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Research Report

Mobile Network Optimization


Performance Monitoring and Optimization for
3G and 4G Networks

Joe Madden
Analyst

Aditya Kaul
Practice Director, Mobile Networks

NEW YORK LONDON SINGAPORE SCOTTSDALE


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Section 1.
EXECUTIVE SUMMARY
1.1 Introduction
In mobile communications, the act of “monitoring” and “optimizing” the network has historically
referred to technicians visiting cell sites with test equipment, checking RF power levels and
antennas, and performing drive tests. At the network operations center, wireless carriers have
performed this act by watching parameters such as the dropped call rate and bit error rate/frame
error rate to keep track of statistical performance. Throughout the 1990s and even into the early
2000s, the most important parameters were related to coverage and voice.

The arrival of 3G created a longer list of key process indicators (KPIs) to track. Yet, operators
generally focused their attention on voice-related metrics because most of their revenue and
profit comes from voice services in 3G. Recently, operators have been surprised by the huge
increase in mobile data, especially from Internet-friendly smartphones such as the Apple iPhone.
As a result, they are beginning to emphasize data efficiency and signaling metrics in 3G and are
focusing much more heavily on data-related metrics for LTE and WiMAX.

Monitoring and optimization solutions are following this change in direction. Internet solutions
such as deep packet inspection (DPI) are suddenly in high demand from mobile operators.
Transport efficiency and radio signaling are becoming important metrics, surpassing the previous
simple focus on dropped call rates and voice call handovers.

1.2 Market Drivers


The rise of mobile data is the most compelling market driver today, and multiple aspects of data
demand are driving a variety of “bottlenecks” in the mobile network, including:

• Streaming video content is flooding the radio channel and transport equipment.
• Client applications on the smartphone are constantly enabling radios, checking some data,
and then logging off again. When millions of these smartphones are authenticating radio
channels every five minutes, the signaling and TCP (Transmission Control Protocol) transport
setup is overwhelmed in a 3G network.
• Gaming applications demand ultra-low latency, which is not always met with 3G networks.
• Other bottlenecks are appearing – in almost every 3G network element.

End users are beginning to notice the quality of service issues resulting from the bottlenecks.
Voice calls are increasingly dropped on some networks, and latency issues on others are
creating noticeable delay for gaming and even VoIP applications. Both uplink and downlink
throughput are degraded by the constant signaling traffic on the network, thus reducing
user-perceived throughput dramatically.

In short, end users are now beginning to drive network improvements through their complaints
and churn to new networks. What’s different about this? Nowadays, subscribers are moving to a
new operator in order to get better data coverage – not necessarily better voice coverage.

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Table 1.1 Mobile Network Monitoring & Optimization Equipment Revenue, World Market,
Forecast: 2009 to 2015 ($ Millions)
CAGR
Segment 2009 2010 2011 2012 2013 2014 2015 (09-15)
UE Clients 3.0 3.6 7.2 14.4 21.6 32.4 48.6 59.1%
Radio Test 200.0 208.0 216.3 225.0 225.0 225.0 225.0 2.0%
Radio Probes 99.0 108.9 119.8 125.8 132.1 138.7 145.6 6.6%
Routing/Transport 193.0 231.6 277.9 347.4 416.9 500.3 600.3 20.8%
OSS 378.0 453.6 544.3 653.2 783.8 940.6 1,128.7 20.0%
DPI 65.0 162.5 325.0 552.5 828.8 1,077.4 1,292.9 64.6%
Network Offloading 2.0 4.0 14.0 36.4 69.2 103.7 155.6 106.6%
Total 940.0 1,172.2 1,504.6 1,954.6 2,477.3 3,018.0 3,596.6 25.1%
(Source: ABI Research)

To address bottlenecks throughout the mobile network chain, operators are investing in multiple
monitoring and optimization solutions, ranging from client applications on the terminal to DPI
solutions in the core network. The operators are investing in two directions:

• The network equipment manufacturers are providing more OSS software and self-organizing
network (SON) features in both 3G and LTE networks.
• Independent suppliers of monitoring and optimization solutions are finding strong growth in
direct sales to operators. Overall, the independent market for various monitoring and
optimization solutions will grow at CAGRs of between 2% and 106% over the next five years.

1.3 Technology
Network operators are trying to balance the SON networks promised by their network OEMs with
several independent monitoring and optimization ideas scattered through the network. In
general, the SON use cases currently focus on radio parameters and self-configuration. SON
functionality is expected to expand into true optimization of additional network layers in the future.

Independent monitoring/optimization solutions include:

• Client-based optimization solutions with software on the mobile terminal, typically to improve
efficiency in the transport layer
• Portable RAN test equipment, which is used to verify compliance to standards and optimize
the coverage/capacity of the radio layer at each cell site
• Fixed probes and related software for the radio layer to track call parameters and handovers
to isolate the root cause of radio access and mobility issues
• Protocol analyzers and transport optimization hardware, installed in the core network to
streamline packet sessions and improve on transport costs
• Operations support system (OSS) software, which aggregates performance data, inventory
information, and fault information to speed up root cause analysis
• DPI infrastructure, which examines each packet of data to categorize it for application content
• Offloading solutions, which can divert Internet traffic to save bandwidth in media gateways
and Gateway GPRS Support Node (GGSN) infrastructure

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No one single solution is a “silver bullet” that will boost the capability of a network. Each
solution can provide between 15% and 50% improvement in efficiency for one network
element, but multiple bottlenecks exist simultaneously. Several of these solutions must be
used together in order to optimize all of the links in the chain. Thus, it is critical for network
operators to have a comprehensive, interoperable strategy.

1.4 Outlook
The growth of monitoring/optimization solutions is accelerating. These solutions will grow at 24%
overall during the next five years. The most advanced data networks in North America, Europe,
and Japan are the most important growth markets in the near term, as these large networks
currently have insufficient data capacity to handle anticipated demand over the next few years.

Chart 1.1 Mobile Network Monitoring & Optimization Equipment Revenue, World Market,
Forecast: 2009 to 2015

4,000

3,500

3,000

2,500
($ Millions)

2,000

1,500

1,000

500

0
2009 2010 2011 2012 2013 2014 2015

(Source: ABI Research)

1.5 Recommendations
The unanticipated rush to the mobile Internet is happening now, and time is critical for operators,
network OEMs, and independent monitoring/optimization suppliers. The companies that can
work in a coordinated way in teams to attack multiple bottlenecks will achieve the greatest
network improvements, and thus will capture market share. Network monitoring and optimization
suppliers should ensure that they have focused solutions for 3G networks that are future-proof for
use with LTE in the near future. Large suppliers capable of handling multiple monitoring solutions
should strive to cover end-to-end requirements and integrate probes, analyzers, and OSS
software. Smaller, specialist suppliers should partner with other vendors in order to bring simple,
highly targeted solutions to market together with a comprehensive portfolio.

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1.6 Conclusions
A shift in focus has long been expected for mobile networks, and it has been predicted that
LTE/WiMAX networks will address data issues. In reality, the data tsunami has hit 3G networks
before the deployment of LTE, forcing operators to invest early in solutions to better diagnose and
optimize for data applications. As LTE networks are rolled out, the market for network
optimization will grow even stronger.

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Section 2.
MARKET OVERVIEW
Today’s complex mobile networks simply cannot be managed by an army of technicians in
blue jeans that drive to site locations and climb up towers to tweak the system. The techniques
and processes used to optimize an analog or 2G network would require a huge amount of
manpower in order to support 3G and 4G systems. Instead, the mobile network must be
managed statistically and automatically, with the technicians reserved for key interventions that
are triggered by statistical analyses of the system.

It is possible to operate a voice network without sophisticated monitoring and optimization


tools. In fact, many 3G networks are currently in operation with what is essentially an
extension of the old 2G dependence on manual intervention. This approach can work
reasonably well for voice traffic, but data traffic impacts the network quite differently, and
ignoring the differences can result in poor OPEX efficiency.

AT&T Wireless’ famous problems with backhaul and signaling in its 3G network are a prime
example. AT&T has been surprised by the sheer weight of iPhone data traffic, as over 55% of its
data traffic comes from less than 5% of its subscriber base. This issue has lingered for over a
year because the solution involves more than simple increases in backhaul capacity. The
iPhones, as well as Android and many other smartphones, continuously shut down their radios to
save power, then re-establish the data link for a quick data update. The result: a heavy load of
signaling traffic. This unprecedented rise of signaling traffic from iPhones has created a
bottleneck in the routing and radio signaling channels, which had basically been designed to
handle normal voice and SMS traffic throughout the AT&T network.

Chart 2.1 Mobile Traffic by Application, World Market, 2009 (TB per Month)

Web Brow sing,


30,242
Video, 35,897

VOIP, 4,579

Gaming, 4,615 Peer-to-Peer,


15,496

(Source: ABI Research)

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Chart 2.2 Mobile Traffic by Application, World Market, Forecast: 2014 (TB per Month)

Web Brow sing,


621,610

VOIP, 156,829

Gaming, 173,177

Video, 2,336,732

Peer-to-Peer,
276,952

(Source: ABI Research)

This problem is not unique to AT&T. Every carrier faces a similar loss of network quality if
smartphone, tablet, and mobile PC web traffic is allowed to continue growing without a
corresponding increase in network sophistication. The bottlenecks are manifesting
themselves in multiple locations throughout the network, from the user equipment (UE) to the
radio access network (RAN) to the core network.

2.1 Networks Evolve into Optimization


Networks tend to mature along a predictable timeline, beginning with simple RF planning and
provisioning of network elements and moving toward an automated, optimized mobile network
where business processes are tuned in to the network, optimizing both cost and revenue. Most
2G networks followed the process to monitoring/optimization with simple and manual
interventions for optimization. 2G business processes are extremely simple, covering some
pricing differences for time of day, total number of minutes, or SMS messages.

3G networks have also evolved along the timeline to the point of implementing optimization
solutions. In this case, simple manual interventions are not always possible due to the high level
of complexity. Interventions such as neighbor list updates or power level adjustments can be
achieved remotely. In 3G, tiered billing structures to take advantage of end-user data
preferences are uncommon, often due to the lack of information available to operators at a
detailed level regarding the content downloaded by each user.

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LTE networks will evolve even more quickly along the timeline, with self-configuration
features taking a major role in the deployment of the network and optimization algorithms
built in from the beginning. Business processes still lag behind the optimization features
available for network performance, but the rise in consumer data consumption will strongly
drive the development of more innovative pricing policies.

Figure 2.1 Typical Timeline for LTE Network Optimization

(Source: ABI Research)

2.2 Key Performance Indicators


KPIs for 2G systems were normally tracked on a short list of five to six items, including
simple voice-related metrics such as:
• Call drop rate
• Handover success rate
• Bit error rate (or frame error rate)

For 3G networks, the list of KPIs grew to include a few data metrics and the complexity of
handovers between multiple air interfaces, but the primary focus for most operators
remained on voice performance:
• Call setup success rate
• Packet Data Protocol (PDP) context activation success rate
• SMS/MMS success rate
• Call drop rate
• PDP context drop rate
• Soft handover success rate
• Hard handover success rate
• Inter-radio access technology handover success rate
• Call setup delay

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In LTE, 3GPP defines KPIs in five categories with a clear focus on data quality of service. The
3GPP organization has been much more careful in the case of LTE to define KPIs with standard
definitions, including precise mathematical definitions of the KPI calculation. In doing so, 3GPP
hopes to address the confusion that has resulted from 3G KPIs defined differently by each
vendor, thus improving interoperability at an equipment level and communication at a human
level. The five LTE KPI definitions are:

• Accessibility: Measured by the E-UTRAN radio access bearer setup rate


• Retainability: Measured by the radio access bearer drops per unit of time
• Integrity: Measured by downlink throughput and latency
• Mobility: Measured by handover success rate
• Availability: Measured as the fraction of total time that a cell is unavailable

Most operators use additional KPIs to address cost optimization targets as well, and a wide
variety of preferences are used by operators around the world. Both CAPEX and OPEX are
tracked by operators in calculations of parameters such as spectral efficiency, throughput per
backhaul fiber or microwave link, and even energy efficiency.

