Embed Size (px)
DESCRIPTION
This work is based on a translation of my MBA monograph whose certification was issued in April 30th, 2010, by FIPE (Fundação Instituto de Pesquisas Econômicas). Some recent information was added to this paper while other information was removed from the original MBA monograph. Brazil launched in 2010, its National Broadband Plan. The aim is to grow broadband at home from 12 million to 40 million by the end of 2014. This means to provide broadband coverage to 72% of total households of the country. Government’s expectation is to reduce the broadband cost from around 5% average household income to around 0.2% for the most popular plan (speed up to 512 kbps and download limitation) and to around 0.45% for the plan with speed between 512 kbps and 784 kbps. The different ways to access the internet are changing the people’s behavior. It can be in the business environment , at home or at any other place. Statistics show that the number of internet users in Brazil increased at a rate greater than 40% a year between 2000 and 2008 (source: Barômetro Cisco 2009). As per Ibope Nielsen (Source: Meio & Mensagem, 22/June/2009), the number of internet users reached 62.3 million people in Brazil in the first quarter of 2009. However the number of internet accounts is only 15.05 millions (10.4 million for fixed internet and 4.62 million for wireless broadband internet) At the same time, Telco’s revenue from circuit switching telephone systems are decreasing due to mobile systems user’s growth and the emergence of VoIP systems. The need to offer broadband services are introducing great access technological innovations such as VDSL, FTTH, 3G HSPA , WiMAX and LTE. WiMAX is a wireless broadband access technology for the last mile based on 802.16 standard from the Institute of Electrical and Electronic Engineering (IEEE). WiMAX means Worldwide Interoperability for Microwave Access. This name was introduced by the WiMAX Forum which is an organization with a goal to promote, standardize and define the strategy of WiMAX. The aim of this work is to capture the most important items that influence the WiMAX business case at 2,5 GHz band and provide insights to minimize risks and uncertainties that occur in the deployment of a WiMAX network. It is shown an example of deployment in São Paulo city, Brazil, containing numbers of base stations, subscribers, payback period and internal rate of return. The study begins with the analysis of the micro-environment providing a summary containing subscribers forecast for the next years. It is also described the macro-environment analysis. On the technological environment should be noted the delay in the availability of WiMAX-embedded devices while on the 3G side there are more than 800 hundred devices available worldwide. It is also commented about the LTE technology which is being developed by most of the greater telecommunications vendors. On the legal-political environment, it should be noted the delays on the spectrum auctions and the power of cellular operators which influence the rules for WIMAX such as mobility and spectrum usage restriction. It is also emphasized the importance of the project planning, scope characterization and definition, work breakdown structure definition containing the decomposition of the work to be executed up to the package level, the activities sequencing, costs involved, risks and response plans, schedule and critical path.
Citation preview
Wireless Broadband Business Plan
WiMAX
Sergio Cruzes
MBA in Project Management and Technological Innovation – FIPE USP
MsC in Electrical Engineering – EESC USP
PMP certified
Table of Contents
Table of Contents .............................................................................................................. 2
1. INTRODUCTION ...................................................................................................... 5
1. CONTEXT .................................................................................................................. 7 2. DEMAND ANALYSIS .............................................................................................. 8
3.1 Fixed Broadband ....................................................................................................... 8 3.2 Wireless Broadband ................................................................................................ 11
3. BROADBAND REVENUE...................................................................................... 13 4. BROADBAND BARRIERS ..................................................................................... 13 5. END USERS ............................................................................................................. 14 6. BROADBAND OFFERINGS .................................................................................. 17 7. WiMAX CONSIDERATIONS ................................................................................. 18
8. MACRO ENVIRONMENT...................................................................................... 19 8.1 Social and Cultural environment ............................................................................ 19 8.2 Demographic environment...................................................................................... 20 8.3 Economic environment .......................................................................................... 20 8.4 Technological environment .................................................................................. 21 8.4 Political environment ............................................................................................ 24
