How backhaul strategies maintain revenues
Consumers today want the fastest network, with the highest quality of experience. Operators however, are desperately looking for a better means of efficiently scaling network capacity in order to maintain and build revenues.
Recent research from Strategy Analytics has calculated that deploying software-defined networking (SDN) to mobile backhaul could save operators more than €3 billion (about $4 billion) in capex over the next four years. The Asia-Pacific region, in particular, has been highlighted as potentially benefiting the most from deploying SDN applications for mobile backhaul networks, with projected savings of $2.7 billion.
The research also stressed that these applications could help to close almost half of the $9.2 billion "backhaul gap" in expected demand and accessibility of backhaul capacity.
But while operators in Asia-Pacific widely understand the monetary benefits of SDN which look compelling, there is still hesitation within the industry about the best long-term approach and strategy in deploying SDN in mobile backhaul.
Why? Some operators, it seems, are still seeking confirmation that SDN can bring all the benefits it promises while others are uncertain of the business model or industry standards required to fully use the network.
Although these apprehensions should not be diminished and are not without merit, mobile SDN is set to be one of the most transformative technologies in the next few years and operators need to be educated on how -- SDN in backhaul in particular -- is radically altering the future operational environment and CAPEX structure of networks.
Strategy Analytics highlighted Asia Pacific because it is currently an opportune market for deploying SDN in mobile backhaul and a good example of how this can be used. There has been an extraordinary growth rate of mobile phone users in the region in recent years.
Gartner’s latest quarterly tracker on mobile phone sales announced that more than 226 million mobile phones were sold to end-users in Asia-Pacific in the first quarter of 2013, helping the region increase its share of global mobile phones to 53.1% of total. With this type of growth and rise in mobile data traffic, it will lead to an increase in investment and pressure on operators to satisfy consumer appetite for mobile connectivity and manage the inevitable proliferation in data.
Added to that, operators are always looking to increase network efficiency as well as capacity for new subscribers and services. This creates a “perfect storm” scenario for SDN.
SDN can allow networks more scalability and flexibility by enabling multiple virtual networks over a common physical network fabric. This approach principally uses software to flexibly manage and reconfigure the network according to demand, traffic type and profitability.
By using SDN in the backhaul, operators can unlock the true potential of current backhaul infrastructure and facilitate easier, more flexible and more cost-effective network operations. This can help control capex through reduced equipment spend and also significantly reduce opex because networks become easier to operate.
SDNs’ value is twofold as operators are also dashing around to find new revenue opportunities for their new LTE networks in response to increasing competition. Significantly, the emergence of SDN provides a route to practically and cost-effectively enable innovative new services and business models.
One well understood example is to introduce an enterprise access network on the same equipment as being used for mobile backhaul. With the synergies between telecoms and IT territories having long been getting closer, SDN is enabling operators to monetize that potential and increase revenues.
With traditional equipment, this would require the construction of a wholly new physical infrastructure. In a software-defined world, we are simply adding another backhaul application to the existing network.
The innovative and growing technology which is challenging the status quo and unlocking some of the greatest impact SDN can have on backhaul and business models is point-to-multipoint (PmP) microwave. PmP-based backhaul solutions are helping operators monetize new services on their network and reduce churn with profitable customers. This is achieved by allowing operators to access underutilized resources (traditionally locked away in rigid hardware and inflexible spectrum allocations).
Traditionally mobile backhaul is primarily seen as a cost consideration but it is becoming both a cost and profit consideration because you can derive profit directly running additional backhaul applications on the network alongside those supporting the mobile operations.
While there is no doubt that SDN is at an early stage of the technology cycle, it is already challenging the status quo of backhaul techniques. It is a real means of cutting complexity and enhancing network competitiveness and agility in a region that has a highly complex mobile market due to differences in wireless infrastructure, types of customers, and government regulations across countries.
Although it is widely recognized that many operators do see SDN as an inevitable trend, more needs to be done by the key Asia-Pacific operators to take steps to ensure they don't miss out on the SDN revolution.
John Naylon is CTO of Cambridge Broadband Networks (CBNL)