Email a colleague    

September 2011

Wireless Backhaul: Preparing for the Cleanup When the Dust Settles

Wireless Backhaul: Preparing for the Cleanup When the Dust Settles

Wireless backhaul represents the largest telecom build-out in the last decade.  Mobile operators can’t deploy Ethernet to the cell sites fast enough.

Every wireless carrier is migrating to 4G/LTE with Ethernet backhaul to support the vast increase in data downloads driven by apps on smartphones and tablets as well as the increasing appetite for video by consumers and businesses.  In addition to site upgrades, an industry analyst mentioned that AT&T is building out 5,000 new cell sites per year.  As we see all around us each day, iPhones and Androids are jumping off the shelf at a record clip.

The build-out reminds me of the emerging telecoms rush to deploy fiber and switches in the late 1998-2000 era; except this time it’s to catch up to customer demand as opposed to speculating on such.  There are important engineering and billing impacts of this wireless backhaul expansion.

  • Wireline Interconnect or Backhaul networks are choking — Where the biggest congestion lies today is not on the radio side (RAN), but in mobile backhaul and the core.  Not long ago, the average bandwidth at a cell site was two TDM T1 circuits — about 3Mbps before overhead.  Today these sites are upgrading to Ethernet speeds ranging from 50Mbps to 10Gbps.
  • The number of interconnect partners is expanding — With nearly 300,000 cell sites in North America, no single supplier can serve every site for wireless backhaul.  Thus, in order to deploy broadband to cell towers, you must choose from multiple Ethernet suppliers on a market-by-market basis.  These suppliers include the well-known players: Qwest, CenturyLink, Comcast, Cox, Verizon, AT&T, Level 3, plus many niche metro suppliers like Tower Cloud, Zhone, and many others.
  • Interconnect billing is getting crazy — TDM circuits such as ATM, Frame Relay, DS3, and T1/EI have billed the same way for the past two decades, so interconnect agreements in the TDM world are well understood.  But with Ethernet backhaul, billing is a new ball game.  No established rating or pricing standards exist on how facilities are charged, so wholesalers create their own rules.  Bottom line: There’s no consistency.
  • TDM disconnect is a broken process — As Ethernet and fiber are deployed to the cell sites, there’s a corresponding need to disconnect TDM circuits.  And it’s a tricky process because you need to be sure the underlying customers are not affected when you drop those circuits.  Still, the vast volume of these disconnects in queue demonstrates there’s a big risk of double-paying.  For instance, over the past two years, industry analysts estimate more than 100,000 TDM circuits in the wireless backhaul network have been disconnected.  Our experience at Razorsight easily supports that estimate.

Given that we sell solutions to many of these problems, I’d love to say, “Stop what you’re doing and go fix your back office,“ but that’s not realistic.  The here and now for mobile operators dictates that they run fast and hard — that means deploying broadband to the cell sites as fast as possible.

However, when the dust settles in three years, the mobile operators will look back and find they have a plethora of suppliers and a Rubik’s Cube of Ethernet rate plans to deal with.  At that point, there will undoubtedly be a corporate push to groom, optimize and re-engineer those backhaul networks based on actual capacity needs, new pricing and improved supplier agreements.

So what’s our advice?  We recommend a two-step sort of military-style strategy: Deploy the troops first, then refine your ground tactical strategy once you’re in the battlefield.  Meanwhile, consider the following points:

  • Leverage cloud-based or SaaS tools — as interim cost, inventory and project management solutions for the rapid and dynamic backhaul network build-out.
  • Don’t buy probes to solve inventory problems — Some suppliers suggest that you deploy probes to reconcile your network inventory.  Don’t do it.  Using probes only makes sense for carriers who own their own large networks.  Most backhaul networks are leased.  Hence, if you’re like most mobile operators and a high percentage of your facilities are leased, then probes can’t help you reconcile your off-net facilities.
  • Do synchronize inventory with your existing B/OSS — While spending big money to buy probes is not wise, there are many B/OSS systems you already own — such as ordering and billing — and those systems already represent inventory and contain circuit IDs, customer addresses and so forth.  So it makes sense to use these data sources to unify and reconcile your view of inventory.  In this way, you can afford to reconcile and recover stranded assets/capacity every month.
  • Invest in 360-degree inventory visibility — Whether you’re a network engineer, customer service rep, or marketer, you should be able to punch in a number in one system and get everything you need to know on a circuit — who ordered it, who’s using it, what are the service endpoints, and how much is it costing us?
  • Don’t expect Ethernet billing standards anytime soon — Facilities billing for IP/Ethernet backhaul is going through an evolutionary period.  It will take years for standards to emerge in this area.  In the meantime, you can follow point 6 below.
  • Get prepared for matrix-pricing contracts — Simplify your interconnect billing and contracts as best you can.  In any case, you’ll need to manage matrix-based pricing contracts with a lot of variable costs.  When it’s time to come up for air, invest in a cost management system that understands this new world.
  • This article first appeared in Billing and OSS World.

Copyright 2011 Black Swan Telecom Journal

 

About the Expert

Charlie Thomas

Charlie Thomas

Charlie is CEO of Razorsight and has led the company to growth including a #8 ranking on Deloitte’s Virginia Fast 50 and a #114 ranking on Deloitte’s National Fast 500 list.

Charlie has secured over $30 million in growth capital for Razorsight from leading institutional investors.  Prior to Razorsight, Charlie co-founded, grew and sold 4 companies, and negotiated over $1 Billion in capital financings for his companies

Razorsight provides SaaS business intelligence and profit analytics for the communications industry, managing both the buy side and sell side of carrier-to-carrier relationships.   Contact Charlie via

Related Stories

  • Network Asset Choreography: Subex Teaches Analytics to Dance with Discovery & Life Cycle Management interview with John Brooks — Network provisioning and asset life cycle management is a foreign world to most business assurance professionals because it’s a domain that lives outside the order-to-cash stream.  This article explains how new analytics and network discovery techniques are enabling operators to better track assets, plan capacity, and pave the way for strategic network deployments and decommissioning.
  • Wireless Backhaul: Preparing for the Cleanup When the Dust Settles by Charlie Thomas — Wireless backhaul represents perhaps the largest telecom build-out in the last decade.  This article lays out a strategy for operators as they sooner or later must groom, optimize and re-engineer their backhaul networks based on actual capacity needs, new pricing and improved supplier agreements.  The article lays out a 6-point plan for ensuring success.
  • Real-Time Network Intelligence: The New Way to Read Telecom Tea Leaves by Suren Nathan — Real-time network intelligence is the key to deciding which products to launch, whose facilities to lease, and where to route traffic.  The article explains why telecoms — and especially enhanced service providers --  should ideally be equipped with both a fine-grained margin analysis solution and a SaaS platform, offering an upgrade path that requires no internat IT support.
  • Network Inventory Integrity: Taking Cost Management to a Higher Level interview with Suren Nathan — Recovering stranded assets and capacity is essential for minimizing CAPEX and leasing costs.  This article makes the case for reconciling network inventory through the many ordering, billing, and other systems that interact with that inventory.