9. INTERNAL MICRO ENVIRONMENT .................................................................. 25 10. KEY SUCCESSES FACTORS ............................................................................. 26
11. BUSINESS SUMMARY FRAMEWORK ............................................................ 27 12. BUSINESS CONCEPTION .................................................................................. 29
12.1 Business Plan Definition ....................................................................................... 29 12.2 Strategic Planning ................................................................................................. 30 12.3 Purpose of the Organization: Vision, Mission, Believes & Values, and Objectives....................................................................................................................................... 32 12.4 Generic Competitive Strategies ............................................................................ 34 12.4 Marketing Strategy................................................................................................ 35
12.4.1 Marketing Plan Definition ............................................................................. 35 12.4.1 Market Segmentation ..................................................................................... 36 12.4.1 Marketing Mix ............................................................................................... 38
13. WIMAX NETWORK BUSINESS PLAN ............................................................. 41 13.1 Input Parameters .................................................................................................. 42
13.1.1 Morphologic Area .......................................................................................... 42 13.1.2 Spectrum and Bandwidth ............................................................................... 43 13.1.3 Coverage Area – Radio Frequency Engineering ........................................... 43
13.1.4 CAPEX Assumptions..................................................................................... 45 13.1.5 Subscribers Growing Rate Assumptions ....................................................... 49 13.1.5 OPEX Assumptions ....................................................................................... 51
13.2 Output Parameters ............................................................................................... 52 14. WiMAX NETWORK DEPLOYMENT ................................................................ 53
14.1 Diamond Model ................................................................................................... 56
14.2 Project Charter ..................................................................................................... 58 14.3 Work Breakdown Structure (WBS) ..................................................................... 61 14.4 Planning – Activities estimation ........................................................................... 62 14.5 Planning – Activities sequence ............................................................................. 64 14.6 Risks ...................................................................................................................... 65 14.6 Adjustments .......................................................................................................... 67
15. REFERENCES ...................................................................................................... 68
Acronyms and Abbreviations 2G Second-generation mobile network technology 3G Third-generation mobile network technology AAA Authorization, Authentication and Accounting ADSL/DSL Asymmetric Digital Subscriber Line ARPU Average Revenue per User BTS Base Transceiver Station BWA Broadband Wireless Access CAGR Compound Average Growth Rate Capex Capital Expenditure CDMA Code Division Multiple Access CPE Customer Premises Equipment CRM Customer Relationship Management DOCSIS Data Over Cable Service Interface Specification (Cable Modem) DSL Digital Subscriber Line EVDO Evolution Data Only FTTH Fiber to the Home Gbps Gigabits per second GSM Global System for Mobile Communications HSPA High-Speed Packet Access IBGE Brazilian Institute of Geographic and Statistics IEEE Institute of Electrical and Electronics Engineers IMS IP Multimedia Subsystem IP Internet Protocol IPC Potential Index of Consumption IPTV Internet Protocol Television LTE Long Term Evolution MIMO Multiple-Input Multiple-Output MMDS Multichannel, Multipoint Distribution System OFDM Orthogonal Frequency Division Multiplexing OPEX Expended Costs PC Personal Computer PMP Price per Megahertz per Pop QoS Quality of Service RAN Radio Access Network SLA Service Level Agreement VDSL Very High Bit-rate Digital Subscriber Line VoIP Voice over IP xDSL any type of DSL WBS Work Breakdown Structure WiMAX Worldwide Interoperability for Microwave Access
1. INTRODUCTION
This work is based on a translation of my MBA monograph whose
certification was issued in April 30th, 2010, by FIPE (Fundação Instituto de
Pesquisas Econômicas). Some recent information was added to this paper while
other information was removed from the original MBA monograph.
Brazil launched in 2010, its National Broadband Plan. The aim is to grow
broadband at home from 12 million to 40 million by the end of 2014. This means
to provide broadband coverage to 72% of total households of the country.
Government’s expectation is to reduce the broadband cost from around 5%
average household income to around 0.2% for the most popular plan (speed up
to 512 kbps and download limitation) and to around 0.45% for the plan with
speed between 512 kbps and 784 kbps.
