Although wireless is one of the fastest growing telecommunications sectors, the average customer churn rate in the industry is 2.5%. Churn rates are driven in part by cost, but almost equally, customers switch because they are not satisfied with quality. With the acquisition cost for each new subscriber at several hundred dollars, wireless carriers cannot afford to let quality slip.

These market dynamics are placing extraordinary demands on network operators charged with the management, design and maintenance of wireless systems. Capacity must be expanded continually, but fierce competition and falling per-minute air-time revenue dictate that capacity be added at the lowest possible cost. As a result, wireless operators must optimize the use of their existing infrastructures to respond to increasing demand and new technologies. And, in the process, they must pay careful attention to capital efficiency (Figure 1).

To address these demands, carriers can take advantage of telecom resource management (TRM), which brings all facets of a wireless carrier`s management team together to improve capital efficiency and quality of service (QOS). TRM creates a "roundtable" meeting point for all wireless company departments, such as marketing, finance, engineering and operations.

By combining departments` needs and constraints, TRM enables wireless carriers to use mathematics and other high-concept methodologies to make knowledge-based decisions about which products they will offer, the most competitive pricing structure they will establish, where they will sell these products and how they will promote them. Thus, carriers can expect to see a rapid improvement in their ability to deliver high-quality, cost-effective wireless services.

Spectrum and capital efficiency

Capital efficiency has become a main indicator for the long-term success of wireless operators, a trend that likely will continue as Wall Street`s focus moves from absolute customer counts to return-on-investment.

Traditionally, wireless carriers have measured capital efficiency based on geographic reach rather than QOS. As a result, it has been difficult, if not impossible, for carriers to adequately assess spectrum efficiency--by far the largest factor in capital efficiency--and therefore improve their infrastructure to achieve maximum profit and customer loyalty.

In addition, it is critical that wireless providers lower capital costs. To do this, providers must make spectrum efficiency analysis, which is the measure of a carrier`s ability to maximize use of available spectrum resources in a cost-effective manner, part of their capital-efficiency planning.

To illustrate how improved spectrum efficiency can lower capital costs, consider a capacity expansion involving extensive cell splitting, with 50 new base stations and perhaps 1500 new radios, added in a hybrid AMPS/ TDMA urban network. Taking into account typical current costs for infrastructure equipment, real estate, engineering and construction, new base stations in a large urban market would cost perhaps $700,000 each, for a total investment of $35 million.

Now, suppose improved spectrum efficiency allowed these 1500 new call traffic-carrying radios to be added to existing base stations rather than requiring deployment of new ones. Assuming a typical installed cost of $3600 for each radio, this would require a total investment of only about $5.4 million.

The affect on capital efficiency actually is greater than suggested above. This is because of "trunking efficiency," which allows the amount of call traffic carried per channel in a sector to increase when the number of available channels is larger. In other words, improving spectrum efficiency by increasing the number of traffic channels per sector also reduces the overall number of traffic channels required in the network.

Always improving

Improved capital efficiency is not the only benefit that a carrier derives from increased spectrum efficiency. Its marketing department can enjoy greater flexibility in promoting increased usage when the resulting changes in peak call traffic loads can be managed more easily. If addressed properly, marketing campaigns and tariff planning can be launched with information regarding immediate network impact on the available capacity and resulting QOS.

The benefits for the engineering and operations departments also are highly significant. A general reduction in the number of base stations deployed will reduce operating expenses, and fewer new deployments will remove issues dealing with site acquisition and obtaining zoning approval.

Perhaps most important, localized capacity bottlenecks due to delays in site acquisition and approval will be less of a threat when system engineers can deploy more channels in existing base stations.

Enter TRM

It is clear that greater capital efficiency and many other benefits can be realized by increasing spectrum efficiency in wireless markets, but how can operators of these networks achieve this goal? TRM`s cross-departmental linkage allows wireless providers to provide precise impact analyses and "what-if?" scenario planning. This enables companies to address spectrum efficiency as part of its capital efficiency planning for the first time.

At the core of TRM is network optimization, which leverages information that is not usually considered and uses mathematical algorithms to solve complex optimization problems. The result is better insight into spectrum efficiency and cooperation across departments.

For instance, one major carrier was inundated with customers after introducing a marketing campaign. However, the carrier was unable to handle the increased capacity, QOS dropped and, as a result, many customers cancelled their service.

