Complete issue - Tellabs

1 st Q U A R T E R 2 0 1 0
Innovations to
help you succeed
Upload:
60% of Latin
America
Going Optical
NetCom
Lights Up
LTE
Tellabs’ Ethernet solution
keeps Nordic operator’s
4G backhaul costs
at 3G levels
inside
Smartphones Make
Networks Wise Up
Analyst Outlook for 2010
Verizon Takes
VPLS Inside
Mobile World
Congress and CTIA
Wireless Previews
Tore Malmo,
manager of
transmission
networks at
NetCom

leading edge
Solving your business challenges
Helping you succeed with mobile Internet
User demand for mobile Internet is booming. That increases
bandwidth consumption, drives up costs and pressures margins.
Customers tell us that mobile data traffic is growing 30% to
50% a year. We want to help you succeed as you prepare 3G and
4G networks to deliver mobile Internet, video and commerce.
Offering the unique new SMARTCORE gateway
In December, Tellabs closed our acquisition of WiChorus and
its breakthrough mobile packet core gateway. The WiChorus
acquisition expands Tellabs ® Mobile Solutions beyond mobile
backhaul into adjacent applications, so you can:
n deliver rich, differentiated user experiences on the mobile
Internet
n launch new applications to generate revenue
n
n
monetize over-the-top content
simplify networks to achieve significant savings.
The WiChorus gateway is the only currently available packet
core platform that’s purpose-built for 4G, LTE and WiMAX,
with support for 3G. It includes a full range of mobile IP
products, ranging from low entry price to highly scalable, for
applications including GGSN, LTE and WiMAX.
Monetize the top 400 mobile
Internet applications
The WiChorus gateway:
n offers 8 times more throughput, 4 times more simultaneous
Internet connections and active users, compared with competitive
platforms
n uniquely combines world-class application analytics with a
mobile core gateway for improved traffic engineering and
network optimization
n enables service providers to analyze and monetize more than
400 of the top mobile Internet applications
n makes mobile networks content-aware and context-aware,
with personalized application-awareness
n outperforms other platforms in delivering mobile Internet
capacity with superior deep-packet inspection (DPI)
capability
n delivers new and differentiated applications, such as Internet
offload and distributed LTE gateway, to improve the user
experience, increase core network efficiency up to 70% and
reduce capital expenses up to 50%.
Focused on mobility
This issue of Inspire focuses on mobile networks and the mobile
Internet. In our cover story, see how Netcom is transforming its
network to become a 4G leader, using Tellabs ® Mobile Solutions
(pages 6-8).
Also in this issue, our chief technology officer Vikram Saksena
shares his insights on the future of mobility (pages 13-14). We
add to Vikram’s vision the viewpoints of leading industry analysts
(pages 10 and 15).
Hope to see you at MWC and CTIA Wireless
We’ll share more about Tellabs’ mobile vision, ideas and expanded
solutions at Mobile World Congress (MWC) in Barcelona,
booth # 2A47, on Feb. 15-18. And at the CTIA Wireless 2010
show in Las Vegas on March 23-25. I hope to see you there!
The WiChorus
gateway is the
only currently
available packet
core platform
that’s purposebuilt
for 4G, LTE
and WiMax, with
support for 3G.
Robert W. Pullen
Tellabs CEO and President
Robert W. Pullen
CEO and President
2 Tellabs Inspire • 1 st QUARTER 2010

contents
tellabs
One Tellabs Center
1415 West Diehl Road
Naperville, IL 60563 USA
Phone: +1.630.798.8800
Fax: +1.630.798.2525
www.tellabs.com
President and CEO
Robert W. Pullen
Editorial Managers
George Stenitzer
Ted Meister
inspire@tellabs.com
Published by
Telephony Custom Media
330 North Wabash Avenue
Suite 2300
Chicago, IL 60611
Phone: +1.312.595.1080
Fax: +1.312.595.0296
www.telephonyonline.com
Editor
Tim Kridel
Editorial Contributors
Joan Engebretson, Lynnette Luna,
Patrick Donegan and Vikram Saksena
Art Direction
Cavedweller Studio
Account Manager
Bethany Borger
Reprints
For reprints and e-prints, call
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4 Upload
Most Latin American networks
go optical by 2014. Broadband
becomes a human right. And more.
6 Gateway to the
Mobile Future
A sneak peek at Tellabs’ lineup
for Mobile World Congress
and CTIA Wireless.
By Tim Kridel
7 Just Wait ’Til This Year
Five top analysts share their
outlook for 2010 and beyond.
By Tim Kridel
8 NetCom’s LTE Leap
Scandinavian operator uses Ethernet
to get 4G backhaul for the price of 3G.
By Lynnette Luna
11 Verizon’s Inside Job
Verizon upgrades its internal
data network with VPLS and the
Tellabs® 8800 Multiservice Router.
By Joan Engebretson
13 Smartphones Need
Smart Networks
Savvy operators know that smart
networks are key to making
money from smartphones.
By Vikram Saksena
15 Surfing the Mobile Wave
To avoid being swamped, mobile
operators must focus on IP,
IT and Internet partners.
By Patrick Donegan
cover photo by Jørn tomter / getty images
Statements herein may contain projections
or other forward-looking statements
regarding future events, products, features,
technology and resulting commercial or
technological benefits and advantages.
These statements are for discussion
purposes only, are subject to change and are
not to be construed as instructions, product
specifications, guarantees or warranties.
Actual results may differ materially.
The following trademarks and service
marks are owned by Tellabs Operations,
Inc., or its affiliates in the United States
and/or other countries: TELLABS®,
TELLABS and T symbol®, and T symbol®.
Any other company or product names may
be trademarks of their respective companies.
Copyright © 2010 Tellabs.
All rights reserved.
74.2128E
Read or subscribe to
Tellabs Inspire online:
www.tellabs.com/news/inspire
1 st QUARTER 2010 • Tellabs Inspire 3