The different ways to access the internet are changing the people’s
behavior. It can be in the business environment , at home or at any other place.
Statistics show that the number of internet users in Brazil increased at a
rate greater than 40% a year between 2000 and 2008 (source: Barômetro Cisco
2009).
As per Ibope Nielsen (Source: Meio & Mensagem, 22/June/2009), the
number of internet users reached 62.3 million people in Brazil in the first quarter
of 2009. However the number of internet accounts is only 15.05 millions (10.4
million for fixed internet and 4.62 million for wireless broadband internet)
At the same time, Telco’s revenue from circuit switching telephone systems
are decreasing due to mobile systems user’s growth and the emergence of VoIP
systems.
The need to offer broadband services are introducing great access
technological innovations such as VDSL, FTTH, 3G HSPA , WiMAX and LTE.
WiMAX is a wireless broadband access technology for the last mile based
on 802.16 standard from the Institute of Electrical and Electronic Engineering
(IEEE). WiMAX means Worldwide Interoperability for Microwave Access. This
name was introduced by the WiMAX Forum which is an organization with a goal
to promote, standardize and define the strategy of WiMAX.
The aim of this work is to capture the most important items that influence
the WiMAX business case at 2,5 GHz band and provide insights to minimize
risks and uncertainties that occur in the deployment of a WiMAX network. It is
shown an example of deployment in São Paulo city, Brazil, containing numbers
of base stations, subscribers, payback period and internal rate of return.
The study begins with the analysis of the micro-environment providing a
summary containing subscribers forecast for the next years.
It is also described the macro-environment analysis. On the technological
environment should be noted the delay in the availability of WiMAX-embedded
devices while on the 3G side there are more than 800 hundred devices available
worldwide. It is also commented about the LTE technology which is being
developed by most of the greater telecommunications vendors. On the legal-
political environment, it should be noted the delays on the spectrum auctions
and the power of cellular operators which influence the rules for WIMAX such as
mobility and spectrum usage restriction.
It is also emphasized the importance of the project planning, scope
characterization and definition, work breakdown structure definition containing
the decomposition of the work to be executed up to the package level, the
activities sequencing, costs involved, risks and response plans, schedule and
critical path.
Keywords: Broadband ♦ Business Plan ♦ WiMAX ♦ LTE ♦ Project
Management
1. CONTEXT
The service growing rate of circuit switching telephone systems is starting
to decrease in Brazil and Latin America.
So, Telcos are investing in fixed broadband access technologies which are
showing high growing rates.
Also, Cellular operators are also noticing a decreasing on their growing
rates for voice services. At the same it is very difficult to provide differentiated
voice services. The price competition is one main drivers of the voice revenue
stagnation.
The exhibit 2.1 shows the ARPU for cellular operators in Brazil
Cellular Operators ARPU
29.3 29.4 29.630.1
27.5 27.3 27.1 27.2
24.8
20
22
24
26
28
30
32
1H07 2H07 3H07 4H07 1H08 2H08 3H08 4H08 1H09
R$ ARPU
Exhibit 2.1 – Cellular Operators ARPU
For most cellular operators in the world, the mobile data revenue has
reached more than 20% of the service revenues.
The exhibit 2.2 shows the mobile data revenue participation in the total
revenue of the Cellular operators in Brazil.
10
.30
%
8.4
0%
6.3
0% 8.
70% 11
.30
%
9.8
0%
6%
9.50
%
10
.90
%9
.70
%6
.40
% 9.40
%
10
.90
%1
0.8
0%
6.8
0% 9.
90% 1
3.1
0%
11
.20
%
5.6
0%
11.3
0%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
1H08 2H08 3H08 4H08 1H09
% of data revenue in the total revenue
Vivo Tim Oi/BrT Brasil
Exhibit 2.2 - % of data revenue in the total cellular operator revenue
Based on the above chart there is still a big room to increase the
availability of data services.
