Mobile Network Ofoad

End-to-End Network Costs Comparisons for Femtocell, Wi-Fi, and Macro RAN

Executive Summary
There is near universal agreement in the industry that femtocells oer a great solution for providing indoor coverage. If you are a mobile network subscriber with little or no coverage in your home, femtocells provide voice and text services that mirror those available on the outdoor 3G macro network. It has been more challenging, however, to get agreement as to when femtocells should be used as a pure data ooad solution. Furthermore, femtocells provide but one approach for ooading indoor trac. An alternative approach is to leverage the near ubiquitous availability of Wi-Fi in smartphone devices to ooad trac using unlicensed IEEE 802.11 based technologies. While much of the early focus of Wi-Fi indoor ooad has been based on user deployed, self-managed Wi-Fi, there is an alternative approach that integrates indoor unlicensed radios into an end-to-end Service Provider Wi-Fi architecture. This whitepaper provides a vendor-neutral view of how network cost per gigabyte (GB) varies across femto, Wi-Fi, and the macro, and how each individual solution is best suited for the operator depending on the type of customer involved (i.e., Bronze, Silver, and Gold tiers). The whitepaper further details the subtle dierences in how cost per Mbps (and its equivalent cost per GB) should be calculated and provides a deeper dive into the unique cost attributes that can be observed for each solution.

The Evolved Busy Hour

Busy hour traffic has been a commonly used term to measure the instances during the day when heavy traffic is seen on networks. W hile traffic has been moving f rom voice and text messaging to more data applications like web surfing or mobile video, the busy hour has been moving as well into the late evenings when people reach home and start to consume data and content on their mobile devices. This simplifies the ability to evaluate the cost trade-offs of the macro network versus femtocells and carrier W i-Fi.

Cost Modeling for Macro Versus Femto and Wi-Fi

The model calculates the end-to-end costs for each solution, taking into account radio access, backhaul, and core network costs, and breaks them out by CapEx and OpEx costs. Apart f rom accounting for the busy hour traffic, the study also uses subtle differences in the way cost is calculated for macro versus femto and W i-Fi cases. The macrocell is shared between many different subscribers. As a result, if one subscriber does not use it, the cost of the installation can be allocated to the subscribers actually using it. This means that for a given subscriber, there is no cost if he or she does not leverage the macrocell for data traffic. The macrocell is

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a very expensive asset, but it has the benefit of having enough users to be fully utilized in the busy hour. On the other hand, the femtocell or Wi-Fi is based on an all you can eat model. The small cell is only used by a few distinct subscribers. As a result, if one of these subscribers does not use it, the device sits idle. In other words, the device costs the carrier a fixed amount of money whether the subscriber uses it or not. The small cell provides coverage indoors and is only available to a small group of family or f riends that are indoors in the vicinity of the small cell installation at any given time. For a bronze user, femtocells or Wi-Fi do not provide any specific advantages. The crossover points begin to become clearer for silver and bronze customers as femto/Wi-Fi is more cost effective than the macro in some specific cases. The gold customer is the ideal use case for using a femto or Wi-Fi solution; the cost effectiveness of using a small cell Wi-Fi is quite obvious. Different accounting methods (depreciation period, upfront subscriber purchase, etc.) can also lead to different conclusions as to which solution is more effective than others. The overall conclusion of this study is that the business case for small cells (both femto and Wi-Fi) as offload solutions becomes more attractive as mobile data consumption increases. Even when using the most generous assumptions for macro network cost per GB, the analysis still results in a crossover point of around 1.5 GB/month beyond. It becomes quite apparent that the macro network will be cost prohibitive when compared with the cost advantages that small cell solutions bring to the table.

The key difference between the macrocell model and the small cell model is that the macrocell cost can be modeled against theoretical maximum capacity whereas small cell cost has to be modeled against actual usage. These different models allow us to derive a fair comparison of cost per Mbps for each of the devices in the busy hour. In addition, the model assumes that the macro network is 100% utilized during the busy hour which gives the macro network the best possible cost per Mbps when compared to small cells.