AFCEA West
February 2-4
San Diego, USA
upload
Mobile World
Congress
February 15-18
Barcelona, Spain
CTIA Wireless
March 23-25
Las Vegas, USA
Most Latin American Networks to
Go Optical by 2014, Survey Finds
In Latin America, the future of telecom
networks is clear – literally. By the end
of 2014, more than 60% of the region
will have upgraded to optical, according
to a survey of attendees at Futurecomm
’09 in São Paulo, Brazil.
Conducted by Tellabs and IDC, an
independent research firm, the survey
found that improved speed and capacity
are the main reasons why most of the
region’s network infrastructure will go
optical over the next five years. Nearly
half of respondents cited cost savings as
the next major reason, followed by simplified
network management (33%).
The region’s optical overhaul is a
major undertaking. More than 40% of
respondents said that less than 15% of
their network infrastructure is optical
today. Within five years, 39% predict
more than 75% of network infrastructure
will be optical, and more than
60% foresee half of their networks
being optical.
SDH/SONET currently is the
region’s most widely used technology,
at 39%, but Carrier Ethernet is a close
second. By 2014, Carrier Ethernet will
dominate, followed by DWDM. Only
14% of respondents believe they’ll still
be using SDH/SONET in five years.
“The survey respondents clearly
understand that operators in Brazil have
infrastructure issues that need to be
solved quickly,” said Vinicius Caetano,
a telecom analyst at IDC. “Operators
must invest in highly cost-efficient and
scalable solutions to be ready for the
inevitable demand increase.”
The region’s preference for green
networks also is driving the optical
trend. More than
90% of respondents
said it’s important to
lower network power
consumption, and
33% cited reduced
energy consumption
as one of the reasons why the region’s
network infrastructure will go optical.
“The findings of this survey reveal
that telecom professionals in Brazil
understand the tremendous impact
traffic growth will have on networks
in the near term,” said Tarcisio Ribeiro,
vice president of sales for Tellabs’
Latin America and Caribbean region.
“Optical networks are the right choice
to improve network capacity, lower
costs and reduce power consumption.”
DWDM: Dense Wave Division Multiplexing SDH: Synchronous Digital Hierarchy SONET: Synchronous Optical Networking
4 Tellabs Inspire • 1 st QUARTER 2010

The New Human
Right: Broadband
Mobile Social Networking Gets Rich
There’s a reason why so many smartphones and feature phones now ship with
social networking apps pre-loaded: It’s one of wireless’ fastest-growing services, on
track to surpass $410 million in revenue and 140 million users worldwide by 2013,
according to ABI Research.
But more than 80 wireless carriers and vendors aren’t taking that growth for
granted. Instead, they’ve teamed up with the GSM Association (GSMA) to develop
the Rich Communication Suite (RCS), which aims to make multimedia social networking
easier and richer.
The latest version of the spec, RCS Release 2, enables services such as sharing
photos and videos in the middle of a call. RCS supports presence-enhanced contact
management, so users can tell whether they can reach someone with a video call,
instant message (IM) or voice call. RCS also eliminates the need to remember each
contact’s IM ID by relying on their mobile number instead.
RCS works with technologies such as IP Multimedia Subsystem (IMS), making
RCS-based services available on both mobile phones and wired PCs, as well as
CDMA networks. That flexibility complements the growing number of telco and
cable quadruple plays (wireline voice, broadband, wireless and video).
At Mobile World Congress 2009, several panels covered RCS. (The videos
are available at www.gsmworld.com/our-work/mobile_lifestyle/rcs/videos.htm.)
Since then, three South Korean operators – LG Telecom, KT and SK Telecom
– launched the world’s first commercial RCS services. By the end of this year,
1.3 million consumers worldwide will be using RCS-based services, Infonetics
Research predicts. Put all of that together, and it’s a safe bet that RCS will be one of
the hot topics at Mobile World Congress 2010.
In many countries, Internet access is
rapidly evolving from a nice-to-have to a
must-have. Estonia, Finland, France and
Greece have declared it a human right
for their citizens, while Spain is considering
it. And the United Nations has spent
the past few years arguing that it should
be a right for everyone, everywhere.
Finland recently went a step further,
mandating the minimum speed – 1 Mbps
– that all broadband providers must deliver.
The country’s Ministry of Transport
and Communications plans to increase
the minimum to 100 Mbps by 2015.
Some countries already have speed
requirements, but only for certain
deployments rather than all operators.
For example, the U.S. broadband stimulus
package will fund a network only if it
supports at least 768 kbps.
A country’s throughput requirements
are worth noting because they affect the
amount of money that each service provider
has to spend – not just to meet those
minimums, but to exceed them by a margin
big enough to stand out in the market
and justify a price premium. Throughput
requirements also affect the types of
broadband services that can be offered in
a country. For example, it’s tough to sell
high-definition movie downloads in a
market where most users have a relatively
slow connection.
Internet-Ready TVs Shake Up the Video Market
If you buy a TV this year, there’s a good
chance that it will have built-in Internet
connectivity. Major vendors such as
Panasonic, Samsung and Sony already
offer several models of Web-ready TVs,
and by 2013, they’ll be 36% of new TV
sales, according to a recent report by
In-Stat, an independent research firm.
Adoption will skyrocket in some
markets. In the U.S., for example,
Web TVs will grow from about 1%
of all TVs sold in 2008 to about 14%
in 2012, predicts Parks Associates, a
research firm.
For cable operators and telco TV
providers, the trend is both a problem
and an opportunity. As the selection of
online video programming grows, some
subscribers will drop their cable and
telco video packages. But on the plus
side, they’ll still need a broadband connection,
and they might have to upgrade
to a faster service plan in order to get
decent quality video, let alone HD.
Telcos and cable operators are
already concerned about losing video
customers to PC-based services, where
viewership grew from 32% of American
consumers in 2007 to 63% in 2009,
according to ABI Research. Some are
striking deals with content providers
to mitigate that threat. For example,
Cablevision lets its broadband customers
watch the YES sports network online
only if they’re also TV subscribers.
1 st QUARTER 2010 • Tellabs Inspire 5