2.3 R&D/Testing/Deploying the Network


The ecosystem for test equipment in mobile networks has matured over the past twenty-five
years, with established vendors such as Agilent, Anritsu, Rohde & Schwartz, and Tektronix filling
most niche areas. Test equipment is distinct from the market for monitoring and optimization
gear. The test equipment is generally designed to be portable and temporary so it can be used
for setting performance on a given network element and then taken away to another site.

The market’s evolution to 4G does not change the equation for radio test gear very much. Radio
test equipment will continue to be required for drive testing and adjustments to the radio layer,
which cannot be achieved through software and automated controls alone.

The difference between 3G and 4G will be seen in the manpower required to deploy, configure,
and maintain the network. While technicians will always need a spectrum analyzer within reach,
SONs will hopefully reduce the number of times that they need to start up their truck and drive to
the cell site. SON technology will result in automatic programming of cell site parameters such as
neighbor lists and default frequencies, and power levels will increasingly be set through
coordinated data from neighboring eNodeB sites.

2.4 Monitoring the Network


So far, SON committees related to the 3GPP standards have focused primarily on use cases that
impact Layers 1 and 2, which are most closely tied to the radio access network, as well as
maintenance functions such as alarm management, inventory, and QoS optimization within LTE
only. This leaves an open field for optimization tools to augment Layers 3 and 4 with routing and
transport setup. In particular, suppliers of optimization tools are able to provide signaling
analyzers, probes, and OSS software that span multiple network vendors and can deal with the
multi-technology complexity of a modern mobile network. Real-time monitoring is achieved
through the use of probes at multiple interfaces throughout the network, including both 3G and
4G probes at the interfaces to NodeB and eNodeB sites, at SGSN and GGSN locations, and at
the LTE Mobility Management Entity (MME) and serving gateway. Through the collection of
statistical data on retransmissions, error rates, and signaling traffic, the network monitor can
synthesize a summary of the performance of a complex, multivendor network in which the
network equipment manufacturers (NEMs) do not coordinate data with each other.

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In the 100-year history of telecom networks, an ongoing market for OSS has developed
slowly and gradually. Almost any OSS on the mobile market can track basic KPIs such as
dropped call statistics and handovers between different vendors. However, operators
complain that the level of detailed information available in the OSS for troubleshooting is
inadequate. A typical 3G network today includes an OSS provided along with the mobile
network, as well as a parallel system of probes throughout the network, in order to isolate the
signaling issues and identify the root cause of traffic issues.

One of the primary functions of protocol analysis tools and related probes throughout the network
lies in the need for operators to quickly diagnose and solve problems. Today’s probes and
monitoring systems provide more specific data than a typical OSS, isolating problems through
analysis of the signaling between network elements on standard interfaces.

2.5 Optimizing Performance


Self-optimizing networks (as distinct from self-organizing networks) are still in their infancy.
They will remain immature for years because the focus of major NEMs centers on
self-configuration of network radio elements, not on the fine-tuning of optimization.
Furthermore, while most major OEMs support the collection of data from multivendor network
elements, none of the major OEMs can offer true optimization of a multivendor network. In
short, interfaces are well standardized, but intervention algorithms are not.

When the operator has visibility into the data patterns on the network, questions quickly arise:

• What can we do to improve data throughput efficiency?


• Can we reduce CAPEX by avoiding future equipment upgrades?
• How can we reduce OPEX by eliminating site visits and reducing time spent by technicians?
• What adjustments will most directly improve quality of service?

In the area of optimization, network operators are focused on three basic concepts: cost
reduction, quality improvement, and revenue increase. Cost reductions and quality
improvements are the two areas that can be impacted through changes to network settings, since
revenue is generally independent of network performance.

2.5.1 Cost Reductions


One of the most direct and natural outcomes of improved network monitoring is that the existing
equipment can be tuned to be optimally efficient, resulting in a deferral of upgrades and capacity
overhauls. In addition, operating costs can be reduced significantly if issues can be resolved
quickly with information available in a central database – without a truck.

2.5.1.1 CAPEX Reduction


Inefficiency caused by retransmissions, interference, or poorly set radio parameters can be
eliminated with effective monitoring and timely changes and upgrades, which allow the
infrastructure to run closer to its rated capacity. By deferring upgrades and new line cards,
multiple vendors believe that they can create between 15% and 30% capital savings for a
particular network element. Assuming the low end of 15% applies to key core network elements
such as SGSN and the RAN in 3G, the annual CAPEX budget for network capacity is significant.
As an example, for a European operator with 30 million subscribers, the €800 million budget for
CAPEX might be reduced by €120 million.

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Similar figures apply to LTE deployment, since the system will be initially installed to handle limited
capacity and will be stretched to accommodate users as LTE services are adopted. The savings are
difficult to distinguish in hypothetical comparisons to an “unoptimized” LTE network, but vendors and
network operators agree that significant savings are built into their plans for LTE optimization.

2.5.1.2 OPEX Reduction


Operating costs constitute another significant area of cost savings. The self-configuration of network
elements saves technician time and the number of drive tests required, and means fewer trips to the
NodeB or eNodeB site. Monitoring tools with probes installed throughout the network can save a
great deal of technician time. The tools provide the ability to troubleshoot problems instantly from the
network operations center, so the technicians do not need to drive to multiple locations.

In addition, streamlining data packets can save a surprising amount of bandwidth in the transport
layer, improving throughput efficiency by roughly 15% to 25%. Harnessing transport optimization
tools to take advantage of 15% efficiency improvement can translate directly into reduced
transport cost, which averages roughly 30% of total operating cost for mobile operators
worldwide. In the United States, backhaul cost reduction is particularly important, since as much
as 50% of operating costs is spent on fiber and leased lines.

The OPEX savings from a suite of optimization solutions can be significant. As an example, for a
regional American mobile network with 6 million subscribers:

• The savings in technician labor and associated trucks/support can be in the range of
$30 million per year, or roughly 5% of the total operating cost budget.
• Transport efficiency improvement of 15% can result in cost savings of $24 million to
$28 million per year in transmission costs.

2.5.2 Quality Improvement


While some KPIs are useful in cost efficiency optimization, others are more useful in tracking
quality of service and quality of experience for the end user. QoS metrics have been changing
quickly during the recent explosion of mobile data because the experience of a VoIP user is very
different than a streaming video user or web browsing user. As a result, the tools for monitoring
and optimizing QoS are evolving to examine a greater number of KPIs and the definition of
“success” has moved well beyond a simple view of dropped calls.

As an example, for VoIP and game users, latency is key but throughput may not be critical.
Conversely, for streaming media, the throughput efficiency is critical but latency can be absorbed
through buffering of the media. Therefore, these two users require different KPI profiles for
optimized QoE. True QoS metrics are increasingly focused on parameters that refer to the
efficiency of the network itself, such as packet retransmissions and overall throughput.

Vodafone has proposed the establishment of different grades of service (GoS) in order to separate
different users into virtual networks. This process would allow the operator to track different KPIs for
different grades of service and even optimize each group’s traffic for their particular usage pattern.

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2.6 Optimizing Revenue


The final – and arguably the most important – step in optimizing the network will come in the
form of pricing plans tailored to extract more money from the end user. The mobile operator
finds itself in a strange dilemma today, spending 70% or more of capital investment on the
data network and deriving 75% of revenue from voice traffic. Further investment in data
networking capability must eventually be supported by a commensurate increase in revenue.
As with cable TV in the 1980s, mobile networks will be moving away from flat-price data
plans and toward a variety of pricing tiers.

Technology is now coming into place to make new business schemes feasible. For example, DPI
tools can identify the content in each IP packet, triggering the OSS/BSS (Operations Support
System/Business Support System) to enforce policies on whether individual users may access
each content type. Coming out of the Internet market, DPI tools are capable of high capacity,
ranging up to 80 Gbps. However, network operators have yet to deploy DPI widely enough to
implement new pricing plans. A complete suite of DPI boxes (to accompany every GGSN on the
network) is necessary before an operator can implement a content-based pricing structure.

Simpler protocol analyzers can identify the source of content as a captive server, an Internet
server, or another mobile user to establish some coarse data categories. Many network
operators feel that these solutions are more suitable for troubleshooting and diagnostics; they are
not detailed enough to utilize as a basis for complex pricing plans.

The potential for increased revenue remains untapped in the market. ABI Research expects
operators to continue driving their networks toward better monitoring and diagnostic tools so
that they can implement policies based on content. During the past year, Verizon Wireless
has hinted that its strategy calls for migration to multi-tiered billing structures. Over the next
five years, we expect several major operators to gradually move pricing plans toward tiered,
content-driven plans tailored to end-user preferences.

2.7 Test Equipment Market


Mobile networks have antennas and cables mounted in exposed, outdoor locations. Thus, they
will always need RF test equipment and trained technicians to check antenna position, power
output, spectral emissions, and other RF performance parameters. The equipment is growing in
sophistication as LTE signals are added and analyzers have additional signals to demodulate and
new parameters such as error vector magnitude (EVM) to monitor in the RF chain.

In addition, with the increase in the number of frequency bands used worldwide, passive
intermodulation (PIM) has become an important test parameter. In the past, intermodulation from
passive components was considered negligible, but dual-band antenna and radio front-end
systems make it possible for loose connectors or dirty interfaces to create interference for mobile
signals. Special PIM testers have emerged as a new item on the market to address the loss of
capacity and performance that accompanies PIM.

Overall, vendors supporting the test equipment market, such as Agilent, Anritsu, Rohde &
Schwarz, and Tektronix, occupy a relatively stable capital equipment market that is currently
entering a phase of supplying deployment/monitoring gear for LTE. The rise of LTE is
resulting in a surprisingly smooth transition from legacy spectrum analyzers and power
meters to newer models with additional functionality.

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Network operators procure portable RF test equipment as a part of their comprehensive


monitoring and maintenance plan. In addition to protocol analyzers, OSS systems, and the
other diagnostic tools discussed in this report, the operator must periodically send a
technician into the field to measure radio parameters, perform a drive test, adjust the position
of an antenna, or replace failed components.

Figure 2.2 An Example of a Portable Spectrum Analyzer

(Source: Anritsu Co)

2.8 Probes
While portable RF test equipment is sometimes necessary, most problems can be diagnosed
immediately through information available from the network elements themselves. A monitoring
system that uses probes installed at interfaces to RNC, SGSN, GGSN, MME, and LTE gateways
can provide information for almost instant diagnosis of simple problems.

Probes are generally passive data-collection devices that can be inserted at the interfaces of a
network without affecting communications between the network elements. They can range from
19-inch rack-mounted boxes to standardized (ATCA) racks with multiple probe cards. The most
common configurations involve probes in the 3G mobile core network, with a recent trend to add
more probes at 3G and LTE radio network interfaces, as well.

Probes report data up to a centralized aggregation point, and are sold along with software to view
a summary of network data. They also typically include Ethernet ports so that a technician can
plug in a laptop to view a probe’s data output locally.

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Figure 2.3 An Example of an ATCA Rack-Mounted Network Probe

(Source: Tektronix Communications)

The market for network monitoring probes and related software/transport optimization includes more
than $300 million in routing and transport layers, typically located at interfaces to SGSN and GGSN
equipment, and $160 million in probes for the radio and Layer 2 signaling, typically located near the
RNC equipment in 3G networks. When LTE systems roll out, an interesting level of competition will
arise between probe vendors and network equipment manufacturers such as Ericsson, Huawei, NSN,
and Alcatel-Lucent. As the network OEMs introduce more self-organizing and self-optimizing
networks, the network diagnostic capability will expand and the network’s ability to automate a
response will also improve. Operators have mixed responses to this trend:

• Operators that want to maintain flexible and manual control over the network are reluctant to
turn over control to an automated system. Thus, in many cases, the OEMs will limit initial
SON features to self-configuration aspects. In these cases, the probe vendors will continue
to see growth in the number of units sold and complexity/capacity of the probes, driving an
ongoing growth market.
• Operators that want integrated data collection (especially operators that have experienced
problems with multivendor interoperability) see the network OEM as the best way to
summarize diagnostic data. These operators are more likely to rely on diagnostic elements
built into the network and summarized in the OSS provided by their primary supplier.

