and

present:
SON: Reducing Costs,
Improving Service
Whitepaper
Published: Second Quarter, 2012
Version 1.0

iGR Inc.
12400 W. Hwy 71
Suite 350 PMB 341
Austin TX 78738
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Table of Contents
Executive Summary..................................................................................................... 1
SON: An Overview ...................................................................................................... 3
Brief Introduction to SON Capabilities .................................................................................3
Figure 1: SON Capabilities ....................................................................................................... 3
Impact of SON Services on Expenditures .............................................................................4
SON Network Management .................................................................................................... 5
Legacy Networks versus SON .................................................................................................. 5
Table 1: SON Scenarios for OPEX Improvements .................................................................... 6
SONs Network Management Benefits ................................................................................7
CapEx Reduction Benefits ...................................................................................................8
OpEx Reduction Benefits ....................................................................................................8
Network Operations Benefits .................................................................................................. 8
SON Financial Impact Forecast .................................................................................. 10
Table 2: Long-term OPEX, CAPEX and Revenue benefits to be realized by SON................... 10
LTE OpEx and CapEx Forecast ............................................................................................ 11
Table 3: SONs Impact on LTE-related CapEx and OpEx, 2011-2016 (U.S. Only) ................... 12
Conclusion ................................................................................................................ 13
About iGR ................................................................................................................. 14
Disclaimer ........................................................................................................................ 14





This research is provided as a member benefit for the exclusive use of members of PCIA The
Wireless Infrastructure Association. It is made available by a partnership between PCIA and iGR.
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1
Executive Summary
Self-Organizing Network (SON) concepts are at the core of launching new, cost-
effective 4G devices and applications. SONs greatly simplifies legacy standard
operational tasks via automated triggers for self-configuration, self-optimization,
and self-management functions. Because of these capabilities, SONs enable
carriers to obtain significant savings both in operational and capital
expenditures (OpEx and CapEx).
iGR forecasts that the LTE capital expenditure savings from SON deployments
for 2011 to 2016 will be 9.9 percent. Operating expenditure savings over the
same period is forecast to be 15.4 percent.
The rapid acceleration of network technology from 2G to 3G, and now to 4G,
provides many challenges to wireless carriers. Prior to 4G, for example,
management of network elements was centralized and involved a considerable
degree of manual intervention. However, 4G brings new technological
advancements, network elements, and business processes that will dramatically
change the wireless infrastructure. SON is a key part of that network evolution.
As the transition to 4G unfolds in 2012, the existing legacy centralized approach
to network management will soon be replaced by a hybrid core network
configuration architecture. Ultimately, this evolved architecture will enhance
robustness, scalability, and integration integrity with 2G, 3G, and 4G network
elements across multiple carrier networks. One of SONs key roles is to provide
methods for operators to develop 4G networks while minimizing costs.
In short, SONs allow for the automated self-management, self-configuration,
and self-optimization of 4G networks. SONs provide a new approach to network
management that combines both centralized and de-centralized elements
helping an operator better maintain and oversee their 4G network in
conjunction with pre-existing network architecture (2G, 3GPP, etc.).
To quantify the potential results from SON on the new LTE networks being
deployed in the U.S., iGR has prepared a detailed LTE CapEx and OpEx model
based on the cost to deliver 1 Gigabyte of data over an LTE network. This model
uses the estimated amount of data traffic sent across the network as its basis
and not simply the number of base stations or cell sites used to support the LTE
network. This model estimates that the depreciated CapEx for LTE in the U.S. to
be just over $22.85 billion between 2011 and 2016. LTE OpEx during the same
period is estimated at $29.19 billion.
In the initial years of the forecast, iGR expects that the savings associated with
SON to be very low and therefore have a negligible impact on network costs. As
the deployments increase and, more importantly, the number of eNode Bs
significantly increases, the savings become much more sizeable.
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2
As a result of full SON implementation between 2011 and 2016, iGR expects
that total LTE CapEx savings will be $2.34 billion and that total LTE OpEx savings
will be $4.5 billion. These savings end up reducing the overall CapEx required for
LTE to $21.4 billion (from 2011 to 2016) and OpEx down to $24.7 billion.
The purpose of this whitepaper, then, is to not only provide a basic
understanding of SON, but to pursue in more detail the beneficial impact of SON
on wireless operators LTE transitions.