mwc and ctia
Gateway to the
Mobile Future
The Mobile World Congress and CTIA
Wireless shows are just around the
corner. Here’s what to expect.
By Tim Kridel
This year’s Mobile World
Congress and CTIA
Wireless shows should
provide a good barometer
of the mobile industry’s
present and future.
Held February 15-18 at the Fira de
Barcelona at Montjuic in Barcelona,
Spain, the 2010 Mobile World Congress
will feature more than 1,300 companies,
including Tellabs, which will be in exhibit
No. 2A47.
Vikram Saksena, Tellabs chief technology
officer, will speak at MWC on the
topic of cloud computing.
“It is, by far, the premier mobile
industry event for Tellabs,” said Sonny
Waheed, senior manager, communications
for EMEA and Asia-Pacific. “It’s
an ideal opportunity to showcase our
leading-edge solutions and engage with
the mobile world.”
What’s New
Tellabs will use Mobile World Congress to
showcase mobile, optical
and business solutions,
as well as professional
services. The first is
covered by the Tellabs ®
Mobile Solutions portfolio,
which helps mobile
operators reduce the
cost of both 3G and 4G.
(For one example, see
“NetCom’s LTE Leap”
on page 8 of this issue.)
“Tellabs Mobile Solution now expands
from 3G and 4G mobile backhaul into
mobile packet core applications. We can
help carriers improve the mobile Internet
experience, deliver new revenue-generating
applications and achieve significant
savings.” Waheed said.
Tellabs will showcase breakthrough
packet core technology from WiChorus,
acquired late in 2009. The world’s only
packet core platform that’s purpose-built
for 4G LTE and WiMAX, with support
for 3G, it handles 8 times more throughput
and 4 times more simultaneous
Internet connections than other platforms.
(See “Leading Edge,” page 2.)
North American and African customers
are using Tellabs Optical Solutions
to slash backhaul costs, even as they
increase backhaul capacity in order to
support bandwidth-intensive services
such as video.
“Optical can cut capital expenses up
to 65%, while reducing power consumption
by the same amount,” Waheed said.
“The same platform can also deliver
business services.”
As the selection of products and technologies
grows, so does the challenge of
choosing the right ones. That’s where the
third main area comes in: Tellabs ® Global
Services, which provides mobile operators
“Our Network Performance
Management service
provides visibility into the
mobile data users’ experience
throughout the network.”
Sonny Waheed, senior manager, communications
for EMEA and Asia-Pacific
with on-site experts to help plan, build
and optimize networks, including LTE.
“Our Network Performance Management
service provides visibility into the
mobile data users’ experience throughout
the network,” Waheed explained. “It provides
service providers with deeper levels
Mobile World Congress
- Exhibit 2A47
of information, so they can make smarter
network decisions and proactively resolve
issues before they affect customers.”
Adding Value — in More
Ways than One
Held March 23-25 in Las Vegas, CTIA
Wireless is the next major opportunity
to learn more about the evolution of the
Tellabs ® Mobile Solutions portfolio. At
both shows, Tellabs will forego the trade
show tradition of loading up booth visitors
with USB memory sticks, pens and
tote bags.
Instead, Tellabs is offering attendees an
opportunity to help several charities.
We will donate to charities of our customers’
choosing the same money we
might have spent on giveaways – roughly
$30,000-$35,000 – and donate it to charity,”
Waheed said. “Everybody who comes
to our exhibit will be encouraged to go to
a touchscreen, where there’s information
about three different charities, such as
Doctors Without Borders and Oxfam
International. They can vote for their
favorite charity.”
The charity with the most votes
receives $15,000. The next one gets
$10,000, and the third $5,000. It’s part of
the Tellabs Foundation, which awarded
nearly $1 million in 2008 to organizations
such as the American Cancer Society
and Save the Children. The opportunity
to help shape 2010 donations is yet
another reason to attend CTIA Wireless
and Mobile World Congress. n
3G: Third-Generation 4G: Fourth-
Generation CapEx: Capital Expenses
LTE: Long Term Evolution
6 Tellabs Inspire • 1 st QUARTER 2010

analyst viewpoint
Just Wait ’Til This Year
Telecom isn’t recession-proof, but it fared relatively well in 2009.
Five top analysts share their outlook for 2010 and beyond.
By Tim Kridel
Despite the worst economy
in 70 years, some
parts of the telecom
market not only survived
the past year, but
thrived. That good news, along with the
outlook for this year and beyond, were
among the topics that analysts discussed
at the 2009 Tellabs analyst conference,
held Sept. 15-16.
Following are some highlights from
those conversations. For each analyst’s
full Q&A, visit www.tellabs.com/
news/inspire.
Michael Howard, principal analyst
and co-founder at
Infonetics Research:
One thing that has
not gone down during
the downturn is
bandwidth use. People
keep using more.
What carriers have
been doing is prepare
their networks for the next 10 years.
Everybody’s being more mobile, so
they’re adding mobility. They’re also preparing
their networks for IP. Over a long
period of time, the old TDM networking
layer will go away, the SONET and
SDH layer. Networks will become more a
transport layer of Ethernet and WDM.
Warren Chaisatien,
research director
at Telsyte: One of
the most significant
trends that I can
see now is the rise
of consumer cloud
computing. You and I are now starting to
feel very comfortable posting and sharing
our personal digital content online in a
cloud, allowing our friends and family and
perhaps colleagues to access our personal
pictures, videos, blogs and other files.
That will be driving tremendous shifts
from a carrier perspective.
It will revolutionize the way service
providers position themselves. Instead of
providing dumb pipe access to the content,
they will have to add intelligence
into the network and add a personalized
service to consumers.
Ron Kline, research
director at Ovum:
Ethernet is really
becoming the new
network currency as
we transition from
SONET SDH to a
more packet-oriented
world, with Ethernet as the multiplex
layer. In the core of the network, we’re
seeing this transition to OTN switching
because of the transparency it provides in
switching: not only traditional SONET
SDH, but also the emerging Ethernettype
services, as well as other storage
area-type protocols.
As we get better at making Ethernet
more predictable and acting like traditional
SONET SDH with all the OA&M
capabilities and such, we’ll start to see
that adoption really ratchet up. That’s
because it’s a more cost-effective method
for connecting to the network for not
only enterprises, but internal networks,
as well, both wireline and wireless.
Sterling Perrin, senior
analyst at Heavy
Reading: The most
disruptive trend we’re
seeing is the growth
of packet optical
transport. At the
highest level, we’re
seeing three different approaches: IP
over DWDM; carrier Ethernet switches,
which can be combined with an optical
layer; and a converged system, “packet
optical transport systems,” which combine
a WDM layer with SONET and
SDH transport, as well as high-capacity
Ethernet switching and increased control
plane technology on top of that.
We’re tracking very closely the
evolution of the SONET and SDH
infrastructure and the standalone WDM
infrastructure into these new systems. It’s
that trend that we’re really seeing starting
to gather a lot of momentum, especially
in 2009 and into 2010.
Ian Redpath, principal
analyst at Ovum:
At Ovum, we’ve just
gone through looking
at the market from
the second quarter,
2009 point of view,
and North America
and Europe are still
suffering from the recession. But Asia-
Pacific is doing quite well. Tellabs has a
good strategy for the Chinese market,
India and Indonesia, and it’s where they
need to be.
Another key thing I learned at this conference
was Tellabs’ intention of bringing
a terabit OTN switch to the marketplace.
With Tellabs’ strong DNA in the bandwidth
management category, we did
think it was a bit of an inevitability. We’re
pleased that Tellabs is moving forward on
that particular product front. n
OA&M: Operations, Administration
and Maintenance OTN: Optical
Transport Network DWDM:
Dense Wave Division Multiplexing
SDH: Synchronous Digital
Hierarchy SONET: Synchronous
Optical Networking TDM: Time
Division Multiplexing WDM:
Wave Division Multiplexing
For more insights into the
cloud computing opportunity for
service providers, see “Clouds
in the Forecast,” available in the
December 2008 issue of Inspire at
www.tellabs.com/news/inspire
1 st QUARTER 2010 • Tellabs Inspire 7