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Overall, probe vendors such as Astellia, Agilent, Radcom, and Tektronix are filling the holes left in
modern networks by providing valuable missing information in a simplified and aggregated central
console. Due to the reluctance of operators to give up control, ABI Research does not expect to
see these vendors step too deeply into automation of network responses. Nevertheless, these
vendors will continue to increase the scope of their probe offerings to accommodate LTE
networks. They will also gradually offer higher sophistication in the analysis of problems and
recommended response by operators.

Figure 2.4 Network Monitoring Solutions Applied to Different OSI Layers

(Source: ABI Research)

2.9 Protocol Analyzers


To fully understand the root causes of limitations in the network, technicians must be able to
duplicate the loading conditions that stress the network, and then visualize the impact on
Layers 1 through 4. While network probes generally focus on the operation of Layers 1 and 2,
protocol analyzers are typically brought in to investigate issues that span multiple communication
layers, tracing a call or data session to determine what bottlenecks are affecting performance. In
many cases, the protocol analyzer and related equipment can simulate heavy loading conditions
to emulate the conditions during a recent failure. As such, protocol analyzers are a key link
between performance monitoring systems and optimization processes for the network operator.

Analyzers can be portable test equipment or stationary installations in rack-mounted


enclosures. Each subsystem includes the data collection/capture electronics, as well as a
hard disk drive for storage of data session signaling information. Rack-mounted protocol
analyzers normally allow multiple users to log on simultaneously. Emulators are sometimes
used to simulate heavy loads of network traffic (late at night) so that testing a more optimal
solution can take place without impacting too many users.

Companies such as Tektronix Communications, EXFO, Astellia, and Agilent Technologies


provide protocol analyzers with diagnostic capability supplied through a graphic user interface at
the network operations center. Some companies, such as Tellabs, EXFO, and Spirent, step
further into optimization of the transport layer through active intervention in session setup.

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Figure 2.5 Use of a Protocol Analyzer to Monitor Network Messaging

(Source: Radcom)

2.10 Impact of Managed Services on Optimization


Roughly half of Nokia Siemens Networks’ revenue comes from services, while 38% of Ericsson’s
revenue is derived from mobile operator services. Ericsson has made some high-profile
announcements of its management of major networks on behalf of major wireless service
providers such as Sprint Nextel and Bharti. These cases illustrate the undeniable trend toward
the outsourcing of network management toward the major OEMs. How will this affect the market
for network monitoring and optimization gear? It may be too early to draw any final conclusions
to this question, as two-thirds of network operators still manage their own equipment. However,
the dynamics of selling independent solutions into the changing network management community
will shift as OEMs increasingly call the shots.

Network equipment manufacturers are increasingly gathering revenue through services contracts,
with companies like In cases where the OEM manages and optimizes the network, in theory the
optimization is, well, optimal. However, large network equipment suppliers are often more
reluctant to engage with independent suppliers of probes, DPI equipment, and other handy tools
from competing outside suppliers. In the end, too much reliance on in-house solutions can leave
the network without the best tools for optimizing each communications layer.

Over time, we can expect the simple, radio-centric SON algorithms offered by major OEMs to
become more sophisticated for services customers. DPI, offloading, and other high-layer
capability will be added to the simpler radio algorithms. If the trend toward services
outsourcing continues as planned, the leverage applied by the major OEMs will put limits on
market growth for independent suppliers.

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2.11 Operations Support Systems


The multibillion-dollar market for OSS software spans wired telephony, cable networks, mobile
networks, satellite, and Internet systems. Service providers and even large enterprises employ
OSS to monitor and manage their network elements over a growing breadth of network
complexity. In the mobile world, the OSS is responsible for organizing information on the status
of network elements, including inventory and relationships between network elements, and
aggregating performance information reported by each network component. Many network
deployments include sales of both network elements and an OSS. Thus, the “captive” or bundled
market for OSS is difficult to separate from the sales of network equipment. Bundled OSS from
the network equipment manufacturers comprise roughly 65% of total 3G NodeB sites globally.

Chart 2.3 Captive OSS Market vs. Merchant OSS Market, World Market, 2010

Merchant Market,
35%

Captive Market,
65%

(Source: ABI Research)

The served market for mobile OSS software is at $400 million per year and growing steadily, due
to the difficulty for any one company to cover all of the possibilities in complex multivendor,
multi-generation systems. Both network OEMs and independent suppliers can access the
standardized data from network interfaces, so differentiation takes place in the speed and
flexibility of customization and in the ease-of-use for the applications using OSS information.
Independent OSS vendors tend to move more quickly than NEMs to adapt to changes desired by
the network operators. Independent vendors such as Agilent, Anritsu, and Tektronix also offer
more flexibility in OSS integration with business systems. Smaller players such as Mycom offer
visibility in simple software that aggregates information from multivendor networks so that
operators can visualize the entire network in one place.

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OSS typically consist of the software itself, which aggregates and displays information for the
operator. In most cases, the OSS provided by a major network OEM is connected to its own
network elements, resulting in islands of information. Many of the independent OSS
solutions sold today are packaged together with network probes or protocol analyzers in
order to create a more complete picture of the entire multivendor network. The OSS does not
typically interfere with any systems because the process is oriented around information
gathering, rather than controlling network elements.

As LTE and WiMAX networks are overlaid on top of existing 2G/3G networks, ABI Research
expects the OSS software to need even more flexibility and capability in order to gather
multivendor data. LTE/WiMAX metrics are a bit different than the 2G and 3G KPIs gathered in
some of today’s systems, so a significant trend in the LTE/WiMAX OSS market will involve
software upgrades to integrate new parameters.

Figure 2.6 OSS Architecture and Applications

(Source: Nokia Siemens Networks)

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Section 3.
TECHNOLOGY
In the 1990s, cell technicians would endlessly drive around and watch the received signal
strength indicator (RSSI) on a special handset. They would then, in many cases, climb up on
a rooftop or even onto a tower to change the tilt of an antenna, hoping to solve many different
issues with this manual, mechanical intervention. Those days are over. The complexity of
3G and 4G networks is making this simplistic type of radio optimization much less effective,
and thus manual intervention is a smaller part of the overall picture. Instead of simple
antenna tilting and other tweaks to the radio layer, network optimization today involves
changes to Layers 2 through 7 using a wide variety of tools and techniques.

Tools available to network operators include the following:

• Portable test equipment for initial network deployment is used periodically to monitor and
maintain the radio layer.
• Stationary probes can be installed at almost every interface in the mobile network, collecting
data from base station and NodeB sites, SGSNs, GGSNs, RNCs, and media gateways.
• Protocol analyzers are often used to monitor the traffic and statistical data such as
retransmission rates, error rates, throughput, and other KPIs in Layers 2 through 4.
• The traffic itself can be monitored through deep packet inspection (DPI) tools, which examine
the data packets for signatures that indicate what type of application is used.
• Operations support systems (OSS) are implemented to centralize the collection and control of
multiple elements within the radio access and core networks.
• In all cases, optimization algorithms using the monitoring data collected can be implemented
to change radio, routing, or application parameters.
• Monitoring data can be reported to the network operator to initiate a business action, such as
suggesting a new data/pricing plan to the customer.

Table 3.1 Applicability and Impact of Various Monitoring Solutions


Primary OSI Layer
Solution Type Equipment Location Addressed Example of Impact
UE Clients UE Layers 5-7 End-to-end optimization possible
Radio Test NodeB and eNodeB sites Layer 1 Improved spectral efficiency, QoS
Radio Probes NodeB, eNodeB, RNC Layers 1-2 Improved handover, QoS
sites
Protocol/Signaling SGSN, GGSN, MME, Layers 3-4 Improved transport efficiency
Analyzers S-GW
OSS Software at a NOC server Layers 1-7 Improved troubleshooting time
DPI GGSN, S-GW Layers 5-7 Improved traffic prioritization
Network Offloading RNC/SGSN interface Layers 3-7 Clears capacity for other traffic
(Source: ABI Research)

Almost every major mobile network today involves a mixture of 2G and 3G, as well as a
multivendor environment in which elements of the mobile network, core network, and backhaul
come from competing vendors. As operators begin to deploy LTE, making an overall monitoring
and optimization solution work requires an active and organized strategy.

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Overall, many network operators plan to continue monitoring and optimizing 2G and 3G
networks with their existing, fairly manual processes and tools while relying on SONs to save
manpower and effort in the LTE overlay network. The SON approach does not solve many
problems, as SON use cases are primarily aimed at radio-related issues in early deployment.
In addition to SON, many network operators will deploy DPI solutions or other end-to-end
monitoring solutions to oversee network performance.

3.1 Self-Organizing Networks


Self-organizing networks (also often known as self-optimizing networks) encompass a vast range
of use cases in which the network itself takes care of tasks that previously had been handled
manually by the RF planning and maintenance technicians. In practice, SONs can save time in
multiple different areas – from RF planning to inventory management.

Figure 3.1 Self-Organizing Network Features

(Source: Mobile Experts)

3.1.1 Self-Configuring Networks


The first use cases considered and implemented in 3GPP clearly rank among the most important
in terms of operational cost savings. In LTE networks, setup and configuration of a new eNodeB
relies on the new network element to configure itself for frequency selection, populate the list of
neighboring cells, and set optimal parameters for handoff to/from the neighboring cells. As it
recognizes the new eNodeB, the network will also automatically update the neighbor lists for the
other eNodeB elements and trigger the re-optimization of their respective handoff parameters.

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Femtocell implementation makes this functionality crucial, since femtocells are intended to be
installed in the field by end users instead of trained network technicians. In a femtocell, the
typical functionality of a NodeB and a radio network controller are rolled into a single low-cost
consumer box. As a result, the configuration algorithms must take into account both the
radio parameters typically set for the NodeB and the handoff and transport setup that is
typically achieved in the RNC.

Typical LTE or WiMAX use cases for self-configuring networks include:

• Installation and radio provisioning of each eNodeB


• Automatic neighbor relations (ANR) used to populate a list of handoff candidates
• Authentication of the new eNodeB to the element management system (EMS)
• Setting radio parameters (C/I and RSSI) for handoffs to neighboring cells

3.1.2 Self-Optimizing Networks


Optimization of a 4G network normally focuses on the collection of KPIs, which can then be
used to fine-tune the network settings. The goal for a network operator is to optimize for
operating cost efficiency, spectral efficiency, or transport cost efficiency and balance this
optimization with its targets for quality of service.

3GPP has defined several use cases for self-optimizing networks, including:

• RF power or antenna tilt optimization to reduce pilot pollution


• Load balancing between cells
• Interference avoidance through changes in channel selection and power levels
• Transport optimization through adjustment of packet sizes and signaling
• QoS adjustments based on DPI to change packet scheduling priorities

3.1.3 Self-Operating Networks


With a network that sets itself up and optimizes its operation, the intelligence can easily be
applied to more mundane tasks to assist in tracking network elements and software updates.
Key use cases include:

• Automated inventory tracking for each network element


• Automated software updates for eNodeB hardware, combined with reconfiguration or
re-optimization as necessary
• Reporting of KPIs to key personnel in the network operator organization
• Tracking of fault data within the network – with 2G/3G and even multivendor complex networks

3.1.4 Self-Healing Networks


Automated network responses to problems constitute an important part of maintaining
high-quality services available for the end user. Use cases include:

• Rapid network reconfiguration to compensate for eNodeB outages


• Re-routing of traffic for loss of service in the transport layer
• Isolation of faults to identify the root cause of a failure automatically

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3.1.5 Trends in Self-Organizing Networks


OEMs are introducing features of SONs ahead of the launch of 4G/LTE systems. Many 3G HSPA
and HSPA+ networks, as well as some EV-DO networks, include features for self-configuration and
self-healing, as well as inventory control features. The development of femtocells has accelerated this
trend, since the self-configuration and self-optimization features of femtocells are implemented in
extremely inexpensive equipment and can be easily applied to the RF layer of any NodeB.

The end game for SONs is to achieve a network with truly self-optimizing performance, whereby
KPIs are tracked and adjustments are made to parameters in Layers 1 through 7 to maximize
efficiency and minimize cost. Yet, this Holy Grail is still several years away due to the technical
barriers to true optimization in multivendor network environments where the system is essentially
untestable until deployment in the field. Operators know that their networks are not prepackaged
solutions that are fully tested in a sterile lab environment. Therefore, many operators are very
reluctant to implement any optimization algorithms that take over control of the network.