2. DEMAND ANALYSIS
3.1 Fixed Broadband
The fixed broadband penetration in Brazil per 100 inhabitants reached
5.16% at the end of 2008 (source: Barômetro Cisco) and 5.47% at the first
quarter of 2009. In 2009, the penetration reached 5.93%.
These numbers show that the broadband penetration in Brazil is still very
low and it is below the world average (See Exhibit 3.1)
Broadband penetration: Brazil versus World (per 100 inhab.)
3
4.1
5.3
4.3
5.1
6.1
2
3
4
5
6
7
2006 2007 2008
Brazil
World
Exhibit 3.1 – Broadband Penetration: Brazil versus World average: (Source: Teleco, Barômetro Cisco, Pyramid Research) – 2008
As per site Teleco (www.teleco.com.br), Brazil is in 67º position regarding
broadband penetration in 2008, behind Mexico (7.1%) and Argentina (8.0 %).
The Brazilian average Broadband residential penetration is 15.94%. This
number shows that there is enough room for a very sustainable growth.
In terms of internet users and internet accounts, there is a big gap showing
a potential demand for internet services. Exhibit 3.2 shows this scenario.
53.9
10.43
0
10
20
30
40
50
60
1
Internet users
Fixed broadband access
Exhibit 3.2 – Internet users versus number of Internet accounts (in million
users – 2008)
In terms of technology, the ADSL is the leader one followed by the Cable
Modem (DOCSIS). Exhibit 3.3 depicts the percentage market share of each
technology (69.55% for ADSL, 26.42% for Cable Modem and 4.02% for other
technologies)
Broadband connections (in thousand)
7258
2757
420
10435
0
2000
4000
6000
8000
10000
12000
ADSL CableModem
Other (Radio) Total
Broadband connections
Exhibit 3.3 – Broadband connections per technology
In 2009, the number of ADSL connections increased 10.55% compared to
2008, reaching 7,705 thousand connections. The growth of Cable connections
was 20.97% reaching 3,132 thousand connections.
Globally the ADSL is also the market leader penetration for fixed
broadband access with 290 million lines representing 68%, followed by the Cable
modem with 21% and FTTx with 9% (source: Pyramid Research 2008). The
exhibit 3.4 details the fixed technologies participation in the world.
0%
10%
20%
30%
40%
50%
60%
70%
ADSL CableModem
FTTx Others
World broadband connections
World broadbandconnections
Exhibit 3.4 – World Broadband Connections (source: Pyramid Research
2008)
It is expected that the FTTx technology will be the leader on the growth rate
on the next years when compared with other technologies.
3.2 Wireless Broadband
The wireless broadband access service is offered by all cellular operators
in Brazil. In the first half of 2009, there were 3,022 thousand 3G mobile devices.
At the end of 2009, there were 6,990 thousand 3G mobile devices.
In the state of São Paulo there were 1,188 thousand wireless broadband
connections, 3G HSPA and CDMA 1xEV-DO (source: Anatel)
Based on Yankee Group and Ericsson research (2009), in 2012 there will
be 46 million 3G subscribers. Pyramid Research (2008) forecasts that WiMAX
will capture 2% of the total 3G subscribers. So, there will be 920 thousand
WiMAX subscribers by 2012. Assuming that São Paulo state will have the same
subscribers growth rate of Brazil, it is expected that by 2012 there will be 206
thousand WiMAX subscribers in the state.
According to Infonetics Research (2009), Brazil is a great potential market
for WiMAX. It is expected that the number of WiMAX subscribers in the country
move from 184,000 to 8 million in 2013.
5300184 184
46000
920
8000
0
10000
20000
30000
40000
50000
Maio 2009 2012/2013*
Wireless Broadband - Brazil (in thousand connections)
3G
WiMAX (Pyramid)
WiMAX (Infonetics)*
Exhibit 3.5 – Wireless broadband forecast based on Pyramid Research
and Infonetics
The exhibit 3.6 depicts the estimated number of WiMAX users for the
Stated of São Paulo based on Brazil’s estimate numbers.
