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  4. > The Inside-out wireless networks for fixed operators: the technical and commercial challenges of HetNets

‘Inside-out’ is one way towards a converged world based on millions of small cells – fixed and cable operators have a real current cost advantage over mobile operators working ‘outside-in’.

The 'inside-out' approach to wireless network provision describes a strategy fixed and cable operators are adopting to develop low-cost, high-capacity vast national public heterogeneous networks (HetNets) and services on the back of their existing fixed broadband access infrastructure. All cells and access points operate in open-access mode, and additional capacity for areas with no coverage is provided on a wholesale basis by a mobile network operator. The approach could be successful, profitable, and
disruptive to legacy mobile operators.

This report analyses the technical and commercial challenges that operators adopting the ‘inside-out’ approach to wireless network roll-out will face.

The report:
defines the approach and investigates the business drivers and opportunities
assesses the technical challenges, including choice of spectrum, interference, cell identity management, the suitability of fixed broadband as backhaul and alternative approaches to fixed–mobile convergence (FMC)
assesses the commercial challenges around scale, distribution, wholesale contracts and pricing, and offers a top-level total cost of ownership model
provides recommendations for fixed, cable and mobile operators, as well as for network equipment providers (NEPs).

COMPANY COVERAGE

This report includes information on the strategies of the following companies.
BT
Free Mobile
Google Fiber
Kineto
Liberty Global
Republic Wireless
Scratch Wireless
SoftBank
TalkTalk
Ziggo

Table Of Contents

The Inside-out wireless networks for fixed operators: the technical and commercial challenges of HetNets

Table of contents


6.Executive summary


7.Executive summary


8.Recommendations


9.Recommendations


10.Inside-out and other approaches to FMC


11.Inside-out: crowd-sourced HetNets for fixed operators


12.Several high-profile operators are actively considering the femtocell-based inside-out approach


13.Other fixed-mobile convergence (FMC) approaches are available


14.Business drivers and opportunities for fixed and cable operators


15.The original consumer femtocell business case was driven by poor coverage, but new business models will have more robust demand


16.The inside-out strategy is an opportunity for fixed network operators and MSOs to rejuvenate their telephony services


17.The inside-out model depends critically on a high relative volume of
at-home traffic and of traffic reachable by public small cells


18.Inside-out operators see an opportunity to undercut MNOs on the price of mobile voice and data


19.Unlimited mobile voice bundles are becoming more common, but this affects only the incremental, and not the actual, cost of voice services


20.Inside-out quadruple-play bundles make commercial sense only insofar as end users value the wired connection


21.Inside-out operators aim to capitalise on their fixed infrastructure assets to reduce the cost of mobile backhaul


22.Inside-out operators can capitalise on oversupply of mobile to force a good MVNO deal


23.Technical challenges


24.Little suitable spectrum is currently in the hands of potential inside-out operators


25.There is no shortage of suitable future spectrum, but most will be licence-exempt and the device ecosystems are immature


26.Using the installed base of fixed broadband connections for small-cell backhaul has several drawbacks


27.FMC options that are less costly than femtocells are available, but they have disadvantages


28.Radio interference management requirements increase as the number of cell sites and frequencies used increase


29.Self-organising networking (SON) reduces the operational difficulties and costs associated with small-cell networks, but it has risks


30.Interference between 2.4GHz Wi-Fi and 2.6GHz LTE can cause problems in the home router


31.Commercial challenges


32.Inside-out operators will have the scale for low customer-acquisition costs, but have credibility and brand challenges


33.Summary of additional costs and revenue


34.The cost of MVNO outfill is critical for the business case of an inside-out operator


35.An inside-out operator would have to balance the merits of per-unit or per-subscriber charges, but more-formal bitstream models may emerge


36.Inside-out models could prove both profitable and disruptive, but there are fixed start-up costs to overcome


37.Some broader implications of an inside-out approach


38.About the author and Analysys Mason


39.About the author


40.About Analysys Mason


41.Research from Analysys Mason


42.Consulting from Analysys Mason


andnbsp;


List of figures


Figure 1: Companies covered in this report


Figure 2: The basic inside-out wireless network


Figure 3: Total and mobile consumer telecoms traffic by service type and location, 2013, Western Europe


Figure 4: Total and mobile consumer telecoms revenue by service type and location, 2013, Western Europe


Figure 5: Average retail revenue per mobile voice minute, selected markets, 2010-2013


Figure 6: Average retail revenue per minute by service type, selected markets, 2013


Figure 7: Voice minute allocations within mobile contract bundles, by country


Figure 8: Mass-market fixed and mobile revenue by network type, Western Europe, 2013


Figure 9: Average IP data traffic per month, by connection type, USA and Western Europe, and growth multiple 2013-2018


Figure 10: IP data traffic growth multiples by network type, USA and Western Europe, 2013-2018


Figure 11: Picocell roll-out costs for mobile operator, and potential savings for a fixed operator


Figure 12: MVNOs' market share of subscribers, 4Q 2013 compared with change in retail mobile revenue 2012-2013, Western Europe and Poland


Figure 13: Advantages and disadvantages of fixed-mobile convergence technologies


Figure 14: Illustrative example of cell distribution in mixed geotypes


Figure 15: 3GPP SON features grouped by functions


Figure 16: The 2.4GHz ISM band, contiguous bands, BT's spectrum holdings, and potential for interference


Figure 17: Details of selected fixed and cable operator MVNOs, Western Europe, 1Q 2014


Figure 18: Production cost of LTE networks by utilisation rate and average retail mobile broadband tariff per gigabyte, Western Europe, 4Q 2013


Figure 19: Main assumptions behind the inside-out mobile strategy model


Figure 20: Simplified model of the total cost of ownership of an inside-out mobile strategy, by cost centre, and mobile service revenue

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