Overall, ABI Research expects SONs to become normal practice for the configuration of
eNodeBs, as well as 2G and 3G base stations. Inventory and quick-response actions to recover
from failures will also be implemented, with steady growth in the sophistication of solutions over
the next five years. However, we anticipate that SONs will not result in fully automated networks.
Above the radio access layers, independent tools will provide more granular, user-friendly, and
actionable information than the 4G SON.

3.2 Monitoring and Optimization Tools


A typical mobile operator has 2G voice and SMS services, 3G voice and data services, and will
add 4G data services soon. The operator’s data applications demand a wide variety of jitter,
latency, and throughput requirements from the network. Trading off radio, transport, and network
parameters to help all of these services coexist optimally is challenging for any one network
equipment manufacturer. Independent suppliers of monitoring and optimization tools therefore
have fertile soil in which to grow businesses based on the aggregation of network performance
data, presenting a unified picture to the operator, and suggesting changes to the network.

In 3G networks today, the OSS provided with the original network deployment is often seen as
inadequate, leading to a separate parallel monitoring system with probes at several interfaces in the
network chain. RAN probes and protocol analyzers provide data to a central graphical user interface
that displays more granular data than the OSS, allowing for more specific troubleshooting.

Here’s an example to illustrate a typical troubleshooting scenario. A common problem arises


when peering delays in the IP core produce latency, causing the radio access network to assume
that the packets have not been successfully transmitted. The RAN re-transmits the packets (e.g.,
from the RNC to the SGSN) two or three times, but in fact the packet transmission was
successful each time. The processor of the RNC is eventually overloaded, resulting in a failure
that appears to be related to call traffic and RAN performance. A coordinated set of protocol
analyzer probes between the RNC and SGSN, as well as between the SGSN and GGSN, can
isolate the problem and identify the IP latency as the true root cause. As such, network operators
plan to use end-to-end monitoring equipment and specific analysis gear from tool vendors to gain
the overall visibility and multivendor analysis that their OEM solutions lack.

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Figure 3.2 An Example of a Network Probe Analysis Report

(Source: Tektronix Communications)

3.2.1 Smartphone Clients


Companies such as Keynote, Mobidia, and Venturi Wireless take the challenge of end-to-end
performance monitoring all the way to the user device itself. These companies have clients that
reside on the smartphone, monitoring the throughput for data applications and, in some cases,
working with its sister software in the core network to optimize the transport layer.

By positioning an optimization client in the smartphone, Mobidia or Venturi can optimize the TCP
link through either compression or a proxy for the TCP sessions. Up to 30% efficiency
improvement in the transport layer is possible through these techniques, though some of the
compression techniques will cause problems with any DPI tools that are deployed by the operator
since the normal data signature will be altered.

The client-based monitoring and optimization approach is quite new; it is currently emerging with
pre-revenue startup companies. Roughly twenty trials are underway worldwide to verify compliance
and interoperability with OSS tools, DPI, SONs, and other network-based optimization features.

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3.2.2 Network Probes


Equipment inserted into the network to monitor performance can monitor traffic on almost any
interface. This is an established market in 3G networks, with companies such as Agilent,
Anritsu, Astellia, and Tektronix providing probes both to network equipment manufacturers
and directly to the network operators.

Figure 3.3 Probe Locations in a Typical LTE Network

(Source: Agilent Technologies)

A probe can be used temporarily for initial setup of a network, but increasingly the probes are being
implemented as a permanent, stationary feature of the network monitoring strategy. In a 3G network,
probes are often installed to monitor multiple locations throughout the system as follows:

• A passive air interface probe can monitor the Uu interface (between the handset and the
NodeB) for mobile throughput/error rate issues
• The Iub interface (between nodeB and RNC) can be monitored for call drop, handover,
signaling, and other Layers 2 through 4 KPIs
• The Iur interface (between RNCs) can be monitored for handover and neighbor list updates
• The Iu-CS and Iu-PS interfaces (between RNC and MSC/SGSN) can be monitored for transport
efficiency
• The Gn interface (between the SGSN and GGSN) can be monitored for transport efficiency
• The Gi interface (“north” of the GGSN, at the interface to the IP core network)

As the network migrates to include LTE, a few new interfaces are added, including:

• The X2 interface between eNodeB sites duplicates the Iur functionality


• Multiple Sx interfaces (S1-U, S1-C, S3, S4, S6a, S11, etc.) connect to the Evolved Packet Core elements
such as the Mobility Management Entity (MME) and serving gateway, offering an opportunity to
monitor IP traffic for content and efficiency, as well as handover between 3G and LTE

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A typical monitoring probe solution is usually employed to keep track of performance data.
Currently, probes are utilized as a troubleshooting tool rather than an automated optimization
tool, working together with a signaling or protocol analyzer to summarize network performance
data. Note that these probes are typically sold as a package, together with a graphical user
interface or integrated with the vendor’s OSS software.

3.2.3 Signaling and Protocol Analyzers


The wired Internet world has created a robust market for IP protocol analyzers, which can provide
analytical data on the signaling at each network element, highlighting bottlenecks and issues in
the data flow through the network. Portable analyzers are a common historical method for this
type of troubleshooting. I complexity and speed of today’s mobile data environment demands
that the signaling and/or protocol analyzer must be permanently attached to the network and
multiple probes, providing data to multiple users through web interfaces.

Signaling analyzers can store analytical data representing a user’s data usage, trace calls,
configure a UMTS NodeB, or even record and store a voice call. This type of analyzer can be
implemented as a rack-mounted box with integrated storage, or it can reside on the packet core
network elements as a software application.

In summary, signaling and protocol analyzers offer operators a convenient user interface with
which they can see graphical representations of traffic loading patterns at Layers 2 through 4 and
a limited view into specific users and applications.

3.2.4 Deep Packet Inspection


To analyze the content in the data stream, instead of simply monitoring the type of signaling used
to establish data connections, several suppliers have introduced DPI tools. DPI tools typically
include equipment permanently installed in the IP layers of the mobile network, and the current
trend is for high-capacity solutions (60 Gbps and trending up to 100 Gbps) to monitor every
packet transmitted through the network. DPI tools can isolate the type of traffic transmitted,
allowing the operator to precisely understand which users are downloading video content, web
pages, FTP files, VoIP traffic, or other applications.

Current state-of-the-art DPI tools provide the ability to perform real-time analysis on high-capacity
data networks. At CTIA 2010, companies such as Allot Communications, CCPU, Procera, and
Tellabs were showing DPI capabilities up to 60 Gbps to 80 Gbps, which enables every packet to
be inspected in real time. DPI solutions have advanced to the extent that they can pick off
signaling traffic to identify the individual user device and/or NodeB associated with each data
packet. So far, DPI vendors appear to be focused on Layer 5-7 identification of applications and
session traffic, while protocol and signaling analyzers focus on Layer 3-4 efficiency. DPI is
presently moving toward the prioritization of traffic by application while other solutions are
focused on network/transport layer efficiency, independent of the data application.

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Although DPI tools are becoming highly sophisticated and capable, the use of the data will
require time to mature. Mobile operators today typically use the analysis to understand data
traffic patterns (VoIP vs. web browsing vs. video, etc.), but the future evolution of these tools will
become more integrated with different levels of optimization. Consider the following:

• Certain types of network traffic will automatically be given higher priority (i.e., VoIP traffic may
require higher priority to avoid latency, while web browsing may be more tolerant).
• New pricing plans for end users will evolve based on the capability inherent in DPI engines in
order to separate the pricing for different kinds of data. Facebook fanatics may be willing to
pay a premium for each Facebook megabyte, but not for VoIP traffic. Conversely, other
users will have different priorities. The rich diversity of end-user preferences creates fertile
ground for DPI-based pricing plans to grow.

Note, though, that privacy is an issue that may inhibit the growth of DPI tools. So far, the general
public has not reacted to an operator’s capability to monitor traffic usage, but there is a risk that
privacy concerns in the wider consumer audience will impact an operator’s ability to prioritize
traffic. In addition, any ongoing discussion of “net neutrality” in regulatory circles could inhibit the
growth of DPI tools in the mobile data network.

3.3 Centralized vs. Distributed Optimization


The algorithms used for decision making in network optimization are often carried out in a central
operations support system (OSS), taking advantage of a central point for data collection. Actions
that require data from multiple network elements and affect parameter settings in multiple
modules are usually centralized. On the other hand, actions that can take place independently of
other network resources can be localized in a single eNodeB, and software optimizing these
areas can reside in the eNodeB itself.

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The distributed SON architecture is best suited to use cases involving network element
self-configuration, which typically take place upon deployment of the system. Optimization of
efficiency, QoS, and adaptation to failure conditions are use cases that are expected in future
LTE systems but have less relevance in the early deployment phase. As a result, ABI Research
anticipates SONs will move from distributed architectures toward more centralization over time,
with different use cases handled in different ways.

Figure 3.4 Centralized SON vs. Distributed SON Architectures

(Source: Comarch)

3.4 Interoperability for Multiple Optimizing Algorithms


The danger of creating a system with dozens of algorithms lies in the tendency for separate
processes to work at cross purposes to each other. While one algorithm may be adjusting
parameters such as frequency settings to avoid interference, a second algorithm may be
changing the frequency settings back to accommodate changes in another cell. An overall
strategy is necessary to resolve any conflict between systems.

This issue becomes especially acute in the case of multi-generational, multivendor systems.
3G optimization on Vendor A’s NodeB may conflict with 4G optimization on Vendor B’s
femtocell or Vendor C’s LTE infrastructure.

Concern over interoperability leads to a major question for mobile operators: Should they
combine SONs supplied by their major OEM suppliers with monitoring/optimization solutions
from third-party vendors?

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The scope of endless possible issues between different vendors and algorithms is too large to
address in this report, but we can highlight a few of the known issues as examples:

• Any optimization in the Layer 2 or 3 packet protocols that compress data will render DPI
useless for monitoring the content at higher layers.
• RF frequencies and power levels can be adjusted by multiple algorithms as new cells are
configured or as interference avoidance is adjusted. Multiple algorithms that address Layer 1
and 2 radio settings may compete with each other, resulting in either constant oscillation in
the optimization algorithms or convergence (a non-optimal compromise).
• A firewall crash (or virtually any failure in the core network) can drop thousands of users at
one time. When the users re-register on the network, hundreds or thousands of data
connections will initiate at once, overloading the NodeB, RNC, HLR, and SGSN
simultaneously.

Overall, the concern about interference between algorithms is not well articulated in the
market today, but it remains a nagging doubt for operators. Vendors with partnerships and
pre-tested solutions will emerge over the next few years in order to satisfy customer anxiety.
To some degree, standardization of SONs and DPI will help to define the boundaries for each
solution. Nevertheless, the overall complexity of possible interactions between solutions is
so large that standardization and OSS software alone will not be enough. Growth of the
market for independent optimization solutions depends on each vendor’s ability to pre-test its
solutions in a wide variety of network environments.

3.5 Mobile Offloading


The notion of pulling mobile data traffic away from the mobile core network has risen very quickly to
the forefront of the industry recently. Femtocells, Wi-Fi, and backhaul offloading have all become very
hot topics lately, as the mobile tsunami threatens to swamp many mobile data operators.

Femtocells and Wi-Fi lie outside the scope of this report since they are consumer premises
solutions. In brief, though, the network can also offload its own data traffic. New solutions from
companies such as Stoke can recognize the originating application for network traffic and can
redirect the traffic directly to an Internet node instead of routing the traffic through a 3G
SGSN/GGSN or through an LTE media gateway.

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Section 4.
KEY INDUSTRY PLAYERS
4.1 Actix Ltd
Based in London, Actix is an independent private company that supplies OSS software. Actix
offered a self-optimizing network solution during early 2009 for LTE networks. The company
supports both network operators and OEM customers with software development related to
network management and optimization.