0
2.000
4.000
6.000
8.000
10.000
12.000
Maio 2009 2012/2013*
1.188
10.308
47 20647
2.057
Banda Larga Móvel - Estado de São Paulo (mil
conexões)
3G
WiMAX (Pyramid)
WiMAX (Infonetics)*
Exhibit 3.6 – Wireless broadband forecast for São Paulo state (thousand
of connections)
3. BROADBAND REVENUE
The wireless broadband will be the main driver of mobile operator revenues
in Latin America in accordance to the Pyramid Research analysis (source:
Teletime magazine, 29/June/2009). This also applies to the fixed wireline
operators. The main drivers are:
• Common platforms based on IP protocol
• WiMAX technology will force traditional operators to invest heavily
on 3G and LTE in order to maintain their competitiveness and
increase revenue
Telefonica in Brazil has its fixed broadband access called Speedy. This
service represented in 2008 to 30% of the company revenue.
4. BROADBAND BARRIERS
The broadband access price in Brazil is the main barrier for the
popularization of internet.
One study done by the United Nations in 154 countries appointed Brazil as
one of the countries with the most expensive broadband access. In USA, the
broadband access represents in average 0.4% of the population average salary
while in Brazil it represents 9.6% of the population average salary.
In accordance to the research done by the Technology Information Usage
in Brazil in 2008, 25% of the households in the South and Southeast has a
microcomputer while 71% of these households has internet access. In North and
Northeast regions, only 7% of the households has internet access.
The internet and computer usage penetration is very dependent to the
population salary range and education level. The internet usage penetration for a
group of population which has university degree is 83% and for the population
which did not conclude the basic education level is only 7%. Regarding the
internet usage, the main barriers are associated to the lack of ability to deal with
the computer or internet (pointed by 61%), lack of interest (44%) and price
(23%).
Government launched this year the Broadband National Plan whose idea is
to provide to the population access to the internet at reasonable prices.
In terms of technology, the plan will consist in the construction of an optical
backbone connecting the main cities of the country. This will probably drive the
construction of access networks based on different technologies. WiMAX may be
one of these technologies.
Regarding new entrants operators, the main barrier is the need of a huge
amount of capital to build a network and cost to interwork with the internet (in
order to provide internet access to its end users). The price in Brazil is very
expensive compared to the USA prices.
5. END USERS
For the end-user media consumer, the open TV main content provider in
Brazil. However it is beginning a trend to search for different forms to access
content , entertainment or information, at devices such as PCs and mobiles.
The group of users that is constantly searching for information on different
channels other than TV, is composed of persons under 35-year old (Accenture
study published at Converge Magazine in 13/April/2009).
A study done by Yankee Group and Ericsson shows that the 3G user in
Brazil is predominantly young (Teletime news, 29/July/2009).
It is estimated that in the state of São Paulo the population between 20
and 30-years old is around 7,250 thousand (source: IBGE and growth
estimations) corresponding to 18.2 % of the total state population.
In accordance to the study done by Pesquisa de Condições de Vida 2006,
65% of young population from São Paulo state has high school completed.
Assuming that the conclusion of high school as a key factor for acquiring an
internet broadband subscription, it can be derived that 4,712 thousand people
are potential consumers of broadband internet. By extrapolating the result for the
total state population (72% of internet users are young people between 20 and
30-years old, 28% is the remaining part of the population that uses internet), it is
estimated that there are 6,545 thousand potential internet users in the state
based on the education level criteria.
The social classes in Brazil are distributed as per Exhibit 5.1 (source:
Associação Brasileira de Pesquisas, 2009)
0
2000
4000
6000
8000
10000
12000
14000
16000
A1 A2 B1 B2 C1 C2 D E
14400
8100
4600
2300 1400 950 620 440
Family average income per month (Reals)
Exhibit 5.1 – Social classes in Brazil and family income per month
Based on a report of the Exame magazine (08/April/2009) about the
consumption of the Brazilian families and IBGE information, it can be derived that
the social classes in Brazil are distributed as per Exhibit 5.2.
