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Personal Broadband Observatory 4G Business Case for 2.6 GHz Andrea Calcagno, Observatory Chairman and CEO & EVP WiTech SpA Agenda • 4G Technologies • 4G Deployment Model • Business Case • Conclusion 4G Technologies Mobile WiMAX Rel 1.0 802.16e-2005 Rel 1.5 802.16e-2005 Rel 2.0 802.16m IP E2E Network 3GPP HSPA Rel-6 IMTAdvanced HSPA+ Rel-7 &Rel-8 CKT Switched Network LTE & LTE Advanced IP E2E Network 2008 2009 2010 2011 CDMA - Based 2012 OFDMA - Based 4G Technologies 2G/3G/3.5G T1,E1 2G/3G/3.5G Core Network Next Generation Access Network Data Overlay or Replacement LTE or WiMAX Comparable Capex – New Spectrum Need Increased BH Capacity All-IP Core Network 4G Technologies Deployment Model Hotspot coverage Urban Coverage Home Base Station National Coverage Business Case Operator Type: CLEC (COMPETITIVE LOCAL EXCHANGE CARRIER) or Green Field Scenario: Urban Coverage ( Roma, Milano, Napoli, Torino , Firenze) Urban Scenario 4G Technology: LTE ( 10 MHz, FDD, MIMO 2x2) Band: 2.6 GHz Target Market: Consumer Service Profile: Mobile Broadband (Flat Data and VoIP) Devices: Handset and Tablet Business Case Tool: TEA|LTE Dense Urban Scenario Business Case – Market Analysis Summary Roma Business Case – Market Analysis|Service Profile Handset 70% - Tablet 30% Business Case – Market Analysis|Forecast Roma|Total Users Forecast Business Case – EF Analysis Personnel Business Case – EF Analysis CAPEX & OPEX Business Case – EF Analysis Income Statement EBITDA > 3rd Year EBIT > 4th Year Net Income > 6th Year Business Case – EF Analysis Cash Flow Peak Funding 74 M€ PBP 6.3 Years NPV 18,45 M€ CFCF 100 M€ Business Case – Conclusion 4G Business Case – Urban Coverage – CLEC/Green Field ARPU Customer Lifetime OPEX CAPEX Value Added Applications Advertising Revenues Broadband Devices New pricing model More devices for User Appl Open Access Better User Experience No Legacy FTTS Flat Architecture Economies of scale All-IP Network Spectral Effinciency Virtual Network Opportunity Backup Slide sul Business Case Tool: TEA-LTE WiMAX & LTE Project Life-Cycle (1) As for any carrier-class Broadband Wireless Access infrastructure, building a WiMAX & LTE network is and will remain a complex undertaking, … Business Case Definitive Project Budget Allocation Quality Assurance Network Building Services Launch Optimization WiMAX & LTE Project Life-Cycle (2) … and the initial planning phases are particularly critical to set a solid foundation for the success of the initiative … Business Case Definitive Project Quality Assurance Budget Allocation Network Building Optimization Services Launch A Holistic, Iterative Approach is Needed Since the Outset Taking into account all technology and business aspects to ensure an iterative alignment of business and technology strategies allowing to identify all main cost drivers Market Analysis Evaluating the potential market for WiMAX & LTE services, identifying target markets, defining service profiles, and forecasting Revenues Scenario & Sensitivity Analysis Iterative fine-tuning of the WiMAX & LTE Business Plan, analyzing the influence of parameter and boundary condition changes Technical Analysis Dimensioning the WiMAX & LTE Access and Backhauling network infrastructures, defining the required bill of quantities Economic & Financial Analysis Calculating Capex & Opex and evaluating all WiMAX & LTE Business Plan’s KPI WiTech TEA Family of Business Case Analysis Tools Supporting 4G operators, vendors and consultants in their strategic planning activities with thoroughly integrated techno-economic analyses TM Market Analysis TM LTE Technical Analysis Scenario & Sensitivity Analysis Economic & Financial Analysis WiTech TEA Family of Business Case Analysis Tools TM Based on real best practices Equipped with well calibrated, WiMAX & LTE technology-related market, technical, and economic models TM LTE Presenting manageable Input and Output with meaningful correlations Supporting an iterative way of working by design through an easy-to-use, dashboardstyled GUI TEA|WIMAX & TEA|LTE – Market Analysis Evaluating the potential market for WiMAX & LTE services, considering: – Type of territory (dense urban, urban, suburban/exurban, rural) – Type of segment (residential/soho; small, middle, and large enterprises/institutions) – Type of application model (fixed, nomadic, portable, and mobile) – Type of service (technical characteristics and pricing policies) – Churn impact TEA|WIMAX & TEA|LTE – Technical Analysis Preliminary dimensioning the WiMAX & LTE Access & Backhauling network infrastructures, considering: – Down-link and up-link capacity demand (by market segment and rollout plan) – Aggregated total capacity – Existing backbone infrastructures – Type of wireless backhauling technology (SDH, PDH, IP Ethernet, License exempt) – Base Station / Enhanced Node B & User Terminal / User Equipment characterization (antenna gain, transmit power, diversity gain, losses, sector number, terminal type, MIMO) – Path loss model (Cost-231, SUI, ECC-33, Log-Normal with/without Shadowing, Free Space) – Compliance with standard WiMAX Forum’s Fixed & Mobile System Profiles (plus the possibility to define custom profiles) TEA|WIMAX & TEA|LTE – Economic & Financial Analysis Calculating all key economic & financial figures and evaluating KPI in the WiMAX & LTE initiative's Business Plan: – Capex & Opex (spectrum license, connectivity, backhauling, BTS / eNB, UT / UE, ASN GW & CSN / EPC & CN, personnel, marketing, SG&A, etc.) – Depreciations – TCO (Total Cost of Ownership) – Relevant Indicators (Gross Margin, EBITDA, EBIT, NPV, IRR, PBP, Shareholder value, etc.) TEA|WIMAX & TEA|LTE – Scenario & Sensitivity Analysis Enabling the user to fine-tune the WiMAX & LTE initiative’s business plan, in real-time and total privacy, and to view the results in an animated graphical format instantly for all analyses: – Market Analysis – Technical Analysis – Economic & Financial Analysis