4.2 Agilent Technologies


Agilent has participated in the mobile ecosystem from its early days as a supplier of test
equipment in the radio layer and protocol and signal analyzers to develop network infrastructure.
As networks have developed, Agilent has migrated toward more support of “live” networks, with
probes and software to monitor and aggregate information for the operator. The company also
supplies OSS software for mobile networks.

4.3 Alcatel-Lucent
Alcatel-Lucent supplies network infrastructure to the mobile market, and today’s organization
combines business groups from Alcatel, Lucent, and Nortel to cover GSM, CDMA, and
UMTS/HSPA technologies. The company offers its “Wireless Network Guardian” as a
“dynamic control” OSS solution, whereby Alcatel-Lucent can monitor and troubleshoot
multivendor networks. The company is focused on the multivendor aspect of this
monitoring/optimization product line, and has placed over twenty systems with network
operators globally over the past eighteen months. Overall, Alcatel-Lucent has been able to
move quickly into the monitoring/optimization space and will directly compete with nimble
smaller companies for a sizable share of the independent monitoring market.

4.4 Allot Communications


Allot is an independent supplier of DPI solutions with a focus on the mobile market. The
company devotes significant R&D effort toward finding efficient “signatures” for mobile data traffic
so that it can handle high-capacity DPI cases in which 45 Mbps to 60 Gbps must be handled in
real time. Allot’s products examine every packet and can isolate the user and the cell site
involved in order to integrate with policy control functions. The company reached $41 million in
both fixed and mobile network revenue during 2009. Allot is in a good position, with a reputation
for having efficient solutions for high-capacity DPI applications.

4.5 Amdocs
As a large supplier of OSS for a wide variety of networks, Amdocs collects roughly $2.8 billion in
revenue annually. Only a small proportion of its revenue comes from the mobile infrastructure
market, due to the integrated bundles offered by mobile specialists such as Ericsson, Huawei,
and Nokia Siemens Networks. However, Amdocs has excellent know-how in defining the
customer experience and should be able to offer some useful tools for the
monitoring/management of higher layers (Layer 4 and above). Still, the company is likely to
continue to have difficulty capturing a major share of the general mobile OSS market.

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4.6 Anritsu Company


Anritsu Company and its parent Anritsu Corp in Japan are focused on the test and measurement
market. They have established leading market share for portable radio test gear for mobile
networks. Anritsu collected roughly $490 million in test and measurement-related revenue in
2009. In addition, the company supplies OSS-related software monitoring solutions to 3,
T-Mobile, Telcel, Vodafone, and other operators.

4.7 Astellia
Astellia has supplied radio probes and related monitoring software to as many as 150 operators
worldwide, focusing on helping operators optimize their radio layer. The company collected
roughly $35 million in revenue during 2009, growing slightly despite the global recession. Astellia
currently supports 2G and 3G technologies and can aggregate KPIs from its own probes, as well
as information from network elements. Astellia is publicly traded with headquarters in France.

4.8 Azimuth Systems Inc


Azimuth Systems focuses on pre-deployment laboratory testing for mobile networks, with new
development stepping out into field testing for trials and deployment. The company works closely
with either network operators or OEM customers to bring its staff’s experience in radio frequency
propagation and channel conditions into drive test scenarios. While Azimuth does not participate
heavily in the monitoring of live networks, it does get involved with troubleshooting and
optimization of the radio performance layer.

4.9 Comarch
Based in Warsaw, Comarch is an established supplier of OSS mediation software, taking
information from network elements or network management systems to present a unified view of
network performance. The company also focuses on inventory management and the use of
network configuration information to trace the root cause of network issues. Comarch is more
active in OSS outside of the mobile/wireless market, but has focused recent efforts on the
stronger growth in the mobile OSS market. Overall, Comarch will be challenged to compete with
large network equipment manufacturers and independent mobile specialist vendors.

4.10 Continuous Computing Corp


Continuous Computing provides enabling technologies directly to OEMs, rather than to network
operators. The company supplies ATCA-based racks with software for network monitoring, protocol
stacks and software for 3G and 4G networks, as well as professional services to customize monitoring
solutions. Continuous Computing addresses both macro layer and femtocell solutions. During the
past few years, it has migrated into the DPI market, providing at least twelve different mobile
infrastructure manufacturers with a basic DPI engine to analyze their traffic.

4.11 Empirix
Privately held and headquartered near Boston, Empirix has roughly 280 employees. The
company provides quality assurance software for IP networks in multiple markets, ranging
from wireline telephony to cable networks and mobile networks. Empirix has had a slow start
in capturing major mobile customers and may be challenged to find a place in the mobile
market as LTE vendor relationships solidify.

4.12 Ericsson AB
Ericsson holds leading market share in the mobile network infrastructure market. Based in
Stockholm with over 80,000 employees worldwide, Ericsson maintains its leadership through
strong relationships with hundreds of network operators. The company supplies mobile radio

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access, transport, and packet core infrastructure, including SON systems for LTE. In
addition, Ericsson provides OSS software solutions and services to assist operators in
monitoring and optimizing their networks. Roughly 38% of Ericsson revenue comes from the
services organization. It is interesting to note that in 2003, only 24% of revenue came from
services, showing a trend toward more service support – even though there is no official
company strategy to move in that direction.

Ericsson acquired Redback Networks in 2006, giving the company greater capability and market
share in IP routing. Recently, this organization has been able to provide Ericsson with DPI tools for
mobile networks as well, thus providing Ericsson with better diagnostic capability for mobile networks.

Note that Ericsson systems present an opportunity for independent vendors to enter with OSS
software, probes, and DPI solutions because the company’s infrastructure is perceived as
relatively inflexible for monitoring and optimization customization.

4.13 EXFO Inc


EXFO acquired NetHawk Oyj in March 2010, creating a combined company to offer a strong
competitor in IP packet capture, DPI, and transport monitoring tools, as well as protocol analysis
and troubleshooting tools. The company’s solutions address fixed and mobile IP networks, with a
clear focus on the mobile market despite revenue behind some competitors in protocol analysis
and DPI. It reported roughly $60 million in revenue related to EXFO’s protocol
analysis/troubleshooting tools and wireline focus and roughly $40 million related to NetHawk’s
protocol analysis, network simulation, DPI, and service assurance solutions for mobile networks.

4.14 Huawei Technologies


China-based Huawei has quickly become a strong competitor to Ericsson and Nokia Siemens
Networks in the mobile infrastructure market. Huawei has been extremely effective in
capturing new network opportunities for GSM and WCDMA networks, overlaying its
infrastructure on legacy systems provided by other vendors in most cases. The company has
won contracts with very inexpensive hardware, and the software provided with the network
has been useful for managing the Huawei elements in the network. Huawei’s OSS suite is
less popular with regard to aggregating performance monitoring from multivendor networks.
A growing opportunity to support Huawei networks with software solutions and monitoring
systems will be a key part of the independent market for optimization solutions.

4.15 Keynote Systems, Inc


Keynote Systems provides a unique mobile monitoring solution based on a smartphone client.
The Keynote “Mobile Device Perspective” measures download speeds for web sites using a
typical smartphone, creating a useful service for network operators and enterprise customers to
check the performance of mobile web services. Keynote currently controls virtually all of the
revenue for monitoring solutions based on UE client applications.

4.16 Mobidia
Mobidia is a pre-revenue startup company that focuses on optimization of the transport layer.
The company provides a proxy for TCP sessions that uses software loaded in the user’s
device and in the GGSN (or a separate box) to bypass the mobile transport layer and boost
efficiency. An estimated 15% to 30% efficiency increase in Layer 4 is typical for existing
smartphones and 3G networks. Mobidia has roughly 15 million connection manager clients
installed so far with one major global mobile operator.

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4.17 Motorola
Despite a very strong history in mobile communications, Motorola has struggled to capture a
major position in 3G and LTE networks, leaving the company with a relatively small but loyal
customer group. Motorola plans to deploy an LTE network for KDDI in Japan, along with
Zain Saudi Arabia and others. The company has developed a distributed approach for SONs and
is pushing to gain advantage through adoption of TD-LTE as a major variant of the LTE standard.

4.18 Nippon Electric Corp (NEC)


NEC began shipping LTE base stations to NTT DoCoMo during March 2010, highlighting its
continued presence as a strong infrastructure supplier within the Japanese market. In addition,
NEC has some early LTE trial deployments with Telefonica and SingTel. The company includes
SON technology in its LTE solution, as well as software from Actix as an optimization algorithm.
NEC will face a challenge in competing with the low costs of Huawei and ZTE, as well as the
political clout and scale of Ericsson/NSN/Alcatel-Lucent.

4.19 Nokia Siemens Networks


Nokia Siemens Networks is a joint venture of Nokia and Siemens, with 60,000 employees and a
global presence as a supplier of mobile infrastructure. During 2010, NSN has renewed its push
to provide service assurance solutions to mobile operators. These solutions cover multivendor
networks and bring SON features to market in advance of LTE networks. NSN’s SON uses a
multi-level architecture with distributed elements and centralized elements, with some capability
to handle multivendor inputs for standardized KPIs. The company differentiates through the use
of multiple SON layers in the radio layer, the routing/transport layers, and a new capability to be
introduced in the core network. NSN has a good stable of service assurance products and can
handle multivendor networks. However, it will be challenged by nimble third-party vendors of
service monitoring and optimization solutions as NSN’s GSM footprint becomes less important in
vendor selections.

4.20 Procera Networks, Inc


Procera is a fast-growing supplier of DPI products for both fixed and mobile networks, with
roughly $17 million in annual revenue from fixed and mobile networks. The company claims
to have the most comprehensive library of signatures available, which it uses to provide the
best high-resolution view of applications running on the network. This claim is supported by
network operator comments and the 1,600 applications identified by Procera today. The
company supplies both OEMs and network operators and has a focused strategy.
Therefore, ABI Research sees Procera as a company to watch.

4.21 Radcom
Based in Israel, Radcom is a specialist supplier of network monitoring solutions with expertise in
radio optimization. The company provides a system of probes and service monitoring software
that operates as a standalone solution, independent of the radio access network it is monitoring.
Radcom currently reports roughly $12 million in annual revenue, but sees strong revenue growth
coming in the radio optimization space. Its solutions attempt to analyze not just Layers 1 and 2,
but also the higher layers. Radcom’s system can pick off information about the origin or type of
data transmitted without DPI so that the company can optimize radio parameters. The limited
scope of the Radcom solution is likely to be successful, but only in its niche of radio optimization.

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4.22 Spirent
Spirent focuses most of its effort on test solutions, instead of the monitoring and optimization of
live mobile networks. The company participates in the optimization of transport layer for mobile
networks, capturing information on throughput and packet loss through probes embedded in the
network. Spirent’s core expertise in the measurement of jitter and latency is useful in isolating
problems. However, in the fast-changing market for mobile monitoring and optimization, Spirent
may be left out of key segments if the company cannot move quickly to offer a more
comprehensive suite of probes and software.

4.23 Stoke, Inc


Stoke is a Silicon Valley startup company that has grown a reputation for effective offload of
mobile network traffic. Its session exchange solution diverts IP traffic, bypassing the SGSN and
GGSN for Internet traffic and selectively passing other mobile traffic through. The Stoke
hardware resides physically between the RNC and SGSN, monitoring the Iups interface to
reroute the traffic as needed. Stoke includes a DPI solution or an IMEI (International Mobile
Equipment Identity) “sniffer” to detect the application and user type, thus allowing new business
models and savings in backhaul equipment. ABI Research expects rapid growth in the offload
segment, and Stoke will likely move quickly to take a significant share.

4.24 Tektronix Communications


Tektronix Communications is a wholly owned subsidiary of Tektronix Inc (which is owned by
Danaher), giving the organization a focus on monitoring and optimization of mobile networks.
The company collects roughly $300 million per year in annual revenue for test equipment, probes,
and monitoring software, most of which comes from the mobile market. Tektronix
Communications acquired Arantech in 2008, adding roughly $35 million in OSS revenue and an
expanded product focus. The company supplies to both OEMs (13% of revenue) and network
operators (87% of revenue). Tektronix commands a leading position in probe-based monitoring
and optimization software, and its relationships with almost all key players ensure a strong place
as LTE network monitoring ramps up.