0,00%
5,00%
10,00%
15,00%
20,00%
25,00%
30,00%
A1 A2 B1 B2 C1 C2 D E
0,90%
4,10%
8,90%
15,70%
20,70%21,80%
25,40%
2,60%
Percentagem Brasil
Exhibit 5.2 – Social classes percentage in Brazil
In order to better estimate the total potential users based on income salary,
the table 5.1 simplifies the number of classes. The total potential number in Brazil
is 15,789 thousand users. This number can be derived for the state of São Paulo
based on the Wireless broadband rate between Brazil and São State. So, the
potential wireless broadband internet users in São Paulo state is 3,946 thousand
subscribers.
Classes
Percentage of the Brazilian population
People between 20 - 30 years old
Wireless internet (potential)
Potential users
A and B 29.60% 11,248 85% 9,560.8
C 42.50% 16,150 30% 4,845
D and E 28.00% 10,640 13% 1,383.2
Table 5.1 – Potential internet users in Brazil based on the income salary
Based on the study of Informa Telecom & Media (2008), WiMAX will
capture 6% of 3G users until 2014. So:
• It is expected 920 thousand WiMAX subscribers in Brazil until 2014
• It is expected 237 thousand WiMAX subscribers in the state of São
Paulo until 2014
The exhibit 5.3 depicts the estimated growth rate of the WiMAX
subscribers between 2008 and 2014 in Brazil and in the state do São Paulo. It is
expected a CAGR of 30.8%.
184
47
920
237
0
200
400
600
800
1000
2008 2014
WiMAX Subscribers Growth
Brasil
São Paulo*
Exhibit 5.3 – Estimated WiMAX subscribers growth – 30.8% CAGR
6. BROADBAND OFFERINGS
The cable modem access reaches only 184 cities representing 74 million
people, or 40% of Brazilian population which represents 53% of total Brazilian
consumption in accordance to the IPC/Target.
While the broadband competitiveness is so tough, the end user has few
choices. The leader subscription service is called Speedy (from Telefonica and it
is present only on the state of São Paulo).
The exhibit 6.1 depicts the main fixed broadband offerings in 2009.
2460
21201920
1762
1320
40280
0
500
1000
1500
2000
2500
Telefonica NET Oi Brasil Telecom CTBC GVT TVA
Fixed Broadband Operators (in thousand subscribers)
Exhibit 6.1 – Fixed Broadband Operators in 2009
An analysis done by IDC in July 2008 (published at
www.puccamp.br/servicos em 06/07/2009), provides the broadband access
prices in Brazil. The average price of minimum throughput (128 Kbps) was US$
30. In Argentina, 512Kbps was US$ 27.05.
7. WiMAX CONSIDERATIONS
The WiMAX community is doing a great effort to expand the possibilities
and alternatives of devices and data applications from laptops and PCs, PDAs
and other devices.
WiMAX Operators around the world point the following key factors of this
technology:
• Broadband access where it is not possible to reach with xDSL
technology. The facility to focus the service at regions where there
is demand allows a better return on investments
• New player who intent to provide broadband services in a very
short deadline
• Unblunding restrictions done by traditional operators
• Differentiation in comparison with xDSL. WiMAX may be positioned
as a fixed network, portable, mobile within the same network.
• IP architecture
• Lower spectrum cost compared to 3G
8. MACRO ENVIRONMENT
As per KOTLER (1995, p. 49), the macro environment consists of the
forces that affect the whole micro environment: demographic, economic,
technological, natural, political and cultural.
8.1 Social and Cultural environment
The cultural characteristics of the areas to be serviced by a wireless
broadband business are very non-homogeneous. The WiMAX service will not be
focused for specific population profiles . In other countries, the WIMAX has been
deployed to attend the regions that the ADSL cannot provide a quality service.
For an operator like Telefonica, WiMAX could attend users from medium to big
cities that live far away from urban areas. Other option would be to provide an
additional service to the Speedy subscribers, not focusing on a specific social
profile. For a new entrant which would compete with ADSL and 3G, there would
not be segmentation of the area to be serviced. The segmentation could only be
used during the implementation phase.