If the company`s marketing department had run scenarios on the impact the increased traffic minutes of use would have on the network, the carrier probably could have managed the oversubscription ahead of time and handled the extra traffic. However, without this information across departments, they were unprepared. Examples like this demonstrate the necessity of running scientific-optimization scenarios that link marketing, engineering and finance departments--before launching new services or promotions.

Examining all data

TRM has the potential to fundamentally shift the way wireless enterprises operate their networks to improve spectrum efficiency. It will help providers increase the value of existing infrastructures and greatly improve capital efficiency and QOS.

TRM provides an integrated and enterprisewide approach to operations management that addresses issues such as spectrum management, network planning, coverage and QOS management, backhaul transmission and data restructuring.

Optimization-based TRM also allows wireless enterprises to make better use of existing spectrum and infrastructure and other resources. In fact, many wireless enterprises have a lot of underused data that, when properly structured, can yield many opportunities for greater use of their networks.

For instance, many enterprises have switch data and drive-test data that are used inconsistently. Hidden within this data, such as re-use patterns in the switch logs, are the seeds of much greater efficiency. Uncovered re-use patterns can be cross-examined with drive-test, massive switch-log processing and other real-field data, to achieve correct impacts on capacity and QOS for additional co-located radios.

Above all, once the reliable powers of efficient data mining and planning are put to work, more relaxed grouping and smaller re-use factors can be adopted with significant savings.

Planning for growth

While key undertakings such as digital deployments or major system retunes may dominate the focus of wireless network engineering groups, an important part of their day-to-day work deals with long-term planning and solving localized problems with network capacity and performance. Long-term planning is critical because of the ever-increasing lead-times required for the deployment of new base stations.

At the same time, system growth does not occur all at once and rarely as predicted. Often, engineers must deal with unanticipated capacity problems that appear in specific sectors as usage patterns change. Carriers that embrace system optimization technologies for frequency planning will find that they also can be used interactively to assist in long-term planning and day-to-day problem resolution.

For instance, an operator of a large TDMA or GSM networks may anticipate a 20% growth in busy-hour traffic during the next year. Because lead times for new cell sites are nearly a year in some places, the operator wants to start the process as soon as possible.

Engineering needs to determine where and how new cell sites will be deployed. Concurrently, marketing wishes to increase its top line by optimally allocating tariff plans that will be competitive, attract more customers and maximize earnings per minutes of use. Finance also expresses a desire for balanced growth, which would not unnecessarily require excess capital expenditure and operating costs due to sub-optimal network configuration.

The carrier must determine how to address these apparently conflicting goals.

Engineering can use optimization technology as part of a TRM platform to create a frequency plan for the network with each sector specified as requiring 20% more radio channels than in the current configuration. Because of increased trunking efficiency, this increases capacity by somewhat more than 20% in each sector, so the exercise will be on the conservative side. This process will identify the sectors that cannot provide the increased capacity without excessive levels of interference. The system engineer then can anticipate that these sectors are the ones most likely to require capacity relief of some form, possibly including the deployment of additional cell sites.

The benefits for marketing and finance are considerably greater. In the competitive wireless marketplace, marketing cannot afford customer churn. Response time is critical, and only an optimization-based TRM platform can assess optimal frequency plans within minutes. This platform also can optimize interference so it is minimal, or at least best-in-class, in the respective market, based on true assessment of what is happening in the network.

TRM also appeals to the finance department. An operator can be assured that costly new cell site deployments and other configuration changes are undertaken only when the capacity potential of the existing system is exhausted, or that an imperative QOS target has to be met. Then, network optimization-based TRM can help the operator keep new infrastructure investments to a minimum by accurately predicting capacity and quality impacts for any proposed changes.

Hitting the mark

Wireless operators can no longer afford to rely on hit-or-miss approaches to network engineering, or to manage different network infrastructure components separately. The most successful wireless operators will be those that identify and incorporate means for increasing capital efficiency by maximizing the capacity of their existing network infrastructure, while simultaneously minimizing instances of noisy or dropped calls.

An ideal method for accomplishing this is by improving spectrum efficiency, which providers can do by using optimization sciences through TRM. By maximizing spectrum and capital efficiency through optimization, wireless providers will have a powerful arsenal in place to respond rapidly to market and technology changes.

TRM is the platform that enables wireless carriers to realize dramatic, enterprise-wide improvements in resource utilization, capital efficiency and QOS. (Figure 2)

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Credit: 2000 Intertec Publishing Corp., a PRIMEDIA company