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in today's ultra-competitive wireless telecom market, cost control is the new driver. With flat subscriber growth and declining revenue per user, wireless operators must look elsewhere for cost efficiencies -- and they can look to their backhaul networks for a vast pool of untapped savings. Through a program of last-mile T1 optimization, leased line savings of 25-50 percent can be achieved.
As little as twelve months ago, efficiency was not a priority for most wireless carriers. In the frenzy to sign up subscribers in the bull market of the late 1990s, the critical requirements were to get the service up and running, continuously expand the network to meet the growing demand, and worry about efficiency later, if ever. But times have changed. Today's savvy wireless carriers are looking at optimizing their networks to enhance the bottom line.
To understand the impact of an efficient backhaul network -- and to see how large the untapped potential for cost savings actually is -- it's worth looking at how networks became as inefficient as they are.
Concentrating On Rapid Growth, Not Efficiency
In the heyday of wireless growth, networks were rolled out one of two ways. In the early stages, the seemingly insatiable demand for wireless service made capacity, not efficiency, the goal of network design. As a consequence, the network was intentionally overbuilt on the premise that an unlimited customer base would follow its implementation.
The second case of network rollout took place when competition among wireless carriers took off. In this market, there was simply no time to worry about efficiency. Network design and implementation happened with lightning speed, driven by the thunderclap that was the sound of the advancing competition. Once the network was up and running, the main focus was building and maintaining net subscriber growth. When that subscriber growth finally began to falter, the focus switched to internal headcount reduction.
What has been lost in this single-minded drive for growth is efficiency in the design of the network. The result is costly under-utilization of many existing lines and, in the extreme, lines being leased that are no longer connected to anything.
Senior management has increasingly lost touch with the network. Costs have continued to mount, the markets have become even more competitive, and now it is crisis time.
A New Model For Wireless Carriers
The new paradigm for wireless carriers all over the world is that competition has driven prices down and new services are not yet in place to increase the average revenue per subscriber. The need for efficiency has never been greater. Consequently, network managers are discovering that a significant source of profitability is the untapped savings in the backhaul network itself. Now is the time to extract maximum efficiencies from existing telecom infrastructures. The good news is that most of the efficiency savings in network infrastructures -- up to 60 percent -- are at the network edge and therefore easily realized. Better still, the payback time is short, on the order of two to six months. These savings can be achieved both in reduced expenditure for leased lines and avoided capital expenditure in radio capacity upgrades.
Optimizing the existing network infrastructure during expansion and overlay of new technologies is key. To wring these savings out of their networks, wireless carriers can reduce the number of leased T1s by delving into the detail of their DS0 utilization. The massive inefficiency exists because the smallest backhaul a carrier can lease is a T1, but a T1 is comprised of 24 DS0s (channels) and the equipment at the cell site often uses as little as a single DS0.
Imagine that the wireless carrier has a women's basketball team and a men's basketball team. Both teams happen to have a game in the same city, but each team charters its own plane instead of both teams flying together.
The same situation exists at the cell site. One radio has its own T1 but only uses six DS0s, and a second frequency has its own T1 but uses only 10 DS0s. This is such a pervasive scenario that products have been developed specifically for these base station applications. These products can split the channels so the base station equipment can share the backhaul T1, eliminating the need for the second T1.
Now let's say the basketball teams are playing in different cities that are relatively close together. Instead of chartering two planes, in many cases it would be less expensive to have one plane fly to both cities, dropping one team off and then continuing to the next location.
The same situation exists in wireless networks. In many cases, cell sites in relatively close proximity each have their own backhaul T1 when they could very easily share a single backhaul T1. This is especially common in rural areas and along highways.
Optimization, Not Redesign
In the case of most telecommunications network systems, optimization -- not redesign -- is the answer. By simply tweaking the existing infrastructure, leased line backhaul cost savings of 25 to 50 percent can be realized.
If saving significant money is not enough justification to optimize wireless networks, a peek into the near future will reveal yet another motivator. Network-based E911 systems and subscriber location services only require a single DS0 at the base station, yet we already seeing wireless carriers leasing new T1s for this equipment. It's like chartering a third plane so the cheerleaders can go to the basketball game. The need to install E911 equipment presents the perfect opportunity to take advantage of available products that will allow the existing infrastructure to support the new services and cost-reduce the backhaul network simultaneously.
A number of wireless carriers took advantage of these savings early on in their network build-out. These carriers are enjoying network operating costs that are much lower than their competitors, were able to implement their overlays faster and cheaper, and are now positioned for E911 without the cost of extra transmission equipment or additional leased lines.
The good news is that finding savings in backhaul networks really is a simple solution. It can be implemented quickly, the savings start immediately, and payback is very fast. An initiative to improve profitability through cost reduction can be jump-started by looking beyond the high capacity core of the network. Creating efficiency in last mile T1 connectivity will unleash a vast pool of untapped savings.
Gary Johnson is vice president of Bayly Communications Inc. Bayly Communications produces T1 and E1 digital multiplexers (OMNIPlexer) to help telecom network operators worldwide reduce their costs. Its product line has recently expanded to include digital cross-connect switches (OMNIBranch and OMNIFlex), as well as SONET and SDH multiplexers (OMNIPlus). Bayly's products integrate voice, data and image traffic for transmission over TDM (Time Division Multiplexing) radio and optical fibre facilities. Due to evolving network needs and technologies, Bayly is now offering packetized data transmission capability.