Related Articles

  • Webinar: From Wholesale Settlement  to Global Partner Management by Dan Baker — A 40 minute webinar providing a sweeping view of the challenges and opportunities service providers face as they try to manage a far more complex wholesale and partnering scene.
  • Special Report: Wholesale Systems for Advanced Services by Dan Baker — Plenty of technology and market changes are disrupting the telecom wholesale market: advanced services, new kinds of partners,,and the need to monitor relationships and services more closely than was ever required in the circuit voice world.  This article introduces a TRI special report discussing the kind of Wholesale Systems needed in this challenging marketplace.
  • Data Integrity Issues Go Global in the Telecom Wholesale Exchange interview with Vic Bozzo — Wholesale systems enable operators to expand their global reach and work efficiently with partners in an increasingly interdependent telco business.  In this article, you’ll learn about: how many subsystems work together in support of the global trading exchange, why data integrity has become critical, and how wholesale business trends are affecting wholesale systems at Tier 1 and mobile operators.
  • Network Asset Choreography: Subex Teaches Analytics to Dance with Discovery & Life Cycle Management interview with John Brooks — Network provisioning and asset life cycle management is a foreign world to most business assurance professionals because it’s a domain that lives outside the order-to-cash stream.  This article explains how new analytics and network discovery techniques are enabling operators to better track assets, plan capacity, and pave the way for strategic network deployments and decommissioning.
  • Atlanta-lytics: New Telecom Conference Features Revenue and Customer Analytics by Dan Baker — A new telecom conference on analytics in Atlanta (January 29 — 31) is shaping up to be a key event for people who want to stay abreast of this fast moving field.  Black Swan is hosting a half-day, pre-conference workshop entitled, “Financial and Revenue Analytics” featuring seven speakers, many of whom are contributors to this magazine.  Detailed program guide is enclosed.
  • Big Data Financial Analytics: Creating Business Value for Tier 1 Telecoms interview with John Devolites & Atul Jain — What exactly is an analytics company?  This interview with executives at TEOCO helps defines this new breed of telecom solution vendor — a cross between software, consulting, and assurance supplier.  Along with a few Tier 1 case studies, the interview discusses: big-data vs. sampling, analytics project management, and the importance of data access.
  • Margin Analysis: Bolting Profit Assurance onto a Revenue Assurance Platform by Efrat Nissimov — Margin analysis is one of the hottest trends in business assurance.  But what’s all the excitement about?  This article explains the benefits, the market forces driving its adoption, and its advantages over Excel and heritage data warehouse approaches in terms of flexibility, data granularity and quicker time to access.  The author also touts major cost savings if margin analysis is deployed as a module within an existing revenue assurance suite.
  • Partner Settlement: The Adaptable Chameleon that Lives Between Wholesale and Retail Billing interview with Arun Kalavath — Partner settlement has been around a long time, but its profile is on the rise because wholesalers are offering new services and content services are bringing settlements into the retail sector.  In this article, you’ll learn about the market forces changing the wholesale business, the expanded portfolio of services that require settlement, and advice on how to pick a settlements solution vendor.
  • Carrier Usage Audits: Why Regular Checkups Are the Key to a CSP’s Bottom-Line Health by Brian Silvestri — Many telecoms are wholly unaware of the risks of not having a solid usage auditing program for interconnect bills.  Rather than a once-a-year or once-a-quarter audit, this article makes the case for regular monthly audits.  Also discussed are: the different types of audits and organizations involved; the dangers of not auditing often; and factors to consider when selecting a cost-management vendor.
  • Partners in Carrier Management: The Success Story Behind T-Mobile’s Fiber Rollout in Wireless Backhaul interview with Bryan Fleming — Wireless backhaul is the unsung hero of the smartphone’s success.  This interview with T-Mobile’s carrier management architect for backhaul reveals the behind the scenes game plan for one of the most ambitious wireless interconnect programs ever.  You’ll learn about: the reasons for adopting a full-scale fiber strategy; the challenge of finding carrier partners; the clever techniques T-Mobile used to simplify and cut costs; advice on building great relationships with suppliers; and the key role that analytics, assurance, and visualization software played.