cover story: netcom
NetCom’s
By Lynnette Luna
LTE
Leap
One of
Scandinavia’s
largest mobile
operators
leverages Tellabs’
Ethernet solution
to keep 4G
backhaul costs
at 3G levels.
It’s no secret that the world’s mobile
operators are witnessing an insatiable
demand for broadband among
their subscribers. Faster 3G networks,
coupled with competitive
service pricing, compelling smartphones
and connected laptops, have come
together to create the perfect storm for
the mobile broadband business.
This situation is highlighted in the
Nordic region, where sophisticated users
set trends that eventually play out in
the rest of the world’s mobile markets.
The region’s mobile voice penetration
exceeded 100% years ago. Now, operators
in Denmark, Norway and Sweden
have turned to mobile broadband services
for new market-differentiation and
revenue opportunities.
The race is on to develop the next
wave of compelling services. Those services
hinge on next-generation networks
that are capable of transmitting multimegabit
speeds on the go – and doing so
on a significantly lower cost-per-bit basis
than today’s 3G and 3.5G networks.
Nordic powerhouse TeliaSonera is
in the process of building one of the
world’s first LTE networks in Oslo and
Stockholm, targeting a commercial
launch in 2010. Why those two markets?
One reason is because subscribers
there are demanding higher bandwidth.
Another is because Norway and Sweden
were among the first countries to auction
4G licenses last spring in the 2.6 GHz
band, the spectrum that’s being set aside
worldwide for 4G networks.
TeliaSonera was the first operator
to publicly award LTE pilot
network contracts: one with Ericsson
for the Stockholm market and one with
Huawei Technologies for Oslo, where
TeliaSonera’s mobile arm, NetCom, with
some 1.2 million subscribers, is fighting
hard for market share against the incumbent
operator, Telenor.
Mobile voice penetration in Norway
reached 110% in early 2009, according
to BuddeComm, an independent
research firm. While overall subscriber
growth has fallen to about 1.5%, the 3G
sector has experienced robust growth,
BuddeComm said. And if competition
weren’t stiff enough already, a new 3G
provider, Mobile Norway, is set to launch
commercial service.
“We are the challenger in Norway,”
said Torstein Aars, department manager
of network development at NetCom.
“It’s important to be on the forefront of
innovation. That is the driver for 4G. We
are constantly working to come up with
new services so that we can be consistently
on the edge.”
Nearly Free Bandwidth
Indeed, LTE promises data speeds that
will make most of today’s fixed-line
broadband connections seem lethargic. In
June 2009, NetCom showcased live LTE
services that included applications such
as video on demand, streaming video, file
transfers, Web surfing, videoconferencing
and video telephony, all under real
network conditions. The network will be
able to deliver download peak data rates
of up to 150 Mbps in one LTE cell with
multiple terminals.
“What we have learned so far from
these test results is very impressive
around data speeds,” Aars said.
NetCom will hold an advantage in
terms of understanding the real-world
8 Tellabs Inspire • 1 st QUARTER 2010