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3
SON: An Overview
Brief Introduction to SON Capabilities
Although SON standards began to evolve with 3GPP R8, it was not until R9 and
R10 were completed that large carriers began to deploy test LTE networks in the
2009 timeframe. The advent of R11, which is anticipated to be in late 2012,
begins to more fully support and enable LTE technology. Figure 1 illustrates a
high-level view of SON capabilities.
Figure 1: SON Capabilities

Source: Motorola and iGR, 2012
Refer to each of the steps below for high-level process information about Self-
Optimizing, Self-Operation, and Self-Configuration capabilities enabled by SON.
The numbered paragraphs pertain to elements in Figure 1:
1. Network planning must take into consideration the legacy networks
functionality and capabilities in order to best determine a migration
timeline to deploy LTE with minimal disruption to subscriber services.
Extensive Network Planning is the key to a successful deployment. When
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4
properly executed, eNode Bs query the approved small cells to be part of
the network.
2. Must take into consideration the new network components, e.g., macrocells,
picocells, femtocells, WiFi, DAS, MME, SAE Gateway, and neighboring
eNode Bs that need to be managed. When a component malfunctions, the
system automatically cooperates with adjacent cells to minimize any
degradation in end-user experience and adjusts coverage and handover
related parameters to mitigate service problems.
3. Need to design and manage new network routing algorithms and finalize
what will be automated, what legacy processes shall remain and what new
processes need to be implemented. Minimally, the SON executes an
authentication with various small cells before including a cell in the network.
4. Self-Configuration New eNode Bs configure themselves in a plug and play
manner and are automatically synchronized with existing neighboring
eNode Bs. Neighbor lists are created and whenever there is a change of
eNode B status, the network configures itself via predefined network
parameters, based on time of day, day of week, etc. Security measures are
automatically established via the control channel between the elements and
servers to ensure that self-testing is executed and that the network
functions as designed.
5. Self-Operating eNode Bs are automated to the extent that they try to
rectify metric gaps in real time via a series of predetermined triggers. In the
event of a node outage or performance issue, neighboring nodes are
notified that they must self-adjust their parameters to ameliorate any
network operational issues.
6. Self-Optimizing The network aggregates a series of measurable metrics
related to power settings, antenna tilt, Radio Frequencies, network
performance, and network interferences, particularly with macrocells,
picocells, femtocells and DAS. These metrics serve as the foundation for
automation and network tuning.
The processes outlined above are interrelated and not independent. These
overlapping processes provide the capability that benefits both the carrier and
the subscriber.
Impact of SON Services on Expenditures
SON is expected to significantly reduce CapEx via automation of operational and
network management costs associated with operations, maintenance, training
and support (OpEx). SON automated functions will reduce costs associated with
daily operations, including power utilization costs. Most importantly, the
customer experience will be greatly enhanced as a result of greatly improved
network stability and integrity.
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5
SON Network Management
In the new SON environment, it is likely that a hybrid network management
model will be the norm. In the hybrid model, the configuration of plug and play
devices is autonomous, as is negotiation of radio resources between eNode Bs.
The key to the hybrid model is hierarchical architecture management by the
Element Management System (EMS), which manages multiple eNode Bs. This
EMS is important in supporting high-quality, inter-vendor operations.
As a consequence of the new flat network architecture, the carriers need to
deploy many more eNode Bs to cover the same areas as the older 3G
architecture. This means carriers will now have many more eNode B vendors to
choose from, which should eventually drive down costs. Although the Evolved
Packet Core (EPC) a defining LTE network element will expand the number of
network elements to be managed, the tasks will be much simpler because of the
inherent automation and self-management functionality of the SON.
Despite the fact that many of the network management functions are
automated, deploying SON requires an extensive planning effort. For example, a
SON network deployment requires definition of initial and anticipated network
capacity, customized use cases, network acceptance, integration, and final test
plan strategies.
Legacy Networks versus SON
This section provides a high-level view of four business scenarios (out of many
such examples) in both the legacy network AS IS and SON-based TO BE
Models. For purposes of this discussion, the four scenarios examined are: Base
Station Configuration, Base Station Management, Load Balancing, and Handover
Optimization.
Table 1 below depicts the very significant OPEX improvements that can be
realized in the SON environment. As the SON standard evolves, it is likely that
such benefits will grow as experience with the technology is gained. However,
CapEx is likely to climb in the short-term, followed by a decline, as the 4G
networks mature.
Note that relative to Scenario 2, eNode Bs are able to shut themselves down
during non-busy traffic periods. eNode Bs can also be configured to
automatically turn themselves back on at a specific time, or when a surge in
network usage is detected. These capabilities can obviously help drive energy
savings.