8.2 Demographic environment
The demographic environment is a very important force since it consists
of the population profile in terms of its age, ethnics, immigration, education level,
lifestyle, etc.. As these trends are out of control of the company, it is important to
anticipate the movement of the trends, to develop scenarios and to provide a
constant adjustment on the market strategies.
The observation of the demographic environment trends allow to develop
geographic, ethnics, income salary and age segmentation strategies.
The geographic segmentation is extremely important for a WiMAX
deployment project. It allows identifying areas with great growth potential and low
level of competition. It is on these areas that the deployment should start.
8.3 Economic environment
The main implications of future changes on the economic environment are
related to the demand. The demand is very sensitive to the variations of the
economic activity and any well defined plan may fail if it ignores the influence of
the economic environment.
Brazil, which has the fifth greater population and the eighth consumer
market in the world, it is becoming one of the best option for business in the
world. The internal market growth and the continuous class C expansion has
boosted the consumption in Brazil.
As per magazine Exame (08/April/2009), the Class C spend its income
salary as:
• 21% at commercial establishments (supermarket, drugstores)
• 11% with transport (bus, subway, gasoline, taxi)
• 10% with food (restaurant, groceries, snack bars)
• 8% with entertainment (gifts, sightseeing, internet)
• 7% with basic services (telephone, light, water, house rent)
Based on this scenario, it is expected a high demand broadband services
on the next years.
8.4 Technological environment
At highly competitive segments, the technology is a key determinant factor
for the business continuity. The innovations which aggregate product and
service value affect the end user perception, creating a maximization of the cost
benefit and an increase on the competitive advantage.
The main deployed technological solutions to offer broadband services in
Brazil are the UMTS with its HSPA platform and the old EVDO technology. Other
mobile technologies that offer wireless data are GPRS and EDGE from GSM
networks and 1xRTT from CDMA networks. MMDS operators also offer wireless
internet (radio connection).
The mobile broadband HSPA is the dominant technology. If we consider
the UMTS cellular phones and 3G data devices, they represent 96% of 3G
accesses in Brazil (source: Teleco).
Regard the fixed telephone market, the operators are updating their ADSL
networks with ADSL2, ADSL2+, VDSL and also are beginning to deploy the
FTTH technology.
The Exhibit 8.1 depicts a performance comparison among different
technologies
Access Technology Mode Peak Throuput Downlink Reach
WiMAX* 3,5 GHz - 5 MHz bandwidth FDD Wireless Fixed 15 Mbps
<1.0 km (urban area)
WiMAX* 2,5 GHz - 5 MHz bandwidth TDD
Wireless mobile 10 Mbps
<1.25 km (urban area)
WiFi (802.11a/b/g) Mobile < 54 Mbps < 0.1 km
ADSL Fixed 8 Mbps 3 km
ADSL2 Fixed 12 Mbps 1.5 km
ADSL2+ Fixed 24 Mbps 1.5 km
VDSL Fixed 50 - 100 Mbps 0.4 km
FTTP (BPON-ATM) Fixed 622 Mbps 20 km
FTTP (EPON-Ethernet) Fixed 1.250 Gbps 20 km
FTTP (GPON-Ethernet/GEM) Fixed 1.244 Gbps 20 km
FTTP (GPON-Ethernet/GEM) Fixed 2.488 Gbps 20 km
EVDO* rel A - 1.8/1.9 GHz - 1.25 MHz bandwidth
Wireless mobile 3.1 Mbps <1.7 km
HSPA* 1.8/1.9 GHz - 5 Mhz bandwidth
Wireless mobile 14.4 Mbps <1.7 km
HSPA+* 1.8/1.9 GHz - 5 MHz bandwidth
Wireless mobile 28 Mbps <1.7 km
Exhibit 8.1 – Technology performance comparison among different technologies
* Reach refers to a throughput that is less than the peak value
It is noticed that in terms of access technology, WiMAX will face strong
competition from 3G technology (HSPA and HSPA+).