Photos by Jørn Tomter / Getty Images
capabilities of LTE early on, Aars said.
And most importantly, in deploying
LTE, NetCom plans to see a reduction
in OpEx rather than the increase that
usually comes with the deployment of a
new network technology.
Recognizing the unpredictable growth
associated with the WCDMA/HSPA
data traffic, NetCom embarked on a
plan in 2009 to change its approach to
the management of its 2G and 3G/3.5G
networks. A major part of that change
involved working with Tellabs to invest in
Ethernet as a new backhaul solution – not
only to manage the new world of mobile
broadband but also to reduce costs associated
with backhauling 2G traffic.
NetCom is rolling out Ethernet transport
for its 2G and 3G networks, and
preparing to run LTE over the same
Ethernet infrastructure.
“This is a huge OpEx saver,” said Tore
Malmo, manager of transmission networks
at NetCom. “We can now move
everything to the same solution and
reduce the OpEx.”
Over three months in late 2009,
NetCom doubled its total transmission
Robert Halvorsen,
senior transmission
planner with NetCom
capacity in the radio access
network by implementing
capacities up to 150 Mbps at
a number of sites, in preparation
for LTE, Malmo said.
But that capacity didn’t come
at a price.
“The insignificant increase
in OpEx resulting from this
capacity increase is clear
evidence that we have succeeded
in breaking the bond
between capacity and costs.
“We can’t see any effect on
the OpEx,” Malmo said.
Such results are key if
LTE is to reach its promise
of delivering multi-megabit
services at a significantly
lower cost per bit than today’s
3G/3.5G technologies, said
Tarcisio Ribeiro, vice president
of Europe, Middle East
and Africa sales at Tellabs.
“Operators simply must
break that linear relationship
that has always existed between
bandwidth and cost and revenue per
bit,” he said.
1 Gbps Per Base Station
On the air interface side, LTE holds significant
cost-savings promise because
of a more efficient network architecture,
said Pyramid Research analyst
Daniel Locke.
“LTE promises to change the dynamics,
by lowering operating costs not only
because of a simpler network architecture
with fewer network controllers to manage
but also because of enhanced spectral
efficiency, reduced OpEx and a concerted
push to lower intellectual property costs
to a single-digit percentage of the value
of handset sales,” he said.
Equally important, however, is an
operator’s ability to efficiently backhaul
the massive data traffic that will be deluging
LTE base stations. The maximum
throughput of LTE will be limited by the
backhaul capacity of the cell site that the
user is connected to.
Analysts estimate that each LTE base
station must be capable of handling
bandwidth in the range of 100 Mbps to
300 Mbps. As demand skyrockets, that
number could reach 1 Gbps or more.
That type of bandwidth will break the
bank under the traditional network backhaul
regime of E1s and T1s. Just one or
two E1 lines are required to backhaul
voice traffic today. By most estimates,
backhaul traditionally accounts for about
30% of an operator’s OpEx.
Throw broadband traffic in the mix,
and the requirement skyrockets to a
dozen or more E1 lines. At hundreds
of dollars per line, per month, such a
deployment scenario makes no economic
sense, said NetCom’s Malmo.
“Without the Tellabs solutions, we
wouldn’t be able to support our 4G
deployment and also increase capacity
on the HSPA side without dramatically
increasing OpEx,” Malmo said.
NetCom is using the Tellabs ® 8600
“This is a huge OpEx saver.
We can now move everything to the
same solution and reduce the OpEx.”
Tore Malmo, manager of transmission networks at NetCom
Managed Edge System (MES), part
of Tellabs’ Mobile Solutions suite of
products, which uses Pseudowire over
MPLS as a cost-effective alternative to
buying more E1s. NetCom is replacing
its E1s by using the Tellabs equipment
to produce its own bandwidth on top
of leased Ethernet capacity, said Robert
Halvorsen, senior transmission planner
with NetCom.
Ethernet is a much less expensive and
more flexible technology than TDM
technology, which is the basis of E1 lines.
Ethernet also supports high-bandwidth
scalability that can be used on an incremental
basis, with carriers paying only
for what they use.
2G: Second-Generation 3G: Third-Generation ATM: Asynchronous Transfer Mode CapEx: Capital Expenses HSPA: High-
Speed Packet Access IP: Internet Protocol LTE: Long Term Evolution MPLS: Multiprotocol Label Switching OpEx: Operating
Expenses TDM: Time Division Multiplexing WCDMA: Wideband Code Division Multiple Access
1 st QUARTER 2010 • Tellabs Inspire 9

cover story: netcom
Anders Grand (left),
Robert Halvorsen
“We are the challenger
in Norway. It’s important
to be on the forefront
of innovation.”
Torstein Aars, department manager of
network development at NetCom
Photo by Jørn Tomter / Getty Images
“For NetCom, that translates into
simplicity,” said Anders Grand, Tellabs
account manager for NetCom. “Instead
of leasing capacity for each mobile service
– 2G, 3G/3.5G and 4G – NetCom
can use one single installation and the
2G, 3G and HSPA travels at no additional
cost to them.”
Indeed, Halvorsen noted that the average
capacity NetCom supports today in
its 3G base stations can be expanded
fivefold without increasing the operator’s
OpEx. That capability is especially
important as traffic on the HSPA network
continues to grow at the same time
NetCom rolls out LTE, and NetCom
won’t be exposed to the escalating costs
associated with the demand for bandwidth
on its HSPA network.
Brave New World
Analysts predict that as early as next year,
data traffic will surpass voice traffic on
mobile networks. One reason is because
bandwidth-hogging services such as
video are eating up capacity.
YouTube, for example, says that
mobile video is an “exponentially” growing
part of its site’s usage. In June 2009,
it reported that over a six-month period,
uploads from mobile phones to YouTube
increased 1700%, thanks to the proliferation
of video-enabled mobile devices.
But for NetCom, those trends are
opportunities to drive additional revenue,
instead of just reasons to shell out more
money for backhaul. With the Tellabs ®
8600 MES, NetCom also can dynamically
allocate bandwidth from base station to
base station remotely, as demand dictates,
without having to deploy field personnel
– another significant OpEx saver.
NetCom’s backhaul capacity freedom
also puts it in enviable position of being
able to experiment with LTE services, Aars
said. NetCom doesn’t have to worry about
the skyrocketing backhaul costs LTE is
placing on the network as it rolls out a
rather pervasive footprint with increased
capacity yet relatively few customers.
“We need to gain experiences for LTE
and understand how data services will
be adopted across all of the networks,”
Aars said. “But it will really take a while
before we have the same coverage that
we see for 2G. In a country like Norway,
it’s difficult and expensive. What we are
doing is making sure we can produce
an affordable OpEx while pushing new
high-bandwidth services.
“We are moving from the good
stable telco world to a more broadband-based
world. LTE is a big shift in
technology, but then again, that is the
way everyone is moving. You have to
do it sooner or later.” n
$876 Million in OpEx Savings
To address one of Ethernet’s perceived
weaknesses – the inability to carry
TDM-based voice traffic – the Tellabs®
8600 MES uses Pseudowire technology.
Created more than a decade ago, the
Pseudowire standard is a building block
upon which multiple types of traffic can
be layered and then converged onto a
single, multipurpose packet-switched
network. In short, Pseudowire technology
emulates the essential attributes
of legacy TDM or ATM service over
a packet network. The technology is
necessary because leaping directly from
TDM to IP and from ATM to Ethernet
isn’t an investment that some operators
want to make right away.
A recent survey of packet backhaul
vendors by the analyst firm Heavy
Reading supports that trend. At the end
of April 2009, fewer than 55,000 2G
or 3G cell sites were in live service with
packet backhaul worldwide, out of a
global total of 2.4 million sites.
The Tellabs® 8600 Managed Edge
System (MES) uses Pseudowire over
MPLS as a cost-effective alternative
to buying more E1s or T1s. Based on
feedback from the more than 120
operators that have deployed the
Tarcisio Ribeiro
Tellabs® 8600 MES, it’s realistic to
expect a potential savings of 60% to
93% in the evolution from 3G to 4G.
For example, in a 30,000-cell-site
network employing Tellabs’ Ethernet
backhaul solution, an operator can save
up to $78 million in CapEx and $876
million in OpEx over five years, said
Tarcisio Ribeiro, vice president-Europe
Middle East Africa sales at Tellabs.
10 Tellabs Inspire • 1 st QUARTER 2010

