Small Cell Business Cases

The economics of satellite backhaul are changing to enable 3G rural small cells

CottageSatellites have transformed communication in remote parts of the world. Truly remote locations, islands, ships and even aircraft are connected from anywhere on the globe running voice, video and data applications.

In the world of cellular communications, satellite has played an important role enabling mobile operators to backhaul traffic providing connectivity where other technologies can't reach. Up to now, the high cost of satellite bandwidth has largely restricted the use of satellite technology to provide backhaul for basic voice service, but recent developments in small cell infrastructure and satellite technology are making 3G and 4G data services over satellite commercially viable.

These advances open up new opportunities for small cells which can be used to target pockets of population in both remote and rural areas. Where before, a 2G macro cell or small cell may have been used to provide voice coverage in these areas, it is now commercially viable to install a 3G small cell to deliver full smartphone services at multi-megabit speeds.

Satellite links are already widely used for mobile networks

Around 30% of mobile network operators worldwide use satellite connections across some part of their territory. Traditionally satellite has been used in developing markets connecting large macro sites where fibre or microwave has not been economically or technically feasible.

A typical satellite network may have 10s or 100s of sites. At the remote sites (bas-stations) the signal is sent and received using a satellite dish not dissimilar to that used for residential TV broadcast. The main difference being that instead of just having an antenna that is receive only, the antenna equipment is designed for two- way communications to both receive and send voice and data traffic. All the remote sites send their traffic over the satellite link to a hub ground station (usually located at a switching center) where all the traffic from the remote sites are routed into the core network. The advantages of satellite links are that they are quickly installed provide reliable service and have a high level of availability, offering IP connectivity to almost anywhere in the world. The challenge up to now has been the cost of satellite bandwidth. This meant a remote or rural site needed a large potential number of subscribers to justify the investment in a large macro cell and the monthly revenue to cover the cost of the satellite bandwidth. This limited the use of satellite to high value sites where no other suitable alternatives existed.

Small cells and satellite backhaul already deliver 2G voice at low cost, now moving to 3G as well for remote areas

For 2G networks we have already seen some deployments of small cell and satellite technology that provided a compelling business case even in some of the most challenging environments and with the poorest communities (<$5 ARPU).

One example of a solution being deployed is for small rural communities in Ghana. The low cost solution developed by K-NET, an international telecom provider, combines iDirect's satellite platform and Altobridge small cell technology to deliver mobile voice and data connectivity for mobile operator Tigo Ghana. The system combines satellite communications equipment with 2G and 3G base stations and solar power technology to profitably serve off grid rural communities with population densities of less than 1,500 people. With 10 sites live and another 300 planned the operator is seeing savings of nearly 65% compared to a conventional backhaul solution.

A new generation of satellites and ground infrastructure increases bandwidth availability and efficiency

hylas3x300The major constraint on the cost of satellite links isn't the ground station equipment, but as discussed earlier the cost of bandwidth based on the total available capacity of satellites serving a region. Two major technical changes when combined with small cells are revolutionising the economics of remote and rural connectivity.

In the next few years a number of new satellites will be launched that take advantage of additional spectrum available in the Ka frequency band. For example, the Hylas 3 satellite shown on the right uses new spectrum in Ka band at 20 to 30GHz which permit a smaller satellite antenna. Since wavelength is inversely proportional to frequency, the antenna can be a third of the size used for the Ku band at 10-12GHz. This allows many more antennas to be fitted to a satellite, so that it can transmit multiple spot-beams, re-using the frequency spectrum many times over – just like capacity expansion of a base-station into multiple sectors using separate antennas. Similarly, the antennas at the remote sites are also smaller, usually 65 – 90 cm in diameter. Ka band also provides much more spectrum overall, increasing system capacity. The launch of these satellites will dramatically increase the amount of available satellite capacity and lower the cost of capacity making it more feasible for small cell solutions.

Satellite systems have also moved on from allocating bandwidth as a nailed-up leased line to a much more efficient on-demand usage based scheme. The older SCPC scheme allocated a fixed capacity whether it was used or not, similar to a leased line. This was reasonable for large macro cell sites where a large amount of capacity was needed and utilized to serve a large number of subscribers. Newer TDMA schemes like that offered by iDirect allocate capacity on demand. This is much more efficient for small sites with wide statistical fluctuations in traffic levels. The system automatically reallocates all the bandwidth 8 times a second which results in system efficiency gains of 30 to 80%. It's much more suited to today's data traffic patterns.

The effect of these developments will be to bring much more capacity online at significantly lower prices and to utilize that bandwidth much more efficiently over the hundreds or thousands of sites that may be connected by small cells and satellite.

Optimising the fixed and mobile local traffic

A number of companies also deliver intelligent features that optimize, compress or route bandwidth much more efficiently helping to best utilize the satellite bandwidth. Companies like Altobridge are optimizing voice and compressing data while maintaining good call quality and internet sessions. There are also technologies from Altobridge and Quortus that deliver local switching, locally routing calls that are within the same coverage area without sending them over the satellite. This is useful in small towns or for remote islands where the majority of traffic is local, optimising the use of the satellite only for higher value international traffic. 

Connecting rural communities in developed countries

In the context of small cells, mobile operators can now move beyond basic voice services and deliver 3G (or even 4G) services in remote and rural areas. It also removes the focus from just developing countries to include developed ones as potential users of satellite. With some European governments declaring that 2Mbit/s broadband service is almost a human right, there is growing pressure to bring not just voice but smartphone data service to ever more remote parts of the country.

For example, the UK claims over 98% population coverage for 2G but only around 60% for 3G. That leaves millions of potential 3G customers untapped. Operators have tended to focus on the metropolitan areas where high demand and larger revenues make it easier to grow business. Regulatory pressures rather than economics have been the main driver to expand coverage in the more remote areas and mobile operators have only done it out of necessity.

The economics of rural connectivity are changing, and low cost satellite backhaul and small cells create two specific propositions to actually make this an attractive opportunity for mobile operators:

  1. Use higher capacity metrocells, say with 16 to 32 channels capacity, HSPA and 1 km range to service a cluster of homes and/or businesses. This can be done at a fraction of the price of a macrocell.
     
  2. Focus on the homesteads and farms etc. Sell them a residential femtocell with satellite backhaul, providing coverage within the residence only.

These propositions don't require the $500,000 investment of a cell tower, each site costing a few thousand dollars of CAPEX, which translates to less than $100/month over 5 years. The new pay-as-you-grow satellite traffic tariffs directly relate customer usage with transmission cost, which provide a much more rapid route to profitability.

Summary

The new satellite spectrum in the Ka band dramatically reduces the cost and increases the available capacity, reusing frequencies with spot beams and smaller antenna. With capacity allocated and paid for by usage, rather than as permanently nailed up connections, costs can be attributed to specific usage.

When combined with rural small cells, satellite backhaul enables good 3G service to be delivered cost effectively almost anywhere on the planet. This is no longer the remit of remote islands, and the developing world. Satellite now has a part to play in connecting rural areas in the developed world too.

This powerful combination allows off-grid locations to be deployed quickly and cost effectively, bringing the benefits of 3G smartphones and tablets worldwide.

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My thanks to Richard Deasington and Terry Neumann of iDirect for their help in writing this article. iDirect are leaders in ground station equipment for satellite service and supply the majority of satellite hubs worldwide. Read more on their cellular backhaul activities on their website.

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