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6
Table 1: SON Scenarios for OPEX Improvements
AS IS MODEL TO BE MODEL
Scenarios Legacy 2G/3G/Networks 4G SON
#1
Base Station
Configuration
Software Management
Software updates are manual
Human intervention often required
Multiple base station types means
multiple software versions and
increased complexity
Testing
Testing is manually intensive
Antennas manually adjusted and
impact network integrity
Network Configuration
Huge undertaking to manage
neighboring network relationships
Hand-off to other networks are varied
and require significant time to manage
Base Station inventory is time intensive
Large staff required to perform base
station configuration and manage
nodes
Automatic Software Management
Automatically detect the transport link
Establish connection with 4G network
Download or upgrade eNode B software
Automatically modify eNode B status
Self-Testing
Perform self-tests at boot, auto detection of
other eNode Bs and other network elements
Automatically verify and adjust antenna
configurations based on network
performance
Dynamically adjust antenna send/receive
path based on weather or traffic conditions
Automatic Neighbor Configuration
ANR tracks all neighboring network
relationships and hand-offs
ANR automatically tracks all base station
inventory
ANR manages all network policies, cell data,
and cell IDs
Reduced staff requirements due to
automation
#2
Base Station
Management
Managing inventory for multiple base
station types is very time consuming
and prone to error
Base station management is manual
Difficult to track base station status
eNode Bs can be automatically turned off or
on to save power costs
eNode B inventory is very robust and
managed dynamically
Report status of all nodes to EMS in real-time
Automatic inventory management of all base
stations
#3
Load Balancing
Load balancing is predominantly
manual in nature and time-consuming
to design and manage in real-time
Mistakes in this space are very costly
and they are frequent
Have little or no control of different
policies germane to adjacent networks
Reporting is error prone and costly to
manage
Intelligently spread traffic across all legacy
radios and new 4G components like MMEs,
SAE GWs, and eNode Bs
Immediately include new network elements
to load balancing algorithm and test security
Report status of load balancing status to EMS
Have the control to govern the different
policies of the SON system and adjust them
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Scenarios Legacy 2G/3G/Networks 4G SON
#4
Handover
Optimization
Handover is very intense when multiple
network technologies and devices are
involved
No standard interface for managing call
handover to other networks or
network elements
Reporting on handover performance
and coordination with neighboring
networks is manual and error prone
Automatically manage handovers to
macro/pico/femto cells, DAS and WiFi
elements within 4G network
Automatically manage inter-carrier, intra-
carrier, or inter-technology traffic via x2
interface standard and SAE for non-4G
networks
Minimize dropped calls for subscribers
Automatically ID new small cells when added
to network
Source: iGR, 2012
SONs Network Management Benefits
Network management benefits from SON are expected to come from several
different areas:
Significantly impact the management of new LTE networks
Eliminate or mitigate network configuration tasks as much as possible
Example IP addressing, QoS setup, automatic assignment of physical cell IDs
and RF parameters, etc.
Enable much quicker eNode B deployment
Introduces plug and play capacity, e.g., no provisioning of hardware resources
needed, inventory info is automatically recorded and reported
Synchronizes with neighboring eNode B locations via cell IDs
Maintains a list of identifying characteristics of neighboring eNode Bs
Continually optimizes RF parameters, including antenna tilt, power fluctuations,
and interference
Automatically establishes transport capabilities by establishing contact with the
MME
Self-testing and verification operation of the eNode B is done automatically
Automatically authenticates itself into the network and updates the correct
version.
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CapEx Reduction Benefits
Capital expenditures associated with LTE are related to the cost of the eNode B
deployment, implementation of the EPC and installation of the required
backhaul and OSS/BSS.
Although network CapEx will likely rise the first year SON is deployed, iGR
expects that it will rapidly decline as the benefits of self-configuring eNode Bs
become apparent. In other words, as the number of eNode Bs with SON rises, so
the efficiencies outweigh the additional cost of including SON initially.
Note that SONs antenna tilt capability alone engenders significant OpEx
reduction, CapEx reduction, and network performance and reliability
improvement. All of these factors can help reduce churn, increase user
satisfaction and enhance carrier revenue.
OpEx Reduction Benefits
Simply put, operating expenses for a wireless network are the costs associated
with running and maintaining the network once its rolled out. Much of these
costs traditionally have come from the time and expense necessary to visit the
radio base station, climb the tower and make any adjustments necessary.
Deploying SON helps reduce a carriers OpEx by providing the following
functions:
Automatic neighbor optimization and updating network lists
Coordination of sub-tones and power levels across eNode Bs
Automatic handoff optimization
Iteratively adjust QoS configuration
Automatic energy savings by examining service loading trends and powering
down equipment when necessary.
Network Operations Benefits
iGR expects that SON will result in several improvements in the way a network is
operated by the carriers:
SON will minimize the amount of monitoring and adjustment required by ops
staff
Standardized inventory reporting of all components of network elements
Very robust cell outage capabilities for latent faults
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Automatic reconfiguration of adjacent cells to compensate for failed cell,
resulting is reduced truck-rolls
Robust root cause analysis and recovery from faults
Real time preventive maintenance to verify repair or reconfiguration
Multivendor subscriber and equipment trace to abet system troubleshooting.
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SON Financial Impact Forecast
Table 2 shows iGRs summary of the financial improvements expected as a
result of SON. This summary, and the assumptions they embody or imply, are
integral to iGRs forecast model.
Table 2: Long-term OPEX, CAPEX and Revenue benefits to be realized by SON
SON LTE Financial Performance CAPEX OPEX Revenue
Preserve financial investments made in legacy
networks