  • Will Apple Take a Bite Out of Carrier SMS Revenues?  Likely. by Brian Silvestri — Text messaging generates $20 billion of revenue each year for U.S. carriers alone.  But Apple’s lastest iPhones come with iMessage, a free embedded messaging service.  But while the long term threat to SMS revenue is clear, what strategies should operators be following today?  This article discusses the many factors operators need to consider, offering advice on how mobile operators can keep SMS profits rolling in as long as possible.
  • Invoice Audit Productivity: From 19th Century Textile Mill to SaaS by Peter Yelle — When it comes to invoice reconciliation, are your processes and tools modern and efficient, or is your company stuck in a 19th century time warp?  This article show how operators can vastly reduce their manual audit steps by automating via a SaaS solution.  The  detailed case study and diagram show which tasks were automated to achieve an 80%+ productivity gain.
  • Least Cost Routing and Rate Audits Not Delivering the Savings You Expected?  Here’s Maybe Why by Brian Silvestri — Least cost routing (LCR) is supposed to be one of telecom’s greatest cost-saving innovations.  Yet Connectiv Solution’s research suggests that the LCR programs at many U.S. carriers are losing millions of dollars.  The story explains the traffic analytics steps service providers must take to ensure profitable LCR and other cost assurance programs.
  • Wireless Backhaul: Preparing for the Cleanup When the Dust Settles by Charlie Thomas — Wireless backhaul represents perhaps the largest telecom build-out in the last decade.  This article lays out a strategy for operators as they sooner or later must groom, optimize and re-engineer their backhaul networks based on actual capacity needs, new pricing and improved supplier agreements.  The article lays out a 6-point plan for ensuring success.
  • Is Offering Free International LD on Your Horizon?  Follow These Checkpoints by Hulya Altinsoy — Free is a magic word for consumers.  So how about adding free international long distance (LD) to your list of services?  While free international LD serivce is fraught with risk, the article presents a  5-point checklist to help get your bearings before you make the leap.  The article also presents an analysis of billions of minutes in international LD calls by U.S. wireless carriers.
  • Real-Time Network Intelligence: The New Way to Read Telecom Tea Leaves by Suren Nathan — Real-time network intelligence is the key to deciding which products to launch, whose facilities to lease, and where to route traffic.  The article explains why telecoms — and especially enhanced service providers --  should ideally be equipped with both a fine-grained margin analysis solution and a SaaS platform, offering an upgrade path that requires no internat IT support.
  • International Call Routing: A Challenging Area to Master, But Payoffs Can Be Big interview with John Fitzpatrick — International call routing offers a completely different set of challenges than the common practices found in North America.  This article explains the many issues faced in international LCR from imprecise routing and number portability headaches to dispute problems and the flood of wholesaler rate sheets that must be rapidly made sense of and implemented in the routing plan.
  • Dynamic Call Routing: The Market Enabler that Allows VoIP to Improve with Age interview with Neal Axelrad — Least cost routing (LCR) has matured greatly in recent years.  Today’s routing is far more dynamic because of new real-time capabilities.  This article explains technology advances that instaneously re-routie calls based on real-time intellgence gathering from the network.  Also discussed are template-driven rate addendums, SaaS delivery, and the economics of LCR.
  • Network Inventory Integrity: Taking Cost Management to a Higher Level interview with Suren Nathan — Recovering stranded assets and capacity is essential for minimizing CAPEX and leasing costs.  This article makes the case for reconciling network inventory through the many ordering, billing, and other systems that interact with that inventory.
  • An Automated Self-Audit Approach to Telecom Cost Assurance interview with Jim Buttafuoco — What’s the value of an automated approach to invoice validation?  This article explains the power of the SaaS model where the vendor supplies the data-processing expertise, relieves the operator of tedious manual work and boosts auditor productivity so more money is saved.
  • Meet Your New Cost Management Solution: A Tandem Hub Carrier interview with Surendra Saboo — In the telco interconnect game, frustrations are many: high tolls, jurisdiction scams, and the expense of connecting to a partner.  This article explains how tandem or aggregation carriers are making life easier and saving operators a boatload of money.  Learn the difference between peering and a “tandem hub” and why this trend is becoming increasingly global.
  • Cost Assurance: Dealing with Rating Variety in Wholesale Bills by David West — Validation of intercarrier wholesale invoices seems like a fairly straight forward process.  But regulatory rules and a variety of bill rating methods have made it very complex.  This article details the challenge by walking through a wireless carrier case, then laying out the argument why operators should opt for a custom solution based on a core reporting engine.