Mobile USA Clearwire Network Build out in selected markets 2009-2010 Mobile WiMAX 802.16e CDMA Voice EV-DO Rev A - Data Sprint LTE Trials by year-end 2009 LTE Deployment begins 2010 for 30 commercial markets nationwide build-out late 2013 or early 2014. LTE . Verizon Wireless LTE trials in 2010 Deployment begins in 2011 HSPA (R6) in 2009 Maximum 7.2 Mbps Ave. 700-1,700 Kbps GSM Voice HSDPA - Data AT&T 4G Deployment Date Next 3G Data Network Current 3G Network Mobile Network Operator 10/28/09 © Copyright Wireless 20/20, LLC. – All rights reserved 8

Media Internet Centric Horizontal and Vertical Integration Mobile Internet and 4G Network Transformation Will Impacts the Entire Mobile Ecosystem Devices Voice-centric Media Internet Centric Access/Backhaul Narrowband Broadband Edge/Core Connectivity Centric Internet Centric Services/Apps Vertical Integration Horizontal and Vertical Integration 10/28/09 © Copyright Wireless 20/20, LLC. – All rights reserved

© Copyright Wireless 20/20, LLC. – All rights reserved Today’s Mobile Data Network Architecture Not Built for Mobile Data Applications AT&T’s Edge and 3G network performance has suffered trying to support millions of iPhones Netbooks and datacards are the next challenge RAN being upgraded to HSPA+ and ultimately LTE Cost for Existing Backhaul running into $100Ms Current backhaul is being upgraded to Fiber/Ethernet AT&T’s network is a harbinger for other mobile providers Verizon Wireless Sprint/Clearwire T-Mobile Vodafone Orange Telefonica/O2 None of them are Ready for 4G 10/28/09 © Copyright Wireless 20/20, LLC. – All rights reserved 10 10 10

© Copyright Wireless 20/20, LLC. – All rights reserved 4G Operator Deployment Strategies Driven by Legacy Position and Competitive Market 4G Plans of Major MNOs MNOs making huge investment on RAN and Backhaul for Mobile Broadband AT&T and Vodafone 3G networks being upgraded to HSPA in 2009, postponing LTE into 2012 Verizon Wireless is LTE first mover with trials in 2009 and commercial deployment in 2010 Sprint using Clearwire mobile WiMAX network for 4G starting in 2009 Vodafone deploying HSPA in 2009 and plans LTE in 2012 KDDI announced LTE while UQ Communications 4G mobile WiMAX network in late 2009 Korea Telecom using mobile WiMAX network for 4G while testing LTE NTT DoCoMo is currently testing LTE and deploying EPC and IMS to offer commercial Super 3G services beginning in 2010 Other 4G first movers include Telstra Australia, TeliaSonera and Telenor NTT docomo Super 3G/LTE GSM/HSDPA LTE 10/28/09 © Copyright Wireless 20/20, LLC. – All rights reserved 11

Next Generation Radio Technologies are Coming Source: Yankee Group – September 2009 10/28/09 © Copyright Wireless 20/20, LLC. – All rights reserved 12

4G Service Providers Need Spectrum Substantial spectrum to deliver true mobile broadband experience Radio Network Open, standards based base stations, radio access network to deliver multi-megabit speeds to the end user. Backhaul High Capacity Ethernet links to connect the radio network to the packet core, the Internet and other networks. So what do we do about this capacity crunch? In my view, the only way to -- and failing to deliver on any one of these prongs will leave us where we started – is this: We need a lot of spectrum A next generation OFDM based technology An all IP core network and infrastructure that enables us to deliver a lot of data at a low price And devices with embedded chipsets that enable devices to take advantage of the speeds and capacity offered by a next generation network Core Network Open, Flat all-IP packet core network, low cost, simple, low latency, with intelligence and analytics montize rich media applications. Devices Wide selection of devices, including low cost, and embedded to reduce barriers to entry and make customer acquisition affordable. 10/28/09 © Copyright Wireless 20/20, LLC. – All rights reserved 13