Observations and Summary

T h e c har t in the next column shows the a v e r a g e c o s t per month for the macro for one c a r r i e r , t w o carrier, and three carrier cases compa r e d t o f e m t o and Wi-Fi, which is shown as an a v e r a g e c o m bined cost. This is a simplified v e r s i o n o f t h e output sh owing a comparison of w h i c h s o l u t ion is the best for different types o f u s e r s ( g o l d, silver, and bronze). The chart also s h o w s t h e crossover points for femto and W i - F i v e r s u s macro when they become more att r a c t i v e t h a n the macro cell.

Introduction
T h e re i s n e a r u n i ve r s a l a g re e m e n t i n t h e i n d u s t r y t h a t f e m t o c e l l s o f f e r a g re a t s o l u t i on f o r p ro v i d i n g i n d o o r c o ve r a ge. I f yo u a re a m o b i l e n e t wo rk s u b s c r i b e r w i t h l i t t l e o r n o c o ve r a ge i n yo u r h om e, f e m t o c e l l s pro v i d e vo i c e a n d t e x t , s e r v i c e s t h a t m i r ro r t h o s e a v a i l a b l e on

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t h e outdoor mac ro net work. It has been m o re c h a l l enging, howe ver, to get agreement a s t o w h e n f emtocel ls should be used as a pure d a t a o f f l o ad solution. In the coverage case, the proposition provides benefit to both the carrier and the subscriber since it can be extremely frustrating for a subscriber who does not have coverage in all parts of his or her home. In the offload case, the proposition primarily benefits the carrier, though the subscriber will often find the femtocell data experience more compelling because of the higher data speeds supported by the technology. Furthermore, femtocells provide but one approach to ooading indoor trac. An alternative approach is to leverage the near ubiquitous availability of Wi-Fi in smartphone devices to ooad trac using unlicensed IEEE 802.11 based technologies. While much of the early focus of Wi-Fi indoor ooad has been based on user deployed, self-managed Wi-Fi, there is an alternative approach that integrates indoor unlicensed radios into an end-to-end Service Provider Wi-Fi architecture. As mobile operators consider alternative approaches to supporting the rising adoption of mobile data services by users located indoors, a coherent approach is required by which alternative techniques can be evaluated. Should there be continued macro network build-out to support indoor traffic, femtocell offload using licensed radio technologies, or alternative service provider Wi-Fi approaches using unlicensed radio technology? This paper and its underlying model provide that analysis.

cost calculations. ABI Research has therefore been motivated to define a goldilocks (just right) model that is sophisticated enough to be useful but simple enough to be understood by industry personnel. Evolution of the Network Busy Hour This goldilocks simplification has been made possible by the shift in traffic loads experienced on mobile networks as data becomes the dominant traffic type. Previously, the busy hour in mobile networks occurred in the morning and the early evening when people were on the go between their home and their places of work. This busy hour traffic was primarily voice and messaging traffic. In the last several years, however, ABI Research has found that the busy hour in the mobile network has been pushed well into the evening. Data intensive video applications on smartphones and tablets drive a tremendous amount of traffic onto mobile networks and these applications are primarily utilized indoors in the evening. The figure below illustrates an hourly usage profile that is typical of carriers in developed countries with a relatively high smart device penetration:

Mobile Ofoad - A Different Perspective

The Goldilocks Approach While the industry has developed many models that outline the value femtocells could provide in the offload case, to date there is no universal agreement on the validity of such models. Existing approaches either take simplistic approaches that dont fully replicate the cost factors in the femto and/or the macro network or they require extremely complicated models that often mask the logic used in deriving
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This movement of the busy hour has had a dramatic, positive impact on our ability to compare the cost of the use of small cells (femtocells and SP Wi-Fi) with the traditional macro network. The busy hour is and always has been the key component of network utilization that drives carrier cost. Carriers determine when they need to invest in new RAN capacity by comparing actual network capacity to usage in the busy hour. When the busy hour passes a dened threshold, the carrier will typically schedule the addition of new capacity, for example, by procuring more carriers or splitting existing cells. Since busy hour trac dimensioning is the key determinant to total cost of ownership of the RAN, small cell indoor ooad solutions that support busy hour trac directly reduce that carrier RAN cost. In other words, every byte of data ooaded via small cells during the busy hour will have a direct impact on the reduction of macro network CapEx and OpEx costs. Another key simplication made in the model was with respect to the utilization of the carrier macro network in the busy hour. Ideally, a carrier will provision a given network element such that it is completely utilized in the busy hour. In reality, however, this is often not the case. Many carriers like to leave some headroom (20% or so) between their engineered capacity and the actual throughput required in the busy hour. Additionally, capacity tends to be lumpy. A service provider that can no longer suce with a given one-carrier, three-sector cell site will need to add a full second carrier even though only half a carrier of additional capacity may be required. Finally, carriers sometimes trade o the cost of installing capacity with the incremental cost of installing that capacity. In a busy urban cell site, for example, a carrier may decide to add a third carrier at the same time as it adds a second carrier. While this will decrease the utilization of the cell site for some time, it ensures that the carrier can delay the point at which it again has to go through the expensive upgrade process at the cell site. Given all of these factors, in the real world many cell sites do not approach anywhere near 100% capacity in the busy hour. ABI Research has found, however, that arguments about the appropriate busy hour macro cell site eciency have been a big reason for a lack of alignment on macrocell cost models. For this reason, ABI Research has assumed a 100% ecient macro cell site. By denition in our model,

the macrocell site is 100% utilized in the busy hour. The costs for the macro network simply cannot get any better than what is shown here. While this really is not a fair comparison (ABI Research is skewing the analysis in favor of the macro network and against small cells), ABI Research feels that this will reduce dissension and help achieve better alignment on the structure and overall results of the model. Evolution of the Network Busy Hour By leveraging these simplifying approaches, a straightforward yet powerful model is built to help carriers, vendors, and industry followers model the comparison of macro and small cell costs. This model directly measures cost per Megabit per second (Mbps) in the network busy hour, as this is truly the key driver of carrier network cost. The model also translates that cost into cost per Gigabyte (GB) per month. ABI Research then uses typical consumption proles to translate this cost to the cost of production required to support three dierent types of user: A bronze 300 MB/month user A silver 1.5GB/month user, and A gold 5GB/month user

What Drives Network Cost?

Macrocell Cost Modeling Macrocells and small cells have fundamentally dierent cost models. The macro RAN is a very expensive asset. It requires equipment in the tens of thousands of dollars range, and installing and commissioning a complete cell site can cost in excess of a hundred thousand dollars. The cell site equipment is connected to the core network via backhaul facilities that contribute signicantly towards the total cost of ownership of the macro RAN. While these overall costs are extremely expensive, the macro network has one signicant advantage over small cells. The macro network provides coverage that is leveraged by all carrier subscribers. A typical macrocell in an urban area will have hundreds of concurrent users. The macrocell is a very expensive asset, but it has the benet of having enough users to be fully utilized in the busy hour. As a result, the theoretical cost of the macrocell can be modeled as follows.