4.25 Tellabs, Inc


Tellabs generated $1.5 billion in revenue during 2009, with business areas ranging from mobile
networks and backhaul solutions to optical networks and Ethernet networks. The company
supplies a “Smart GGSN,” which performs DPI to enable optimization in the core network and
routing/transport layers. Tellabs’ equipment typically does not replace network elements like the
GGSN. Rather, the company’s equipment makes the elements more efficient through by
providing a dedicated DPI engine and feeding information back to the GGSN or other network
elements for optimization savings of up to 15%. Tellabs also gets involved with policy engines to
block traffic or prioritize certain applications.

4.26 Venturi Wireless


Venturi Wireless is a private company based in California with multiple technologies for mobile
data optimization. The company offers server-based optimization for video and data applications,
as well as a client server architecture with software on the mobile terminal. Venturi Wireless uses
a proprietary protocol to replace TCP for higher efficiency without compressing data.

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4.27 Zhong Xing Telecommunications Equipment Company Ltd (ZTE)


Founded in 1985 by state-controlled companies involved in China’s Ministry of Aerospace,
ZTE has grown very quickly to become a solid global contender in GSM, 3G, and LTE
networks. The company is now traded publicly in Hong Kong and Shenzen, and has
established customers in more than 140 countries.

ZTE offers SONs for the LTE standard, and has integrated some of the self-diagnostic features of
this technology into its existing GSM and 3G network solutions.

4.28 Overall Market Share Estimates


A look at the overall market for independent monitoring and optimization solutions (excluding
SON solutions and OSS software provided by major OEMs) reveals that just a few major vendors
have the overall breadth of product capability to capture major market share. Specialist vendors
in individual areas such as DPI, OSS software, or specific monitoring areas without the breadth of
a wider product line are not able to compete for the larger contracts involving test equipment,
probes, analyzers, and software. As network operators get buried in complexity, the ability to
handle this end-to-end functionality will become more and more important.

Chart 4.1 Market Shares for Independent Monitoring/Optimization Vendors, 2009

Agilent
13%
Others
29%

Anritsu
20%

Astellia
5%
Tektronix Comms
27% EXFO
6%

(Source: ABI Research)

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Section 5.
INDUSTRY COLLABORATION
5.1 3GPP Self-Organizing Networks
SON use cases are defined in the LTE (E-UTRAN) standards by the RAN3 working group,
beginning with Release 8. Additional SON functionality will be added to future releases. The
primary purpose behind the standardization of use cases is to ensure the interoperability of
SONs in multivendor environments.

Standardized SON features will expand in scope as the expected LTE network evolves over time.
Release 8 covers configuration features, as well as:

• Automated neighbor relations


• Automated software downloads
• Automated inventory tracking
• Automated Peripheral Component Interconnect (PCI) assignment

Release 9 is expected to address issues related to more mature LTE networks, including:

• RF optimization for coverage and capacity


• Random Access Channel (RACH) optimization
• Load balancing
• Energy savings
• Operation and Maintenance interfaces to control femtocells
• UE reporting for end-to-end radio optimization

Technical report TR-36.902 codifies the proposals for Release 8 and Release 9 SON features.

http://www.3gpp.org/ftp/specs/html-INFO/36902.htm

5.2 SOCRATES
The SOCRATES project (Self-Optimisation and Self-Configuration in Wireless Networks) brings
together a non-profit consortium of companies, including Ericsson, Nokia Siemens Networks,
Vodafone, and others, with the aim to accelerate the adoption of technologies to enable SONs in
mobile networks. This organization creates a forum for discussion of use cases and architectures
outside of the political environment of the 3GPP standards process.

The SOCRATES project is supported by the European Union under the 7th Framework Program,
and is currently scheduled to run from January 1, 2008 to December 31, 2010. The EU’s goal for
SOCRATES is to assert European leadership in mobile networks, coordinating a strategy for
global standardization to benefit European suppliers and network operators.

http://www.fp7-socrates.org/

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Section 6.
MARKET FORECASTS
The overall outlook for wireless infrastructure involves slow growth, with severe price erosion
cutting into the profitability of RAN equipment and hardware for both 3G and LTE. However, the
market for network monitoring and optimization solutions includes several bright spots, as strong
growth is expected in technologies that improve efficiency and quality of service.

Chart 6.1 Mobile Monitoring & Optimization Equipment Revenue by Segment, World Market,
Forecast: 2009 to 2015

1,400
UE Clients
1,200 Radio Test
Radio Probes
1,000 Routing/Transport
OSS
($ Millions)

800 DPI
Offloading
600

400

200

0
2009 2010 2011 2012 2013 2014 2015

(Source: ABI Research)

In particular, tools that provide good end-to-end visibility (such as DPI and some OSS software)
and highly focused solutions for specific cost reductions (such as offloading or transport
optimization) will be adopted most quickly in both 3G and 4G networks. On the other hand, SON
solutions will compete with independent radio optimization solutions, stunting the growth of
independent probe-based monitoring tools in the radio layer. UE clients will see solid growth from
almost zero in 2010, with the potential to become a mainstream solution if lightweight client
applications are proven to be effective in end-to-end optimization.

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6.1 Regional Outlook


Countries with the most advanced data networks will lead the way in monitoring and optimization.
For mobile operators, monitoring 3G networks is currently viewed as a defensive measure.
Smartphone and laptop users are changing their data patterns so quickly that operators fear the
kind of public embarrassment that AT&T Wireless has experienced during 2009 and 2010.

Chart 6.2 Mobile Monitoring & Optimization Equipment Revenue by Region, World Market,
Forecast: 2009 to 2015

1,200
Asia-Pacific
North America
1,000 Western Europe
Eastern Europe
Africa
800
South America
($ Millions)

Middle East
600

400

200

0
2009 2010 2011 2012 2013 2014 2015

(Source: ABI Research)

Currently, Japan and Western Europe represent the strongest markets for advanced
monitoring equipment, with the United States catching up quickly. Developing markets lag
behind, as users in Eastern Europe, Africa, South America, and the Middle East use less
mobile data than power users in more mature networks. North America’s growth wave is
taking place earlier than other regions and should flatten out in 2014-2015, when the basic
monitoring hardware for most LTE networks has been fully deployed.

Over the next five years, ABI Research expects the Asian market to overtake North America
and Western Europe for advanced monitoring and optimization equipment. This forecast is
due to the higher expected subscriber base and higher growth in mobile Internet data in
Asian countries without widespread broadband service.

The five-year outlook for developing markets in Africa, South America, and the Middle East lags
behind Asia. Quality-of-service requirements in these emerging markets will not demand the
robust monitoring solutions that Japan, Korea, and China will implement.

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6.2 OEM Market vs. Direct Sales to Operators


Independent suppliers of network monitoring solutions are currently moving more quickly than
major OEMs. The result is a trend toward more direct independent business with network
operators. In particular, DPI solutions, network probes, and OSS software are currently trending
toward outside suppliers despite the product offerings of a few network equipment manufacturers.
Over time, ABI Research expects this trend to reverse. Network OEMs will increase the
sophistication of SON solutions, and as LTE is deployed, the number of use cases and
functionality for self-optimization will rise. OEMs will buy many of the best solutions from
independent suppliers, and will implement pieces like the radio optimization and self-configuration
functions internally. By 2015, revenue for independent suppliers of monitoring/optimization
solutions will be roughly 30% through OEMs and 70% direct to operators.

Chart 6.3 Mobile Monitoring & Optimization Equipment by Customer Type, World Market,
Forecast: 2009 to 2015

100%

90%

80%
Netw ork Operator
70% OEM

60%

50%

40%

30%

20%

10%

0%
2009 2010 2011 2012 2013 2014 2015

(Source: ABI Research)

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6.3 Outlook by Network Generation (2G/3G/4G)


Monitoring/optimization of 3G networks will dominate the market for the next five years. As
LTE networks are deployed, supporting monitoring and optimization equipment will always
lag behind, addressing problems as the system gets loaded (and sadly, in some cases,
addressing problems after the system gets overloaded).

ABI Research’s forecast includes radio test equipment used for monitoring emissions and power
levels for GSM and 2G CDMA networks, which represented roughly 40% of the 2009 market.
Excluding radio test equipment, almost all of 2010 monitoring and optimization revenue will be
tied to 3G networks, with 90% of the solutions monitoring U-TRAN (UMTS/HSPA/HSPA+)
networks and 10% monitoring EV-DO networks. Operators are clearly focused on mobile data
optimization, and spend far less effort on mobile voice optimization nowadays.

In addition, many independent solutions such as OSS and DPI are in deployment on 3G
networks today, but will be used for LTE networks later. ABI Research’s forecast categorizes
the monitoring/optimization solutions according to the initial primary usage, even if the same
solution is used for multiple generations over time.

Chart 6.4 Mobile Monitoring & Optimization Equipment, 2G/3G/4G, World Market, Forecast: 2009 to 2015

100%

90%

80%
4G
70%
3G
60%
2G
50%

40%

30%

20%

10%

0%
2009 2010 2011 2012 2013 2014 2015

(Source: ABI Research)

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6.4 Smartphone Client Outlook


Solutions that utilize client software on the mobile terminal itself offer an intriguing alternative to
pure network solutions, addressing the network operator’s desire for a true “end-to-end” solution.
The revenue associated with these solutions sits at practically zero today, with early solutions just
reaching the market. As a result, even with very strong growth, the market for client-based
solutions is likely to remain small through 2015.

It is unclear today whether every smartphone will need a monitoring client installed. In cases
such as the Venturi Wireless optimization protocol or the Mobidia TCP proxy, the step toward
transport optimization requires a client on every smartphone. Simpler monitoring concepts may
not need every user to act as a mobile “drive test.” As the market for client-based solutions
develops, the choice between monitoring and full optimization will dictate the scale of growth.

Chart 6.5 Mobile UE Clients for Network Monitoring Revenue by Region, World Market, Forecast: 2009 to 2015

60

Middle East
50 South America
Africa

40 Eastern Europe
($ Millions)

Western Europe

30 North America
Asia-Pacific

20

10

0
2009 2010 2011 2012 2013 2014 2015

(Source: ABI Research)

Note: Enterprise sales of clients to monitor mobile web traffic or web site performance are not
included in ABI Research’s forecast. The above chart refers to client-based monitoring and
optimization solutions and includes sales of the smartphone client software, as well as any
accompanying server software in the network.

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6.5 Radio Test Equipment Outlook


Spectrum analyzers, vector network analyzers, and scalar analyzers today often sit in the
back of a cell technician’s truck, ready for the endless site tests and drive tests that
accompany changes to 2G and 3G networks. While these portable instruments are not
always characterized as “monitoring and optimization” solutions, in fact these are the primary
tools for optimizing the physical aspects of the radio layer.

LTE-capable test equipment is available in the market today, so sales are shifting quickly from
2G/3G test gear to the full capability. Even if the equipment is used for 2G or 3G systems,
operators planning for the future want LTE functionality built in.

Chart 6.6 RAN Portable Test Equipment Revenue by Region, World Market, Forecast: 2009 to 2015

250

200

Middle East
South America
150
Africa
($ Millions)

Eastern Europe
Western Europe
100 North America
Asia-Pacific

50

0
2009 2010 2011 2012 2013 2014 2015

(Source: ABI Research)

Western Europe and North America have represented the majority of the RF test equipment
market for many years, due to the attention paid in Western countries to emissions regulations.
Essentially every base station and every NodeB is tested for compliance to spurious emissions
targets. Over the next five years, ABI Research expects the Asian, Eastern European, and
emerging markets to begin monitoring compliance with emissions regulations, as well as
optimizing power levels and antenna tilt in the field for improved coverage and capacity.

The market for portable RAN test equipment will be essentially flat because the market has
already grown during 2G and 3G operations to involve multiple test boxes for each
technician. New sales will include new functionality for LTE/WiMAX testing, but the price
differences and volume increases will be flat. At a radio level, the new standards represent
business as usual, with new features added to the box.

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6.6 Outlook for Probes in the RAN


Probes in the radio access network essentially provide a duplicate or parallel source of
information, at times with better granularity and visibility than the network elements provide
through the original OSS software. Operators buy RAN probes today in order to access a more
user-friendly and intuitive troubleshooting interface provided by a third-party vendor.