4G is More than a Radio Access Network IMS Internet Operator IP Service Domain GERAN E-UTRAN eNodeB UTRAN BTS NodeB SGSN/ MME SGW LTE AAA/ HSS Overlaid Networks ePDG WiFi / Femto / WiMAX 3G PGW/ GGSN Evolved Packet Core (EPC) drives all-IP for capital and operational efficiencies and to accelerate service innovation 10/28/09 © Copyright Wireless 20/20, LLC. – All rights reserved 14 14

Radio Network Upgrades Alone Cannot Address Traffic Demands Source: Yankee Group – September 2009 10/28/09 © Copyright Wireless 20/20, LLC. – All rights reserved 15

4G is Much More than a Radio Access Network Efficiencies of Ethernet in the backhaul Source: Yankee Group – September 2009 Massive investments needed to overcome backhaul choking-point 10/28/09 © Copyright Wireless 20/20, LLC. – All rights reserved 16 16

Mobile Backhaul Trends Path to 4G heralds hyper-convergence of communications, Internet, media, mobility and machine New players are poised to capitalize on 4G and the Anywhere Network Service providers are grappling with transformation strategies for 4G Current market strategies are driven by competition and are not addressing market demand Ecosystems evolving to empower the end users and disrupt status quo Within next five years, mobile network operators have to: Transition from TDM to packet based backhaul Transition to fiber backhaul and microwave Simplify backhaul connectivity with Ethernet Unify the voice and data networks mobile networks, particularly for wireline backhaul 10/28/09 © Copyright Wireless 20/20, LLC. – All rights reserved 17

3G and 4G Mobile Network Backhaul Challenge Over $24 billion was spent on mobile backhaul services globally in 2008 US mobile network operators spent $6.2 billion on backhaul in 2008 for 228,000 cell sites supporting an average of 10 Mbps or less of capacity In 2012, there will be more than 300,000 cell sites in the U.S., each supporting on average 100 Mbps. If MNOs keep throwing T1s at the problem, this would result in a backhaul bill of $82 billion. The monthly average cost per site would be about $23,000 compared to today’s average of $2,100. MNOs need to plan RAN and backhaul together – preplanned fiber hub sites enable broad microwave coverage and lowers lifecycle costs 4G requires more fiber and microwave in the backhaul network to support high bandwidth requirements Metro Ethernet and fiber hubbing enables node aggregation 10/28/09 © Copyright Wireless 20/20, LLC. – All rights reserved 18

© Copyright Wireless 20/20, LLC. – All rights reserved 100 Mbps Ethernet Backhaul Needed to Support HSPA+ and WiMAX, More for LTE 100 Mbps Backhaul in two years 10 Mbps Backhaul in 2008 AJIS LLC? 10/28/09 © Copyright Wireless 20/20, LLC. – All rights reserved 19

WiROI Model for LTE Backhaul 10/28/09 © Copyright Wireless 20/20, LLC. – All rights reserved

Future Wireless Network Architecture Conclusion Mobile Internet presents tremendous opportunities for those who transform to address its demands Service providers must embrace the Mobile Internet and 4G or perish A holistic approach towards technology evolution is critical in the run up to 4G Service providers must drive transformation into their company culture and with employee incentives to change Focus on Backhaul and Evolved Packet Core in the Transition to 4G to Optimize the Mobile Internet User Experience 10/28/09 © Copyright Wireless 20/20, LLC. – All rights reserved 21

Questions? www.wireless2020.net Berge Ayvazian 617 504-6141 berge@wireless2020.net Randall Schwartz 415 307-4259 randall@wireless2020.net Roberta Wiggins 617 504-6141 roberta@wireless2020.net Haig Sarkissian 408 884-1561 haig@wireless2020.net 04/01/09 10/28/09 © Copyright Wireless 20/20, LLC. – All rights reserved © Copyright Wireless 20/20, LLC. – All rights reserved 22 22