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Macrocell Network Cost ($/Mps) =

Macrocell Opex & CapEx Max Theoretical Busy Hour Usage

Small Cell Cost Modeling In contrast to macrocells, small cells are extremely inexpensive. They cost the carrier less than $150 and require no site leasing. Power is provided by the subscriber and backhaul is provided by the subscribers Internet Service Provider. From a cost perspective, the small cell is much more cost eective on a dollar per Mbps basis than the macrocell. To be fair, however, one must consider that the small cell is not fully utilized. Unlike the macrocell, which provides coverage outdoors and is available to any mobile carrier subscriber who happens to be in the area, the small cell provides coverage indoors and is only available to a small group of family or friends that are indoors in the vicinity of the small cell installation at any given time. Because of this, ABI Research has to model the theoretical cost of the small cell in the following manner.
Small Cell Network Cost ($/Mps) = Small Cell OpEx & CapEx Actual Busy Hour Usage

The macrocell is shared between many dierent subscribers. As a result, if one subscriber does not use it, the cost of operation can be allocated to the subscribers that are actually using it. This means that for a given subscriber, there is no cost if he or she does not use any data. For that reason, the macrocell cost per Mbps and GB per month will be zero if the subscriber uses zero data. When the subscriber does use macrocell data, however, the data cost is xed per unit of usage. In other words, if the subscriber uses 100 Kbps sustained data in the busy hour, the cost to the carrier will be approximately twice as much as if the subscriber uses 50 Kbps sustained data in the busy hour. Along the same lines, if the subscriber uses two GB per month, it will cost the carrier approximately twice as much than if the subscriber uses one GB per month. The macrocell is a pay as you go resource. Use it a little and it costs the carrier very little. Use it a lot and it costs the carrier a lot. ABI Research can compare this to the small cell model, which is shown below:

The key dierence between the macrocell model and the small cell model is that the macrocell model considers maximum theoretical capacity, whereas the model considers actual data usage. These dierent models allow us to derive a fair comparison of cost per Mbps for each of the devices in the busy hour. Pay as You-Go Versus All You Can Eat A simple graphic is provided that highlights the dierences between the macrocell and small cell cost models. If ABI Research takes the macrocell, the fundamental cost model for the carrier will look similar to what is presented below:

$/GB

The small cell is only used by a few distinct subscribers. As a result, if one of these subscribers does not use it, the device sits idle. In other words, the device costs the carrier a xed amount of money whether the subscriber uses it or not. For that reason, the cost of the small cell in dollars per Mbps or dollars per GB will never be zero.
Gigabytes per month

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What ABI Research also nds, however, is that the cost of the small cell does not change signicantly with respect to how much it is utilized. A small cell that is using 100 Kbps in the busy hour will cost the carrier roughly the same amount as a small cell that is using 50 Kbps in the busy hour. A small cell that carries two GB of trac a month will cost the carrier roughly the same amount as a small cell that carries one GB of trac a month. The small cell uses more of an all you can eat model. Comparing Macro and Small Cell Costs When the two alternative models are compared, we can see that as consumption rises, there is a crossover point at which the small cell approach becomes more cost eective to serve trac compared to the macrocell network, as shown in the gure below.

Gold User monthly quota of data consumption is ve GB per month Silver User monthly quota of data consumption is 1.5 GB per month Bronze User monthly quota of data consumption is 300 MB per month These consumption limits are useful in comparing the costs associated with todays average smartphone user and those which may be experienced as the adoption of mobile broadband services continues to accelerate. A busy hour consumption of 7% has been assumed for this model, which means that 7% of the users daily quota of data is consumed in the busy hour. This maps to the data shown in the gure in the Small Cell Cost Model section, which is typical for a carrier with signicant smartphone penetration. Network Capacity Model The network capacity model is used to generate the amount of capacity that is provided in a traditional macrocell case. Assuming 2100 MHz spectrum, a typical Received Signal Code Power distribution for urban deployments is used together with building penetration loss to estimate the actual HSDPA capacity delivered for both the indoor and outdoor case. For the indoor case, a -15 dB penetration loss is assumed. Using these calculations, the capacity for a single sector HSDPA macro base station is estimated to be 3.3 Mbps for the outdoor case and 2.2 Mbps for the indoor case. The model assumes a 100% busy hour utilization of the macro, which is rarely the case but provides the best-case scenario for the macro. As stated earlier, this is not a realistic assumption and will make the macro network gures look better in the model than is actually the case. Network Capacity Model

Given these factors, the key to being able to deliver the most cost-eective mobile broadband service is to understand when it becomes more attractive for an operator to deploy a small cell data ooad solution versus building conventional macro RAN capacity, as well as the deltas between licensed and unlicensed small cell ooad solutions.