Transition legacy networks to 4G in a phased
approach

Prevent Churn and network degradation during
transition to LTE

Deploy interim Hybrid Network Management process
to track network performance

Begin to offer new 4G IP-based products and services
Manage multiple networks during transition phase
Reengineer and automate business processes
Improve overall network management capabilities
Deploy new LTE hardware and software
Data services to surpass voice services
Source: iGR, 2012
To quantify the potential results from SON on the new LTE networks being
deployed in the U.S., iGR first prepared a detailed LTE CapEx and OpEx model.
Before reviewing the total opportunity for LTE equipment, several points should
be made:
iGR does not know the true cost of the various LTE networks. VZW, Clearwire,
LightSquared, Leap, MetroPCS, Sprint, US Cellular and AT&T were not directly
involved in the preparation of this cost model. Furthermore, the other operators
discussed in this brief were not involved in the preparation of this estimate. That
said, the costs included in this model are derived from information from the
major wireless infrastructure vendors.
LTE has only just been commercially deployed and so the costs of its deployment
over the next few years are likely to change. However, at present, iGR believes
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that the cost model presents the best estimate of the costs involved. iGR will
update this model on a regular basis as more information becomes available.
Obviously, as LTE is deployed and the industry becomes more familiar with
deployment and operation, costs will likely change. Similarly, costs will also
change depending on how quickly the LTE ecosystem develops.
In order to estimate the costs involved in building the various LTE networks, iGR
has used the cost per gigabyte (GB) model presented in its prior research. The
model assumes a certain amount of data traffic sent across an LTE network and
not simply the number of base stations or cell sites used to support the LTE
network.
iGR first modeled the likely use of the various LTE networks. This forecasted
usage level is based on assumed subscriber penetration and data usage per
month. iGR then modeled various other factors including the penetration of
new LTE services and devices into the U.S. subscriber base, usage per subscriber
of LTE voice and data services and the cost of delivering those services.
The goal (and the methodology presented here is oversimplified for the sake of
brevity) was to reach a total assumed LTE network usage figure. With this
number, iGR was then able to estimate the CapEx for the 5 years of the model
by applying the depreciated CapEx costs per gigabyte delivered over the
network. OpEx was calculated in a similar way by assuming the cost to run the
network per subscriber and then looking at the percentage of those costs
associated with LTE.
LTE OpEx and CapEx Forecast
iGRs forecast therefore shows a total estimated depreciated CapEx for LTE in
the U.S. to be just over $23.85 billion between 2011 and 2016. LTE OpEx during
the same period is estimated at $29.19 billion. Note that these numbers
represent the estimated total cost of deploying and running an LTE network
across all U.S. carriers (that are currently deploying LTE or have announced
plans to do so) without considering any benefits imparted by SON. In other
words, this estimate is the baseline to which SON benefits will be applied.
In 2011, iGR expects the CapEx benefit resulting from SON to be about 2.5
percent that is, estimated is about 2.5 percent lower because of SON
capabilities. By 2016, iGRs model suggests that CapEx will be about 27 percent
lower than the baseline shown above because of SONs (cumulative) capabilities.
Operational expenditures in 2016 are likely to be about 22 percent lower than
the baseline (shown above) because of SONs capabilities.
