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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

 
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

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