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mobile core:
Packet Gateway (PGW) Serves as the IP anchor point for bearer networks.
erving Gateway (SGW) Acts as the local mobility anchor for inter-eNode B
S
(i.e. LTE base station) handoffs.
olicy and Charging Rules Function (PCRF) Controls QoS resources for policy
P
decisions such as gating, flow based charging, etc.
LTE subscribers forecast to exceed 597 million in 2016. (see chart below)
WORLDWIDE LTE SUBSCRIPTIONS
700
Subscriptions (millions)
600
500
400
300
200
100
0
2010A
2011E
2012E
LTE
Source: Pyramid Research, 2011
2013E
2014E
2015E
2016E
As LTE is increasingly deployed and smartphones become more widely adopted, the widely
recognized Y chart (as depicted below) illustrates the disconnect occurring between data traffic
and operator revenue that will only become more pronounced.
Quantity
Traffic
Cellular operator
revenue and
traffic
decoupled
Voice
dominant
Revenue
Data
dominant
Time
Source: Heavy Reading, 2011
Compounding the problem is that as LTE radio networks are built out, the need for a robust
mobile core becomes paramount. Of course, the challenge then becomes how to pay for robust
RAN, backhaul and core assets in the face of a rapidly deteriorating economic model.
DEVICES
ACCESS
BACKHAUL
EPC
TRANSPORT
IMS
APPS
ENABLEMENT
END-TO-END MANAGEMENT
Validated ecosystem
Validated ecosystem.
In the scenario described above the regional operator could consist of a holding company
that owns several wireless properties across a particular region of the country. Additionally,
consortiums of smaller operators have been known to band together to purchase large backbone
networks, which are then shared by the operators in the consortium. The same concept can be
applied to a hosted core arrangement.
The economic benefits associated with going the hosted core route can be dramatic, as
depicted below.
RAN
&
Core
Engineering
services
50-60% LESS
CORE RENTAL
(Its
really tiny!)