As operators consider deployment of LTE networks with self-organizing features, the penetration
of probes in Layers 1 and 2 for 2G and 3G networks has grown less rapidly than other network
features. Operators are unsure of the eventual scope of self-optimizing LTE networks and how
their future systems will be integrated. LTE networks may, in fact, need fewer probes for
monitoring and troubleshooting than 3G networks. Thus, the likely outcome over the next five
years will be slow growth for RAN probes at 5% to 10% per year.

The dominant Western European/American market for RAN probes will grow incrementally, with
other regions increasingly investing in improved diagnostics as operators in developing countries
dive into multivendor networks.

Chart 6.7 RAN Monitoring Probes Revenue by Region, World Market, Forecast: 2009 to 2015

160

140

120
Middle East
100 South America
($ Millions)

Africa
80 Eastern Europe
Western Europe
60 North America
Asia-Pacific
40

20

0
2009 2010 2011 2012 2013 2014 2015

(Source: ABI Research)

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6.7 Outlook for Transport Monitoring/Optimization


Layers 3 and 4 (network layer and transport layer) represent a stronger market for stationary
probes, troubleshooting solutions, and optimization schemes than Layers 1 and 2 (radio layer
and data link layer). In the RAN, the air interface is generally not changed to streamline
traffic due to the wide variety of handsets and data terminals on the network. However, in
setting up data sessions and setting packet sizes for transport, both ends of the
communications link can be controlled, and several vendors have found ways to improve on
the efficiency of TCP and are finding willing customers.

Monitoring 3G data sessions has also become a major concern for network operators, as iPhones and
other web-friendly smartphones are driving a huge increase in data signaling traffic. Nobody expects
SON to address this issue for 3G networks or even early LTE networks, so the independent market
for monitoring solutions should see strong growth over the next five years. Growth in Layer 3 and 4
solutions should scale along with data traffic growth, as the capacity handled by monitoring/
optimization solutions will grow quickly in conjunction with the growth in data usage.

Western Europe, North America, and Japan are the strongest markets for transport
optimization. Growth in China and India will take place later as mobile broadband begins to
comprise a significant portion of traffic.

Chart 6.8 Transport Monitoring/Optimization Equipment Revenue by Region, World Market,


Forecast: 2009 to 2015

700
Middle East

600 South America


Africa
Eastern Europe
500
Western Europe
North America
400
($ Millions)

Asia-Pacific

300

200

100

0
2009 2010 2011 2012 2013 2014 2015

(Source: ABI Research)

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6.8 Mobile OSS Outlook


The total OSS market for mobile networks totals is in the billions of dollars annually, with the
majority of sales bundled together with network infrastructure. The independent market for OSS
to augment visibility and management of the system will reach $450 million in 2010, with 20%
growth over the next five years driven by increasing complexity in the network. OSS software
provided by major OEMs will increasingly be replaced by independent software, which can adapt
more quickly and flexibly to unique aspects of each network’s vendor base and architecture.

Chart 6.9 OSS Monitoring/Optimization Tools Revenue by Region, World Market, Forecast: 2009 to 2015

1,200
Middle East
South America
1,000
Africa
Eastern Europe
800 Western Europe
North America
($ Millions)

600 Asia-Pacific

400

200

0
2009 2010 2011 2012 2013 2014 2015

(Source: ABI Research)

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6.9 DPI Outlook


One of the strongest growth segments in mobile infrastructure centers on Deep Packet Inspection
tools. Because DPI is proven in Internet networks, mobile operators can readily adopt the technology
from established vendors and expect high levels of reliability. The dozens of DPI tests and trials
underway now should bear fruit during 2010 and 2011, driving 70% to 100% growth over the next few
years.

Asia, Western Europe, and North America all represent strong markets for high-capacity DPI
tools that examine every packet. Due to the exponential growth of mobile data traffic in these
regions, DPI revenue will also grow quickly. LTE deployment in highly developed countries
should accelerate DPI adoption even more as operators prepare for their customers using
LTE as a broadband replacement.

Chart 6.10 Mobile DPI Infrastructure Revenue by Region, World Market, Forecast: 2009 to 2015

1,400
Middle East
1,200 South America
Africa
1,000 Eastern Europe
Western Europe

800 North America


($ Millions)

Asia-Pacific

600

400

200

0
2009 2010 2011 2012 2013 2014 2015

(Source: ABI Research)

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6.10 Offloading Outlook


Mobile network offloading will expand quickly during the 2011-2012 timeframe due to the growing
gap between transport bandwidth and end-user demand. Rather than “optimizing” transport, an
offloading solution moves the most bandwidth-hungry applications off the operator’s core
infrastructure. This approach should find a timely market window for the most data-intensive
networks now and acceptance from a wide number of global networks over the next three years.

Femtocells (not included in the forecast for “offloading” as an optimization solution) are distinct in
that femtocells will not sense the content and divert individual packets to the Internet; instead,
femtocells divert all traffic to the Internet.

Offloading is likely to be most popular with network operators that feel capable of implementing
third-party solutions. In Asia and developing countries, operators do not have the expertise to feel
comfortable in implementing a new solution, so the growth of offloading solutions will be slower in
those regions. North American operators and multinational operators based in Europe and advanced
Asian economies are conducting trials now, and ABI Research expects strong growth in those regions
through 3G networks over the next three years. LTE networks are likely to be outfitted with offloading
solutions on deployment, so the 3G market is the primary focus for now.

Chart 6.11 Mobile Backhaul Offloading Infrastructure Revenue by Region, World Market, Forecast: 2009 to 2015

180

160 Middle East


South America
140
Africa
120 Eastern Europe
Western Europe
($ Millions)

100
North America
80 Asia-Pacific

60

40

20

0
2009 2010 2011 2012 2013 2014 2015

(Source: ABI Research)

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Section 7.
RECOMMENDATIONS
7.1 For Network Operators
Every network operator has seen the tremendous rise in mobile data consumption, but very
few operators have adequate visibility to pinpoint the source of bottlenecks in their networks.
Operators need to develop a comprehensive monitoring and optimization strategy in order to
avoid costly mistakes and delays.

The first operators that push through the painful process of integrating DPI tools, network diagnostics,
and new billing systems with tiered pricing structures will reap the benefits of increased customer
traction. Operators should stay focused on the end goal: increasing average revenue per user
through multiple data options with the infrastructure and policy engines to match.

7.2 For Network Equipment Manufacturers


Network OEMs should partner with other companies in multiple areas in order to integrate the
best possible flexibility and visibility into their networks. Differentiation in mobile networks is
moving toward ease-of-use and scalability, both of which can be multiplied by the use of
innovative diagnostic tools and a set of easy-to-use optimization algorithms.

Network equipment manufacturers can differentiate by folding all possible optimization solutions
into a multivendor, comprehensive optimization suite that has clear priorities. Competing
independent solutions will struggle with interoperability issues. Thus, the top-tier OEMs can
succeed by testing hundreds of combinations of network equipment and optimization solutions
and refining their overall set of algorithms to consistently adapt to complex networks.

As network OEMs increasingly move into managed services, each company should pay attention to
keeping network optimization solutions lined up with its services business strategy. Network OEMs
may find that a unique approach to optimization is a differentiator in their services business.

7.3 For Monitoring/Optimization Solution Vendors


Most monitoring/optimization suppliers will see strong growth in the next two to three years.
However, in the long term, only the companies with a clearly defined objective and obvious
interoperability will be able to penetrate the mainstream mobile markets.

Vendors of client-based solutions should focus on optimization, not simple performance


monitoring, in order to drive ROI through network efficiency savings.

Probe vendors should partner with network infrastructure manufacturers to drive the use of
probes into LTE hardware. Close integration with top-tier OEMs will drive the sales of monitoring
equipment more quickly than competing for attention with up-and-coming SON solutions.

In transport optimization, suppliers should stick to a focused strategy and avoid extending solutions
into areas that optimize multiple other layers simultaneously. Interoperability with other optimization
systems will be best served when the transport compression or session protocols are predictable.

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OSS vendors that can adapt quickly to an extremely wide array of network configurations will rise
above the pack. Most customers have, by now, experienced limitations in network visibility for
mobile data diagnostics. Therefore, the network operators are looking for OSS solutions that can
drill down to the root cause in troubleshooting scenarios, regardless of the infrastructure used.

Offloading vendors simply need to establish a track record of reliability in the field. The market
demand is inescapable, so simple offloading solutions that interfere as little as possible with other
network diagnostics and optimization will dominate this new segment.

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Section 8.
COMPANY DIRECTORY
Actix Ltd (United Kingdom) Facebook
www.actix.com www.facebook.com

Agilent Technologies Huawei (China)


www.agilent.com www.huawei.com

Alcatel-Lucent (France) Keynote Systems, Inc


www.alcatel-lucent.com www.keynote.com

Allot Communications (Israel) Mobidia, Inc (Canada)


www.allot.com www.mobidia.com

Amdocs Ltd Motorola, Inc


www.amdocs.com www.motorola.com

Anritsu Company (Japan) NetHawk Oyj (now EXFO)


www.anritsu.com (Finland)
www.nethawk.fi
Apple Inc
www.apple.com Nippon Electric Corp (NEC)
(Japan)
Astellia (France) www.nec.com
www.astellia.com
Nokia Siemens Networks
AT&T Wireless (Finland)
www.wireless.att.com www.nokiasiemensnetworks.com

Azimuth Systems Inc Procera Networks, Inc


www.azimuthsystems.com www.proceranetworks.com

Comarch (Poland) Radcom (Israel)


www.comarch.com www.radcom.com

Continuous Computing Corp Rohde & Schwarz (Germany)


www.ccpu.com www.rohde-schwarz.com

Empirix Stoke Inc


www.empirix.com www.stoke.com

Ericsson AB (Sweden) Spirent Communications


www.ericsson.com (United Kingdom)
www.spirent.com
EXFO Inc (Canada)
www.exfo.com Tektronix Communications
www.tektronixcommunications.com

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Tellabs Vodafone (United Kingdom)


www.tellabs.com www.vodafone.com

Venturi Wireless Zhong Xing Telecommunications


www.venturiwireless.com Equipment Co. (ZTE) (China)
www.zte.com.cn

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Section 9.
ACRONYMS
2G Second Generation Cellular Services

3G Third Generation Cellular Services

3GPP Third Generation Partnership Project

4G Fourth Generation Cellular Services

ANR Automatic Neighbor Relations

ARPU Average Revenue per User

ATCA Advanced Telecommunications Computing Architecture

BSS Business Support System

C/I Carrier to Interference Ratio

CAGR Compound Annual Growth Rate

CAPEX Capital Expenditure

CCPU Continuous Computing Corp

CDMA Code Domain Multiple Access

CPRI Common Public Radio Interface

CSCF Call Session Control Function

C-SON Centralized Self-Organizing Network

CTIA Cellular Telephone Industry Association

DPI Deep Packet Inspection

D-SON Distributed Self-Organizing Network

EMS Element Management System

eNB Enhanced Node B

EPC Enhanced Packet Core

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E-UTRAN Evolved Universal Terrestrial Radio Access Network

EV-DO CDMA Evolution-Data Only

EVM Error Vector Magnitude

FTP File Transfer Protocol

Gbps Gigabits per Second

GGSN Gateway GPRS Support Node

GoS Grade of Service

GPRS General Packet Radio Service

GSM Global System for Mobile

GW Gateway

HLR Home Location Register

HSPA High Speed Packet Access

HSS Home Subscriber Server

iDEN Integrated Digital Enhanced Network

IMEI International Mobile Equipment Identity

IP Internet Protocol

IP Intellectual Property

KPI Key Process Indicator

LTE Long Term Evolution

Mbps Megabits per Second

MME Mobility Management Entity

MMS Multimedia Messaging Service

MRF Multimedia Resource Function

MSC Mobile Station Controller

NEC Nippon Electric Corp

NEM Network Equipment Manufacturer

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NOC Network Operations Center