The Ofoad Model

Introduction The three fundamental inputs to this model are busy hour trac estimations, network capacity, and network cost. Trafc Model The user trac model generates a trac scenario for three dierent sets of users: Gold, Silver, and Bronze.

The network cost model calculates the CapEx and OpEx cost in the busy hour for macrocell, femtocell, and Wi-Fi access points. In each case the end-to-end cost is assumed,

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For the macrocell case, using network capacity estimates, the network cost per unit GB is calculated. This is done for each element in the network including the radio access (base station plus controller), backhaul, and core network (SGSN and GGSN). The total cost per GB for the macrocell case is the sum of OpEx and CapEx for each of the network elements, including radio access, backhaul, and core. The CapEx elements in the network cost model are amortized for a given period that can range from one to ten years depending on the equipment. Femto and Wi-Fi equipment are amortized between one and three years. The macro base station is amortized over eight years, while core elements like the SGSN and GGSN are amortized over ten years. Other network cost elements like spectrum and cell site are amortized over a period of 20 years. Output The output of the model is a product of two elements Network cost per GB in the busy hour where GB is the supply capacity Busy hour trac consumption in GB for gold, silver, and bronze users where GB is the demand capacity The output of the model provides a cost comparison for delivering a unit GB for the macro, femto, and Wi-Fi cases for gold, silver, and bronze users. The comparison between the dierent technologies and the dierent user types should give an indication as to which technologies are better placed for dierent user trac conditions. Technologies: Traditional Macrocell The traditional macrocell is the baseline technology in this model that has been extensively built out. In order to make a proper apples to apples comparison between macro, femto, and Wi-Fi, the model assumes best case scenarios for each element: the macro, backhaul, and core. Technologies: Radio Access The radio access CapEx consists of the base station, tower/ rooftop, and spectrum related costs, while the OpEx takes into account power, site rental, and site maintenance

costs. The model also uses one carrier, two carrier, and three carrier cases to allow for best-case scenarios. For the multi-carrier case, additional CapEx costs (spectrum and equipment) are assumed. Each carrier is assumed to use ve MHz spectrum. Technologies: Backhaul The backhaul portion of the model takes into account a typical network with both leased and owned circuits. The average cost per site represents a combination of leased and owned circuits reected in both the CapEx and OpEx. Applying a best case scenario for the network, Ethernet backhaul is assumed using both native IP Ethernet and pseudo wire to support 2G, 3G, and future 4G networks. The average cost per site again reects a typical backhaul network using cost-eective technologies that provide high performance. The backhaul costs are calculated separately for the pre-aggregation and aggregation layer of the backhaul network. Technologies: Core The core network accounts for network elements like the GGSN and SGSN and calculates the CapEx and OpEx costs for a typical core network. The OpEx costs assumed include data center costs such as site lease, maintenance, and power. Femtocell and Carrier Wi-Fi The femtocell network considered in this model accounts for the end-to-end costs, including access point, security gateway, aggregation gateway, SGSN, and GGSN. The Wi-Fi network used for the model has been assumed to be a carrier-integrated Wi-Fi network and therefore considers elements like the access point, gateways, and GGSN. Network integration costs for femto and carrier Wi-Fi have also been considered. Both the femtocell and carrier Wi-Fi networks assume dierent cases for the access point, including one year and three year amortization periods as well as subscriber purchase options. In our modeling, we used $150 (US) as the price of the femtocell and $75 (US)