verizon idn
Verizon’s Inside Job
Verizon migrates its internal data network to VPLS,
with the Tellabs ® 8800 Multiservice Router at the core.
By Joan Engebretson
Like other large corporations,
Verizon needs a
high-capacity data network
to support connectivity to
employee desktops and data
centers. In addition, the carrier’s internal
data network supports command and
control connectivity for the infrastructure
for its wired and wireless networks.
Today, the backbone for Verizon’s
internal data network (IDN) uses private
lines to connect aggregation sites.
But soon the carrier plans to begin
migrating to a backbone network based
on VPLS, which provides multi-point
Layer 2 Ethernet connectivity over
MPLS. Verizon’s MPLS network, initially
deployed several years ago, is based
on the Tellabs ® 8800 Multiservice Router
(MSR) series.
Simplicity Equals Savings
Verizon reached a major crossroads in
mid-2009, when it learned that the manufacturer
of certain equipment underlying
its IDN would no longer support that
gear. Verizon had three choices: continue
with a private line approach, use its
MPLS network to support connectivity
via Layer 3 IP VPNs or go VPLS.
“We chose a VPLS or Layer 2-type
network based on its ability to transition
efficiently and effectively at the least
cost,” said Tom Bechly, director of enterprise
network engineering for Verizon
Services Operations.
“We chose a VPLS
or Layer 2-type
network based
on its ability
to transition
efficiently and
effectively at
the least cost.”
Tom Bechly, director of enterprise
network engineering for Verizon
Services Operations
Part of the lower cost results from
engineering workload savings, which
ultimately could be in the range of 50%,
Bechly said.
“When you have to manage OC-3s,
OC-12s and T1s, it requires a tremendous
amount of work,” Bechly said. “You
have to consider certification, testing
and the integration cycles you have to
go through.”
Because Ethernet interfaces are simpler
to manage, the new network also should
be easier to extend or upgrade, said Hwa-
Jung Han, manager of IDN engineering
for Verizon Services Operations.
“Provisioning bandwidth will be more
efficient versus the private line-based
TDM environment,” Han said.
Equipment costs were another important
consideration.
“Ethernet interfaces are less expensive,
and there is less work associated
with them,” Bechly said. He estimated
that Verizon ultimately could reduce its
equipment costs over the product life
cycle by about half.
1 st QUARTER 2010 • Tellabs Inspire 11

verizon idn
Another advantage of using VPLS is
simplified routing, Bechly said.
“There is a single hop from each
aggregation point across the network.”
Routing considerations also were an
important reason why Verizon chose
to transition to a Layer 2 service such
as VPLS.
“You minimize the impact on the routing
infrastructure that you already have,”
Han said. “The risk is minimized in terms
of routing.”
In moving its IDN to VPLS, Verizon
also saw an opportunity to showcase its
commercial VPLS offering, which has been
available in the Americas for over a year
and was recently expanded internationally.
“We like to showcase our products,
and this was an example where we could
use one of our products in a very highprofile
way,” Bechly said.
All Ethernet, Eventually
Verizon’s VPLS-based IDN backbone
will have 20-25 aggregation points
and carry traffic at around GigE levels.
Connectivity to the company’s
data centers will be provisioned for 10
GigE bandwidth.
in over a period of time and then
moving a few more locations every
week — or every couple of weeks.
This is mission-critical traffic, so
we won’t jump into it overnight.”
Ultimately Verizon anticipates
moving its IDN entirely to an
Ethernet platform, including the
access links to all locations, which
currently are based on private lines.
This would include hundreds of
Verizon sites and eventually could
extend lifetime equipment and
engineering workload savings to
the IDN access network.
“Initially we will migrate to
VPLS at the core, a move that we
will finish during 2010,” Bechly
said. “The rest of the sites will be
driven by economics, opportunity
and the work force. If we have new
requirements at a site, we will go
in and migrate that site. But to
rapidly touch all of the sites would be
very expensive.”
Verizon expects to obtain 4½ nines
reliability from the VPLS-based IDN,
meaning that the network should be
available 99.995% of the time. That
level of reliability is consistent with
the requirements of many commercial
VPLS customers, which have chosen
“We like to showcase our products, and this
was an example where we could use one of
our products in a very high-profile way.”
Tom Bechly, director of enterprise network engineering for Verizon Services Operations
The process of
migrating traffic
from the current private
line-based IDN
backbone will take
about six months.
“Initially we will
interconnect the old
and new backbone,”
Bechly said. “Then
we will move sites
over from one to
the other, doing a
couple of sites initially,
proving those
Verizon’s offering to obtain similar economics
and efficiencies.
VPLS is often used for enterprisewide
backbone connectivity, Bechly said.
The service is particularly appealing to
enterprises that want to control their own
routing over a carrier-provided Layer 2
network, Han said. Now Verizon is one
of those enterprises. n
GigE: Gigabit Ethernet
MPLS: Multiprotocol Label Switching
TDM: Time Division Multiplexing
VPLS: Virtual Private LAN Service
VPN: Virtual Private Network
12 Tellabs Inspire • 1 st QUARTER 2010

