How Can LTE Reduce the Cost Per Bit?

Recently, a question was asked in the LTE forum on LinkedIn how LTE can reduce the cost per bit compared to todays broadband wireless systems such as HSPA. I found it quite interesting that a lot of people immediately jumped at the greater spectral efficiency as the means to reduce the overall cost. But I think there are also other innovations which will drive down cost:

  • There are no Radio Network Controllers (RNC) anymore, i.e. fewer network components
  • The backhaul network is radically different. While E-1/T-1 connections (cable, microwave) are still heavily used today, LTE will be rolled out with Ethernet over fiber / VDSL and microwave. Huge cost advantage here. It's not spectral efficiency operators worry about today, it's the rising E1/T1 backhaul costs.
  • In all fairness, it has to be said, that current HSPA networks are changing towards this as well in terms of backhaul and network element (e.g. one tunnel architecture) but it is not built in and the RNC is still required.
  • Another reason why LTE has a cost advantage over today's deployed networks is that technology has advanced and allows smaller base stations to be built which require less power, less space. These will be deployed from day 1 and in many cases will be put inside existing base station cabinets or mounted besides.
  •  Also count in remote radio head technology that will probably be used heavily with LTE to drive the cost down.
  • In the mid- to long term, I think LTE access will be the catalyst to have multi radio base stations with a common Ethernet based backhaul thus also driving down the cost of 2G and 3G systems to some extend that will remain in place for the time to come.

Anything else you can think of?

8 thoughts on “How Can LTE Reduce the Cost Per Bit?”

  1. SON: Self Organizing (Optimizing) Networks will allow for the automation of several tasks lowering the OPEX costs. Examples include plug and play, neighbour recognition and configuration, optimizations and others.

  2. Have you noticed that Nokia Siemens Networks provides a solution known as “Internet HSPA” (or I-HSPA) that is a flat WCDMA network without RNC. Works with any standard HSDPA enabled phone.

  3. The NSN I-HSPA follows the 3GPP R7 “Flat Architecture”, It is standards compliant and offers the same Iu-PS interface as a normal RNC does.

    I-HSPA uses IP based transport, so the actual transport medium is free for the operator to select, thus allowing the optimal choice for each country/city. This will surely reduce costs of HSPA.

    SAE will bring benefits, but they are/will be largely available to HSPA as well (I-HSPA sort of proves it).

    So my question is. After spectral efficiency, what costbenefit does LTE bring that cannot be done in an HSPA network?

    For I-HSPA, see
    Regs, Jarkko

  4. jarkko

    my understanding is that, if you dig beyond, mktg. glossies the NSN i-hspa does not *eliminate* the rnc. it just moves it out of the data path, which goes directly to the GGSN… so it is a variant of the 3GPP standard where only the SGSN is bypassed…


  5. – as

    You’re right in that the RNC isn’t (cannot be) removed. It actually says so in the glossies as well. I’ve worked on I-HSPA equipment so this is familiar stuff.

    But in this case the RNC is distributed to the sites. Thus you don’t need a big RNC to handle varying loads from multiple node-Bs, you can optimise for one site and eliminate ATM. Thus it _should_ save costs in many of the places Martin outlined as cost-saving locations for LTE (backhaul etc.).

    With the elimination of RNC in LTE, is truly removed or is the functionality embedded into the LTE Node-B (like I-HSPA does with HSPA)? If the latter, where is the true benefit of LTE except bandwith flexibility at the air interface? Where do we get the most cost savings: LTE or SAE? SAE can be implemented to a large extent in HSPA?

  6. Obviously I’m comming a bit late to this. Apart from all the technology improvements already mentioned here and elsewhere, the biggest factor is network loading.

    Adding paying, active users to a network (which is primarily fixed cost) is the surest way to reduce cost-per-bit, even if absolute costs increase.

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