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Femtocell and Carrier Wi-Fi The femtocell network considered in this model accounts for the end-to-end costs, including access point, security gateway, aggregation gateway, SGSN, and GGSN. The Wi-Fi network used for the model has been assumed to be a carrier-integrated Wi-Fi network and therefore considers elements like the access point, gateways, and GGSN. Network integration costs for femto and carrier Wi-Fi have also been considered. Both the femtocell and carrier Wi-Fi networks assume dierent cases for the access point, including one year and three year amortization periods as well as subscriber purchase options. In our modeling, we used $150 (US) as the price of the femtocell and $75 (US) as the price of the carrier Wi-Fi device. Difference between Femto/Wi-Fi and Macrocell Costs The one big dierence in the network cost and capacity models for femto/Wi-Fi and macro is that femto and Wi-Fi are assumed to have similar demand and capacity. In other words, the capacity demand for a femtocell is equal to the capacity supply. Unlike the traditional macrocellular case, the operator is not paying for unused demand in the case of a femto or Wi-Fi network. This means that the GB in $ cost per GB in the busy hour for the femto and Wi-Fi cases is the demand capacity (equal to the supply capacity). In the macro case, the GB denominator in the $ cost per GB is the supply capacity. Optimized Network Architecture Optimized architecture refers to the use of ooad techniques in the core network, which allow trac to bypass the core elements like the GGSN and SGSN. The femtocell case has considered the special optimized architecture, which could use techniques like SIPTO (Selective IP Trac Ooad) to allow for trac from the femtocell to bypass the GGSN and SGSN network elements. Aspects Not Covered in Model While the model aims to capture the true end-to-end costs for trac through a macro, femto, and Wi-Fi network, there are certain elements that fall outside its scope:

The model does not account for the Internet POP costs that are present northwards of the SGSN, and is the connectivity point from the mobile core to the Internet backbone. The model also does not account for network management costs, which are typically borne out of the Network Operations Center (NOC). The model does not account for RAN sharing benets that may be applicable to macro cell case, e.g., where resources are shared between competing operators or between co-sited 2G and 3G installations.

Cost Comparison of Femto/Wi-Fi Over Macrocells

The chart below shows the relative tipping point of femto and Wi-Fi over macro cells. This chart averages out the various scenarios and provides a simplistic picture clearly showing the crossover points for the macro versus femto/ Wi-Fi. Femto and Wi-Fi have been averaged out and are considered to be one element for simplicity. More importantly, the chart proves that each of the technologies (macro, femto, and Wi-Fi) has a role to play, with the cost eectiveness of each technology varying for bronze, silver, and gold users. The lower the cost for a given technology for a given user, the better it is from an operator perspective. While the model calculates the cost for busy hour trac, the chart below provides the monthly cost for the operator.

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Observations by User Type In the chart below, ABI Research has broken out the macro, femto, and Wi-Fi cases that were averaged out in the previous chart. Specic crossover points for each scenario can be identied here.

femto and Wi-Fi, but the benet of doing this analysis for silver users is clear. Gold User The model shows that carriers would benet from providing the gold user at 5 GB/month, the most valued customer on the network, with a Wi-Fi or femtocell solution. There is a cost advantage even if the femto and Wi-Fi CPEs are fully subsidized, and the advantage grows if the cost is amortized over three years or if the subscriber buys the device. There is a 2.5x minimal cost saving between the worst case macro (one carrier indoor) and the worst case femto (unoptimized one year amortization) Once the CPE device is paid for at a one time cost per subscriber, the use case jumps to the bottom three lines in the chart since there is no recurring cost associated with the device. By Technology: Macro The cost of supplying indoor capacity for a macro network increases exponentially from bronze to silver to gold users. There is a 15x to 20x dierence in the cost between a bronze and gold user for the one carrier case. The cost dierential in the macro between users can only be reduced by using a multi-carrier strategy. A macrocell using three carriers is one of the most costeective options compared to femto and Wi-Fi for bronze and silver users. If the operator is limited with only one carrier on the macro, it makes sense to adopt either a femto or a Wi-Fi strategy. In all cases, once the femto or Wi-Fi device is paid for, small cells become the most cost-eective solution. By Technology: Wi-Fi and Femtocells There are multiple options for femto or Wi-Fi depending on the amortization period and optimized versus un-optimized. For the most part, femtocells