THOUGHT LEADERSHIP
Smartphones Need
Smart Networks
If their networks don’t wise up, wireless
carriers risk losing money on smartphones.
By Vikram Saksena
Does anyone really believe
that a dumb network can
support a smartphone?
Customer enthusiasm
for smartphones has
unleashed a torrent of innovation to take
advantage of the growing ubiquity of these
powerful computers we carry in our pockets.
Few people today would leave home
without a mobile phone any more than they
would leave behind their wallet and keys.
This is a boon to the telecom industry,
but each popular new use places added
burdens on wireless networks, often
without bringing additional revenue.
Various studies predict that worldwide
mobile data traffic will double every year
through 2013 and that by 2011, data will
outpace voice traffic.
Adding capacity in the traditional way,
especially expanding the “dumb pipes” in
a “stupid” network that some have advocated,
is a poor choice for carriers. The
expense of doing that will shrink carrier
profits, and eventually network operators
will become marginalized as handset
makers and application innovators take
center stage with consumers.
Apple’s Mindshare
Not long ago, my daughter, a high-school
student, said she wanted an iPhone.
Why? She said it would offer her better
service than what she was getting from
AT&T. She didn’t realize that iPhones
use AT&T’s network, but instead viewed
the iPhone like her iPod: a device that is
totally Apple’s.
AT&T’s decision to make an exclusive
iPhone deal with Apple has paid many
dividends, but it carries a significant challenge
to maintaining a central role with
customers. Utilizing a smart network is
the carrier’s key to meet that challenge.
Apple pioneered the online store where
customers can download applications,
bypassing the network operator. Other
smartphone vendors emulate that concept.
Now a growing number of wireless
carriers hope to insert themselves back
into the relationship by gathering several
smartphone application stores into their
own, carrier-branded online malls. Like
a brick-and-mortar mall operator, these
carriers would provide services to their
tenants, such as analytics of how customers
use their applications.
Network operators can see trends and
provide opportunities based on what customers
do, where they do it and what
handsets they use. Carrier analysis can
help application vendors refine products
to make them more valuable. A smart carrier
network can also enable applications
that could not be created otherwise.
“Various studies
predict that
worldwide mobile
data traffic will
double every year
through 2013
and that by 2011,
data will outpace
voice traffic.”
Dr. Vikram Saksena, executive vice
president and CTO, Tellabs
Last autumn’s agreement between
Google and Verizon Wireless aims to
develop Android phones that utilize network
information, Lowell C. McAdam,
chief executive of Verizon Wireless said
in an interview with the New York Times.
“You will see features on these phones
that are not on other Android devices,”
McAdam said. “Our plan is to leapfrog
the competition.”
Decentralized Intelligence
Tellabs envisions helping carriers create
networks with decentralized intelligence.
A network with intelligence at its edges
is cheaper to build and operate, and it
provides subscribers with a superior
experience. It will deliver a truly new
mobile Internet experience by tailoring
the network to efficiently manage traffic.
Instead of receiving data, voice and
video in one stream at a cell tower and
sending everything to the network core
to sort out, it is more efficient to analyze
traffic near the network edge and send it
where it needs to go before it reaches the
core. Much of the new data traffic wants
to get to the Internet. Offloading it from
the network edge enhances the customer
experience and avoids the need to greatly
expand core capacity.
The mobile Internet demands that wireless
networks become smarter. On today’s
wired Internet, content providers know
their material will be viewed on a PC or
Mac, but the variety of devices using the
wireless Internet is far more diverse.
A decentralized intelligent network
can analyze specifications from a customer’s
handset and adjust the bit rate
to create an optimized resolution for
that screen. The network will customize
content and can insert ads for customers
who agree to receive them.
Smart networks will learn much about
what customers do with their mobile
Photo by Brendan Mcdermid/Reuters /Landov
1 st QUARTER 2010 • Tellabs Inspire 13