iGR expects that initial savings from SON (as compared to the baseline) will be
very low and will therefore have a negligible impact on network costs. But, as
the deployments increase and the number of eNode Bs significantly increases,
the savings become much greater.
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To summarize, iGR expects that LTE CapEx savings resulting from full SON
implementation between 2011 and 2016 will be $2.34 billion; savings from LTE
OpEx will be $4.5 billion. Table 3 illustrates this point i.e., SON reduces carriers
total depreciated CapEx and OpEx expenditures by a substantial amount. The
savings do occur over the five years of the forecast, but they are real. And, note
further, that iGR has only modeled the hard costs and not the soft costs
associated with lower churn, etc.
Table 3: SONs Impact on LTE-related CapEx and OpEx, 2011-2016 (U.S. Only)
2011 thru 2016 Total Depreciated Cost Savings due to SON Total Adjusted Cost
CapEx, $bn $23.85 $2.34 $21.51
OpEx, $bn $29.19 $4.50 $24.69
Source: iGR, 2012


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13
Conclusion
As new 4G network technologies and new user devices begin to flourish in 2012,
SON will enable a path for delivery of these new complex data services to
subscribers. However, this significant increase in data traffic requires the
deployment of new 4G network elements like the MME, the SAE Gateway,
eNode B base stations and new interfaces that provide access to the EPC.
SON leverages network intelligence, automation and network management
features in order to automate the configuration and optimization of wireless
networks, thereby lowering costs and improving network performance and
flexibility.
A key goal of LTE SON standardization is the support for multi-vendor network
environments, which has resulted in the definition of standard messaging
formats to convey information between network elements that can be used to
implement a given SON algorithm. In addition, new small cell technology must
now be integrated to the LTE network to improve network performance.
Strong carrier interest in SON continues to drive significant contributions
coming from organizations such as the Next Generation Mobile Networks
Alliance and 3GPP. These two standards bodies, among others, will play an
integral role in defining the future beyond 4G.
SON will evolve from the initial hybrid architecture model to a more centralized
management model of many new functions that have been automated and
distributed throughout the SON environment. SON will greatly reduce OpEx
over time while providing improved management of CapEx as the industry
moves to the next generation of wireless technology.






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14
About iGR
iGR is a market strategy consultancy focused on the wireless and mobile
communications industry. Founded by Iain Gillott, one of the wireless industrys
leading analysts, we research and analyze the impact new wireless and mobile
technologies will have on the industry, on vendors competitive positioning, and
on our clients strategic business plans.
Our clients typically include service providers, equipment vendors, mobile
Internet software providers, wireless ASPs, mobile commerce vendors, and
billing, provisioning, and back office solution providers. We offer a range of
services to help companies improve their position in the marketplace, clearly
define their future direction, and, ultimately, improve their bottom line.
Note that Iain Gillott currently serves as an independent director for Wmode,
Inc.
A more complete profile of the company can be found at http://www.igr-
inc.com/.
Disclaimer
The opinions expressed in this white paper are those of iGR and do not reflect
the opinions of the companies or organizations referenced in this paper. All
research was conducted exclusively and independently by iGR.