LTE: An Evolution of Technology or Business?

Peter Briscoe, Strategy Office, Telcordia

Is the Long Term Evolution (LTE) of mobile communications an evolution of technology, or an evolution of your business?  The easy editorial answer would be to say “both.”  Especially given that most of the analysis across the industry seems to be focused on the technology.  But it is easy to forget why we are talking about LTE and 4G.  Our business is changing to respond to a changing marketplace—not to changing technology.

Data-hungry consumers and standardized technologies have put competitive pressure on key revenue measures.  Shareholders want to see ARPU (average revenue per user) growth, but don’t particularly like fragmenting supply chains or dramatic shifts in buying power.  So, service providers naturally look to drive up ARPU by adding value—generally defined as delivering a higher quality experience for a similar or lower price.   To that end, the Operator therefore has to manage two things:  (1) reduce costs; and (2) provide more.

Enter LTE.  Today’s mobile networks were designed to carry more voice than data.  If existing technologies were used to support the level of projected demand over the long term, the amount of additional equipment, both in the numbers of cell sites and backhaul network devices, would make the service uneconomical.  LTE technology aims to address this through the combination of simplifying the backhaul network, removing the need for complex and expensive control functions, and the use of cheaper transport technology (IP and Ethernet) that reduces the price-per-port for connections from the cell sites to the core. So the first part of LTE is to help in controlling the costs while providing the same or better level of service!

Unfortunately, technology itself does not generate revenue.  However, services do.

If you can create and deliver value from services that not only builds off of the increased available bandwidth LTE brings, but are also relevant to the consumer for their task at hand, then you take the commodity out of the technology and making it differentiable in the market (see diagram below).

Historically in our industry, we tended to think along a single array.  If you were a service provider, your job was to build bigger and better pipes.  If you were a device manufacturer, your job was to put a phone in everyone’s hand.  If you were an application developer, you helped consumers organize data.  But as we advance along the path of long term evolution to 4G, 5G, and 6G networks, a tightrope walk down a single axis of value will likely fall short of customer expectation.  What good will it do to offer lightening fast download speeds without sufficient coverage or content agreements?  What value do you bring by creating the next killer application in a market that cannot offer reliable mobile broadband connections while you travel at speed? 

As customers move closer to experiencing a full Internet experience on their phone, they will look for the ability to turn their handset from a terminal to an integral control point supporting their services and lifestyles -- no longer just a way to view content hosted online, but a direct peer-to-peer connection enabling a new wave of social networking.  With such promise, operators will need to take a holistic view of the technological impacts LTE will have on their business process and their support systems. 

Unfortunately, the application of this technology to obtain greater flexibility and lower costs comes at a price. Here are just a handful of potential impacts LTE will have on your network, processes, systems and services:

• LTE will provide mobile operators with methods to deliver a new level of tailored services to their customers, with quality of service (QoS) and application-based performance. However, being able to deliver this will require a finer level of control within the access data network, not currently in place.
• Before an operator can deploy a new LTE cell site they will need to extend their IP network. To do this requires a complex audit of every existing cell site location to understand what changes are needed. This non-trivial process for thousands of sites has already begun in most of the larger operators today.
• An additional area of focus for LTE will be the management of cell-to-cell communications. The optional X1 interface of the standard could change the topology of the access network, requiring all the leaves of the tree to have logical connections between them. This further complicates the management of the access network.
• Within the planning processes, radio planning will need modification to support the potential volume and high frequency of optimization. The impact of femtocells alongside LTE will require greater planning and will ultimately be an automated process to ensure timely network management. The current methods of drive-by radio monitoring will not scale to the number of cells and rate of change predicted.
• There will be a greater need for any backhaul planning processes to be very closely linked to the radio planning process, as increases in cell capacity need to be coordinated with backhaul capability. Therefore, changes in the planning groups to provide better cross network topology interoperability will need to be further introduced.
• Within the trouble-to-resolution process, there are some obvious changes related to the use of IP within the access network to monitor and manage the quality and policies that have been applied. In many cases processes will exist for doing this within the core IP network; however the scale of the access network will require different methods to support the volume of connections to be monitored.
• Service-to-cash process will also need changes to handle location, quality, time of day and multiple suppliers. It is likely that a single service will be comprised of multiple suppliers. This starts to introduce more multi-sided payment models that split charges between many parties. This will be further complicated with service level agreement (SLA) management between parties and any forms of rebates that may be set.

Fortunately, these impacts on your business can be reduced with the correct management of the operational support systems.

The majority of the changes within the radio planning processes can be supported by the existing platforms; however, these systems will require new algorithms and rules to support the new frequencies and limits of LTE technology. Backhaul planning platforms will need upgrading to support IP configuration and QoS to a level of detail not seen today.

Interfaces directly between radio planning, logical demand and build-out functions will be required to reduce errors in handover while managing the evolution of the network. This will speeding up the planning cycle time to support new equipment rollout programs more efficiently.

The introduction of policy platforms (such as policy and charging rules function [PCRF]) prior to LTE is one method to make the transition for the user as smooth as possible. Therefore, there will be the need to move from protocol based charging (used today) to a more flexible dynamic data charging model with location, time and service being used (for example) to determine the rate for the service. This will require upgrades or replacement of the pre-paid and rating platforms used today.

Also the use of IP will require the extension of fault and performance tools from the core to the access network. Some of these tools will need to be enhanced to support of the number of devices and types of connections within the LTE access network. The wide definition of a service will further increase the need for true service quality management. This shift will also increase the need for trend and predictive functions to enable proactive early warning of service issues as well as full service impact control.

Making these changes in line with you business drivers will ensure maximum service value while supporting cost reduction, and will need to be undertaken in combination with improved common processes across the business to allow Operators to fully realize the business benefits from LTE and satisfy their customers.

For more information, please contact Peter Briscoe, Strategy Office, Telcordia, at pbriscoe@telcordia.com or visit our website.

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