THOUGHT LEADERSHIP
devices and when they usually do it. That
information can be used to cache data
or video at the network edge, making it
available quickly when customers want
it, again saving capacity demands on the
network core.
The Personal Touch
As the Internet becomes mobile, it also
grows more personalized. I look forward
to personalizing my phone so that it will
help me to coordinate my activities with
my family’s. When I get an invitation to
an event, it would be great if my phone
could automatically check my wife’s
schedule to see if we’re both free to
accept, for instance.
The proliferation of applications for
mobile devices means that even when
they have the same handset, individuals
can use them in vastly different ways. An
application that may strike me as trivial
can be vital to my neighbor.
I always regarded the ability to program
a DVR from a cell phone as superfluous
until I met someone who described how
important it is to him. He travels a lot and
often forgets to program his DVR when
he’s home, so this service that enables his
cell phone to interact with his TV is quite
useful, and he values it highly.
For carriers that offer triple-play services,
this one application may create
customer stickiness, as do “TV anywhere”
applications that direct content to whichever
screen a customer wants. While a
football fan probably prefers to watch a
game on big screen high-definition set
at home, he might just want game highlights
sent to his smartphone.
Intelligent networks that can package
content in different ways for individual
screens will provide carriers with an edge
over the competition and may open new
revenue streams.
Mobile Security: The Killer App
Mobile carriers should endow their
networks with decentralized intelligence
because it will save them money and
improve their service, but the one argument
for smarter networks that may
trump all others is mobile security.
Security on the mobile Web demands
smarter networks to track down and isolate
viruses and other malicious software
that target known vulnerabilities in smart
wireless devices. PCs can download antivirus
software and other programs to
protect themselves. When they become
infected, they can be cleaned. Wireless
devices don’t have sufficient capacity for
that, so they depend on the network to
provide a “clean pipe” and protection
from malware.
As the Internet
becomes mobile, it
also grows more
personalized.
Already, there are increasing number of
headlines about attacks and vulnerabilities
that expose newly arrived smartphones
on the market, such as the iPhone SMS
hack vulnerability exposed recently.
The New Reality of Smartphones
Researchers worldwide are enlisting
smartphones to augment reality.
Some examples:
• Tourists use phones to take photos
of the Palace of Venaria near
Turin, Italy, or Winchester Castle in
England and get views of how those
landmarks looked in earlier times.
They also get tips on nearby attractions
of interest.
• A Japanese company is testing an
overlay of data displayed on phones
to provide added information about
places in the user’s vicinity, such as
restaurant menus.
• In the U.S., a university engineer
in St. Louis has married an ultrasound
probe with a smartphone
so low-power-ultrasound imaging
can be done anywhere, any time.
This should greatly expand the
reach of telemedicine, especially in
countries where electrical power is
unreliable.
• For patients in developed countries,
wireless technology provides
patient information to healthcare
providers without an office visit.
A Massachusetts start-up has a
service linking pill bottles to AT&T’s
wireless network so that forgetful
patients will get reminder calls when
they miss a dose.
Smartphones, like PCs, have operating
systems and are vulnerable to hacking.
Hackers can potentially leverage vulnerabilities
in device platforms, hack millions
of such devices and utilize them to turn
against the network to bring it down.
To ensure that the mobile Web
achieves its potential, network operators
must intelligently detect such threats and
thwart them. It’s just one more smart
thing to do. n
Dr. Vikram Saksena, is executive vice president
and CTO at Tellabs. His main responsibilities
are technology strategy and business
development, focusing on the areas of optical
networking, Carrier Ethernet and IP, and
mobile backhaul.
SMS: Short Message Service
Level 4, Row H
• Duke University engineers have
created an application enabling a
consumer to wave his phone in the
air to write something like “Level 4,
Row H,” to send himself an e-mail
recalling where he parked his car.
• A California company has launched
an application that uses location
awareness to enhance its memory
jogging, so a shopping list would pop
up on a customer’s phone when he
approaches a grocery store.
• Google has extended its mobile
traffic service to retrieve feedback
from cell phone users to portray
changing traffic conditions in real
time, enhancing the service’s value
to motorists.
Clearly, the handy device that was
born as a way to make phone calls on
the move has grown into something
much more far-reaching, and its evolution
is accelerating.
14 Tellabs Inspire • 1 st QUARTER 2010

analyst insight
Surfing the Mobile Wave
To avoid being swamped by data traffic, mobile operators must
wring the most out of IP, IT and their Internet partners.
by Patrick Donegan
Innovation in cost control and
optimization of end products
or services are the key success
factors in any business. Having
barely scratched the surface of
the new 3G and 4G mobile broadband
opportunities, the challenge for mobile
operators is one that is the most difficult
at points of discontinuity: not merely
embracing the disruptive change that
is breaking down conventional business
models, but actively beckoning that
change forward.
The new challenges are about realigning
mobile network business models
to get better leverage out of IP, IT and
Internet partners. Lower cost, higher
performance IP switches and routers
are widely deployed at the core and
sometimes the metro part of the mobile
network. But in the backhaul, operators’
margins are increasingly threatened by
trying to scale TDM circuits in step with
the often alarming surge in new mobile
broadband data traffic. Extending packet
technology out to the cell site allows the
cost per bit of transporting traffic to be
reduced, albeit with the initial pain and
disruption of changing traditional TDMoriented
operating practices.
Getting more out of IP is a two-step
journey. The second is to transition to a
flatter network such as WiMAX or LTE,
with a common voice and data core,
BSC or RNC functions collapsed and
a direct interface between base stations.
This will enable further cost reduction
by populating the network with lower
cost, more scalable equipment and generating
bandwidth savings by enabling
some core network functionality to be
deployed out toward the network edge.
A flatter architecture doesn’t mean
just lower costs. It also enables lower
latency, resulting in better performance
from existing applications and a sharper
business case for new generations of
real-time multimedia applications.
Which brings me to the IT and Internet
sectors. Operators need to recognize that
in a broadband environment, content and
applications are king. It’s the content guys
that primarily drive the consumer to buy
the network service – not the other way
around. But although the Internet players
can afford to think of the network as
a “dumb pipe” up to a certain point, there
are also a number of high-value capabilities
that they can’t deliver without a key subset
of operator smarts. They can’t deliver location-based
services, for example. And they
can’t orchestrate single-source provisioning
of a common set of services delivered
optimally and uniformly across the socalled
“three screens” of the PC, TV and
mobile phone.
On the one hand, a sharper recognition
of these two fundamentals frees up
mobile operators to focus on differentiating
themselves from one another as
delivery partners for the content and
applications ecosystems. At the same
time, it also provides a better basis for
clawing back some of the consumer
loyalty to their own brand that mobile
“In the backhaul, operators’ margins are
increasingly threatened by trying to scale
TDM circuits in step with the often alarming
surge in new mobile broadband data traffic.”
3G: Third Generation 4G: Fourth
Generation BSC: Base Station Controller
IP: Internet Protcol IT: Information
Technology LTE: Long Term Evolution
RNC: Radio Network Controller TDM:
Time-Division Multiplexing
WiMAX: Worldwide
Interoperability for
Microwave Access
operators have conceded to handset vendors
over many years, and the big beasts
of the Internet jungle more recently.
Within the IT industry, a lot of the
answers lie in the network management
domain. As traffic increases inexorably,
and as patterns of usage become ever
more dynamic and unpredictable, leveraging
new data-centric network and
performance management capabilities
that can provide an end-to-end view of the
network rather than a series of elementcentric
snapshots is going to be key. This
will not only allow network investments
to be managed more efficiently; it will
also enable the end-user’s quality of experience
to be optimized according to a
number of metrics such as by application,
by time of day or by type of user.
When a large wave rises up in front
of you, you often have a better chance of
surviving its impact by swimming rapidly
towards it. No matter how tempting it
might be, your prospects are often not
best served by trying to swim away or by
just standing still. n
Patrick Donegan is a senior analyst
at Heavy Reading, a research
firm. For more information, visit
www.heavyreading.com.
1 st QUARTER 2010 • Tellabs Inspire 15