Bronze User Because the macrocellular network, as described earlier, is a pay as you go model, macro is the preferred option in general in the case of a bronze user who averages 300 MB per month. There is little advantage for an operator to use femtocells in this case because these users are getting the services they need without using many network resources. There may be some limited benet for an operator to use SP Wi-Fi if the macro infrastructure is congured in a single carrier conguration. Silver User The model clearly shows that the tipping point for deciding between a femto, Wi-Fi, or macro has been crossed by the time ABI Research considers the silver user who averages 1.5 GB/month. Carrier specic data will help make the nal decision in this case due to the dierences seen based on multiple macrocell carriers, the amount of subsidization and length of depreciation, whether the network is optimized or not, and the minimal cost dierence between

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and Wi-Fi can prove to be similar in terms of the cost to the operator across dierent user types depending on the amortization model. However, femtocells are roughly two times more expensive than Wi-Fi when comparing basic (un-optimized) femtocell and Wi-Fi solutions regardless of the amortization model. As the cost of femtocells start to go down over time, this dierence will become less meaningful. Wi-Fi and femtocells become cost eective especially for silver and bronze users when purchased by the subscriber or amortized over three years. If the operator is limited with only one carrier on the macro, it makes sense to adopt either a femto or a Wi-Fi strategy. There isnt a big dierence in the savings between a femtocell that is optimized and one that is un-optimized. The majority of the cost savings occur on the access point itself, which could be purchased by the subscriber or amortized across one or more years.

There is a tipping point at about 1.5 GB per month usage where the cost of the small cell deployment, even when fully subsidized by the operator, can be more cost eective than adding macro capacity. Operators would benet from doing a cost analysis based on their actual costs for subscribers at this usage level and above. The cost dierences between a femtocell and a Wi-Fi solution are not obvious and come down to how they are accounted for in terms of subscriber purchase or amortization periods. While Wi-Fi does have a slight advantage at the moment (mostly due to the low cost of the access point), this advantage will vanish as femtocell access point costs decrease.

Conclusion
In summary, the key ndings are centered on these points: The busy hour for mobile networks has moved well into the evening and indoors with the growth of data intensive video applications on smartphones and media tablets. The busy hour for mobile networks is what drives carrier cost since more capacity is needed in the busy hour than at any other time in the network. A realistic model for carrier costs needs to focus on cost per Mbps in the busy hour since this is the true driver of those costs. Once those costs are determined, they need to be translated to cost per GB per month since this is the way carriers charge subscribers. The use of small cells, including femtocells and carrier Wi-Fi solutions, directly reduces the need for busy hour capacity in the macro network, and as a result they directly reduce the carriers CapEx and OpEx requirements for that network.
2011 ABI Research www.abiresearch.com The material contained herein is for the individual use of the purchasing Licensee and may not be distributed to any other person or entity by such Licensee including, without limitation, to persons within the same corporate or other entity as such Licensee, without the express written permission of Licensor.

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Published 2Q 2011 2011 ABI Research 249 South Street Oyster Bay, NY 11771 USA Tel: +1 516-624-2500 Fax: +1 516-624-2501 http://www.abiresearch.com/analystinquiry.jsp

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2011 ABI Research www.abiresearch.com The material contained herein is for the individual use of the purchasing Licensee and may not be distributed to any other person or entity by such Licensee including, without limitation, to persons within the same corporate or other entity as such Licensee, without the express written permission of Licensor.

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