NSN Nokia Siemens Networks

OAM Operations, Administration, and Maintenance

OBSAI Open Base Station Architecture Initiative

OEM Original Equipment Manufacturer

OPEX Operating Expense

OSI Open System Interconnection

OSS Operations Support System

PC Personal Computer

PCI Peripheral Component Interconnect

PCRF Policy Control Rules Function

PDN Packet Data Network

PDP Packet Data Protocol

P-GW Packet Gateway

PIM Passive Intermodulation

PSTN Public Standard Telephone Network

QoE Quality of Experience

QoS Quality of Service

R&D Research & Development

RACH Random Access Channel

RAN Radio Access Network

RF Radio Frequency

RNC Radio Network Controller

ROI Return on Investment

RSSI Receive Signal Strength Indicator

SGSN Serving GPRS Support Node

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S-GW Serving Gateway

SMS Short Messaging Service

SOCRATES Self-Optimisation and Self-Configuration in Wireless Networks

SON Self-Organizing Networks (and sometimes Self-Optimizing Networks)

TB Terabyte

TCP Transmission Control Protocol

TD-LTE Time Domain Long Term Evolution

TD-SCDMA Time Domain-Synchronous Code Domain Multiple Access

UE User Equipment

UMTS Universal Mobile Telecommunications System

UTRAN Universal Terrestrial Radio Access Network

VoIP Voice over Internet Protocol

WCDMA Wideband Code Domain Multiple Access

Wi-Fi Wireless Fidelity

WiMAX Worldwide Interoperability for Microwave Access

ZTE Zhong Xing Telecommunications Equipment Company

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Table of Contents
Section 1. ........................................................................................................................................ 2
Executive Summary ....................................................................................................................... 2
1.1 Introduction ............................................................................................................................. 2
1.2 Market Drivers......................................................................................................................... 2
1.3 Technology.............................................................................................................................. 3
1.4 Outlook.................................................................................................................................... 4
1.5 Recommendations .................................................................................................................. 4
1.6 Conclusions............................................................................................................................. 5

Section 2. ........................................................................................................................................ 6
Market Overview............................................................................................................................. 6
2.1 Networks Evolve into Optimization ......................................................................................... 7
2.2 Key Performance Indicators.................................................................................................... 8
2.3 R&D/Testing/Deploying the Network .................................................................................... 10
2.4 Monitoring the Network ......................................................................................................... 10
2.5 Optimizing Performance ....................................................................................................... 11
2.5.1 Cost Reductions................................................................................................................. 11
2.5.1.1 CAPEX Reduction........................................................................................................... 11
2.5.1.2 OPEX Reduction ............................................................................................................. 12
2.5.2 Quality Improvement .......................................................................................................... 12
2.6 Optimizing Revenue.............................................................................................................. 13
2.7 Test Equipment Market ......................................................................................................... 13
2.8 Probes................................................................................................................................... 14
2.9 Protocol Analyzers ................................................................................................................ 16
2.10 Impact of Managed Services on Optimization .................................................................... 17
2.11 Operations Support Systems .............................................................................................. 18

Section 3. ...................................................................................................................................... 20
Technology ................................................................................................................................... 20
3.1 Self-Organizing Networks ..................................................................................................... 21
3.1.1 Self-Configuring Networks ................................................................................................. 21
3.1.2 Self-Optimizing Networks................................................................................................... 22
3.1.3 Self-Operating Networks.................................................................................................... 22
3.1.4 Self-Healing Networks ....................................................................................................... 22
3.1.5 Trends in Self-Organizing Networks .................................................................................. 23
3.2 Monitoring and Optimization Tools ....................................................................................... 23
3.2.1 Smartphone Clients............................................................................................................ 24
3.2.2 Network Probes.................................................................................................................. 25
3.2.3 Signaling and Protocol Analyzers ...................................................................................... 26
3.2.4 Deep Packet Inspection ..................................................................................................... 26
3.3 Centralized vs. Distributed Optimization ............................................................................... 27
3.4 Interoperability for Multiple Optimizing Algorithms................................................................ 28
3.5 Mobile Offloading .................................................................................................................. 29

Section 4. ...................................................................................................................................... 30
Key Industry Players.................................................................................................................... 30
4.1 Actix Ltd ................................................................................................................................ 30
4.2 Agilent Technologies............................................................................................................. 30
4.3 Alcatel-Lucent ....................................................................................................................... 30
4.4 Allot Communications ........................................................................................................... 30

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4.5 Amdocs ................................................................................................................................. 30


4.6 Anritsu Company................................................................................................................... 31
4.7 Astellia................................................................................................................................... 31
4.8 Azimuth Systems Inc............................................................................................................. 31
4.9 Comarch................................................................................................................................ 31
4.10 Continuous Computing Corp............................................................................................... 31
4.11 Empirix ................................................................................................................................ 31
4.12 Ericsson AB......................................................................................................................... 31
4.13 EXFO Inc............................................................................................................................. 32
4.14 Huawei Technologies.......................................................................................................... 32
4.15 Keynote Systems, Inc ......................................................................................................... 32
4.16 Mobidia................................................................................................................................ 32
4.17 Motorola .............................................................................................................................. 33
4.18 Nippon Electric Corp (NEC) ................................................................................................ 33
4.19 Nokia Siemens Networks.................................................................................................... 33
4.20 Procera Networks, Inc......................................................................................................... 33
4.21 Radcom............................................................................................................................... 33
4.22 Spirent................................................................................................................................. 34
4.23 Stoke, Inc ............................................................................................................................ 34
4.24 Tektronix Communications ................................................................................................. 34
4.25 Tellabs, Inc.......................................................................................................................... 34
4.26 Venturi Wireless .................................................................................................................. 34
4.27 Zhong Xing Telecommunications Equipment Company Ltd (ZTE) .................................... 35
4.28 Overall Market Share Estimates ......................................................................................... 35

Section 5. ...................................................................................................................................... 36
Industry Collaboration................................................................................................................. 36
5.1 3GPP Self-Organizing Networks........................................................................................... 36
5.2 SOCRATES .......................................................................................................................... 36

Section 6. ...................................................................................................................................... 37
Market Forecasts.......................................................................................................................... 37
6.1 Regional Outlook................................................................................................................... 38
6.2 OEM Market vs. Direct Sales to Operators........................................................................... 39
6.3 Outlook by Network Generation (2G/3G/4G)........................................................................ 40
6.4 Smartphone Client Outlook ................................................................................................... 41
6.5 Radio Test Equipment Outlook ............................................................................................. 42
6.6 Outlook for Probes in the RAN.............................................................................................. 43
6.7 Outlook for Transport Monitoring/Optimization ..................................................................... 44
6.8 Mobile OSS Outlook.............................................................................................................. 45
6.9 DPI Outlook........................................................................................................................... 46
6.10 Offloading Outlook .............................................................................................................. 47

Section 7. ...................................................................................................................................... 48
Recommendations ....................................................................................................................... 48
7.1 For Network Operators.......................................................................................................... 48
7.2 For Network Equipment Manufacturers ................................................................................ 48
7.3 For Monitoring/Optimization Solution Vendors ..................................................................... 48

Section 8. ...................................................................................................................................... 50
Company Directory ...................................................................................................................... 50

Section 9. ...................................................................................................................................... 51

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Acronyms...................................................................................................................................... 51
Scope of Study ............................................................................................................................. 58
Sources and Methodology .......................................................................................................... 59
Notes ............................................................................................................................................. 59

Please be aware that an Excel worksheet containing all market forecasts accompanies this
document. When downloading this report as a PDF from the ABI Research web site, please
check to see if the Excel worksheet is also available for download. If you have any questions
regarding this, please contact our client relations department.

TABLES

Table 1-1. Mobile Network Monitoring & Optimization Equipment Revenue, World Market,
Forecast: 2009 to 2015

Table 3-1. Applicability and Impact of Various Monitoring Solutions

Table 6-1. Mobile Monitoring & Optimization Equipment Revenue by Region, World Market,
Forecast: 2009 to 2015

Table 6-2. Mobile UE Clients for Network Monitoring Revenue by Region, World Market,
Forecast: 2009 to 2015

Table 6-3. RAN Portable Test Equipment Revenue by Region, World Market,
Forecast: 2009 to 2015

Table 6-4. RAN Monitoring Probes Revenue by Region, World Market, Forecast: 2009 to 2015

Table 6-5. Transport Monitoring/Optimization Equipment Revenue by Region, World Market,


Forecast: 2009 to 2015

Table 6-6. OSS Monitoring/Optimization Tools Revenue by Region, World Market,


Forecast: 2009 to 2015

Table 6-7. Mobile DPI Infrastructure Revenue by Region, World Market, Forecast: 2009 to 2015

Table 6-8. Mobile Backhaul Offloading Infrastructure Revenue by Region, World Market,
Forecast: 2009 to 2015

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SCOPE OF STUDY

In researching and reporting on mobile monitoring and optimization, ABI Research limited its
scope to the solutions available as products in the merchant market. Network equipment
manufacturers with bundled solutions for infrastructure equipment and OSS software are not
covered. However, adaptations of the OSS solutions offered separately by network OEMs for
use with multivendor networks are included in the body of the report and the market forecasts.

A wide scope was used in looking at multiple solutions and segments, ranging from Layer 1
through Layer 7 and from smartphone clients to hardware and server-based software.
ABI Research compiled a comprehensive overview of the technologies used for
network monitoring and optimization. Portable test equipment was included to the extent that
the equipment is used for diagnostic monitoring and troubleshooting of an operating network
and not simply for initial system setup.

Self-organizing networks are included in the scope of the technology description in this study
since they represent an important piece of an operator’s overall strategy for network optimization.
Note that the self-organizing network is generally sold to a wireless operator by a network
equipment manufacturer. Therefore, ABI Research did not include a forecast for SONs in the
merchant market quantified in this report.

The technology scope covers descriptions of monitoring and optimization techniques, including
the interfaces and network elements to be monitored and the actions taken for optimization.
Problems with interoperability between optimization solutions are described at a high level, with a
few specific examples for illustration. Details on the specific implementation of individual
products are omitted for the sake of brevity.

Note that business solutions, including business support system software and other tools for
tracking and billing the wireless subscriber, are not included in the scope of this report, though
these solutions can involve some monitoring and optimization.

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SOURCES AND METHODOLOGY

An analyst was assigned to coordinate and prepare this Research Report. Research and query
specialists helped lay the data and information groundwork for the analyst, who also developed a
focused interview strategy.

ABI Research teams follow a meticulous process when examining each market area under study.
The three basic steps in that process are: information collection, information organization, and
information analysis.

The key element in ABI Research’s information collection process is developing primary sources,
that is, talking to executives, engineers, and marketing professionals associated with a particular
industry. It is from these conversations that market conditions and trends begin to emerge, free
from media hype.

Analysts use secondary sources as well, including industry periodicals, trade group reports,
government and private databases, corporate financial reports, industry directories, and other
resources.

Analysts’ conclusions take several forms. The text addresses hard data and well-defined trends
and is supported by forecast tables and charts. The text also addresses issues and trends that
are difficult to quantify and present in neat, tabular form. Lying at the margins of an industry, they
are often precursors of the next technology wave.

For this report on mobile network monitoring and optimization, the ABI Research analyst
interviewed multiple network operators, network equipment manufacturers, and suppliers of
specific test equipment, software, monitoring solutions, and optimization solutions. Each
company was asked to project a view of its market and the driving forces behind future growth.

The forecast was derived from company reports and network operator comments. It is
segmented generally by Open System Interconnection (OSI) layer, since most solutions address
the RAN in Layers 1 and 2, the core network efficiency in Layers 3 and 4, or application efficiency
in Layers 5 through 7. Regional forecasts and other market segmentation were derived from
specific comments from suppliers and regional operators.

NOTES

CAGR refers to compound average annual growth rate, using the formula:

CAGR = (End Year Value ÷ Start Year Value)(1/steps) – 1.

CAGRs presented in the tables are for the entire timeframe in the title. Where data for fewer
years are given, the CAGR is for the range presented. Where relevant, CAGRs for shorter
timeframes may be given as well.

Figures are based on the best estimates available at the time of calculation. Annual revenues,
shipments, and sales are based on end-of-year figures unless otherwise noted. All values are
expressed in year 2010 US dollars unless otherwise noted. Percentages may not add up to 100
due to rounding.

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Published 2Q 2010

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