In the latest years the WiMAX technology had the following successes:
• ITU accepted WiMAX as the sixth aerial interface for the IMT-200
• UQ Communications (sponsored by KDDI operator and Intel)
granted the 2.5 GHz license in Japan for WiMAX
• Intel invests heavily in infra-structure makers in Taiwan
• Clearwire starts its operation in USA
• Certification equipment is started at 2.5 GHz spectrum
• Notebooks with embedded WiMAX are launched
At the same time:
• Em junho de 2008, número de usuários HSPA atinge 65 milhões no
mundo, um aumento de 81% em relação a Dezembro 2007.
• In June 2008, HSPA users reach 65 millions in the world, a 81%
increase compared to December, 2007.
• The great success of the iPhone 3G as an strategic mark for the
mobile industry
• NGMN (Next Generation Mobile Networks Alliance) adopts the LTE
as the preferred technology
• At the end of 2008 there was more than 800 HSPA devices (mobile
phones, PCMCIA cards, USB modem, laptops, etc) available on the
market
This proves that the HSPA has a great world market and continues gaining
room and benefiting from the economies of scale.
Other negative aspect for WiMAX is the requirement of capital intensive
while the HSPA deployments are already done and requires only expansion or
upgrades to accommodate new users.
One of the crucial factors for the WiMAX market is the availability of end-
users devices. The first devices, the CPEs (table devices and outdoor ones) had
a very restricted market while laptops and USB cards will have a bigger market.
The WiMAX success is directly linked to the availability of devices. This makes
the user visualize value and bring advantage competitiveness to the business.
Until now the device availability is very shy.
Other competitor for WiMAX is the LTE technology which a technological
fundamental similar to WiMAX. A telco could wait for the LTE consolidation and
use it instead of WiMAX. LTE has been supported and developed by great
vendors of network infrastructure while the majority WiMAX infrastructure are
small companies.
8.4 Political environment
The political and legal environment is composed of laws, government
agencies and pressure groups that influence and restrict the actions of the
companies. The political environment provides great restriction over the
organizations and individuals.
In July 2009, Anatel proposed a smoothly reduction on the TV operators
frequencies in the 2.5 GHz band. The proposal consists in reducing the available
spectrum from 190 MHz to 70 MHz in 2012 and from 70 MHz to 50 MHz in 2015.
To start a WiMAX operation, 50 MHz may be enough. But 50 MHz of spectrum
eliminates any possibility of expansion. It may be possible one or two operators
in the same region with 25 MHz of spectrum without considering the band guard
that may reach 5 MHz. In Portland, USA, Clearwire started its operation with 30
MHz of band and can increase the spectrum usage until 120 MHz (source:
Teletime magazine, August 2009).
The great movement on this area was the TVA acquisition by Telefonica in
the cities of São Paulo, Rio de Janeiro, Curitiba and Porto Alegre. It is
commented that Telefonica paid between R$ 1 billion and R$ 1.6 billion and that
most part of this value was due to the acquisition of the spectrum which is
currently used by MMDS operation (2.5 GHz range). Recently Telefonica
acquired Vivo which means that their interest on WiMAX may not exist anymore.
Anatel intends to use the 2.5GHz spectrum with services such as LTE.
The 3.5 GHz spectrum range is another band to be used for WiMAX.
There are few operators on this range such as Embratel (whole country license),
Brasil Telecom (license for 12 ANs), Grupo Sinos (AN RS1), Neovia (DirectNet)
in the state of São Paulo, and WKVE (6 ANs in the states of Minas Gerais,
Espírito Santo and Bahia).
It should also be noticed that there is the lobby from cellular operators
which had already invested billions to obtain their spectrum license. They
argument that a MMDS operator deploying WiMAX would have a non fair
advantage by offering wireless broadband services with WiMAX technology.
9. INTERNAL MICRO ENVIRONMENT
The internal micro environment considers the resources, capabilities and
the essential competencies of an organization which although they do not
provide an intrinsic value, they represent value when seen by the possibility of
generation of competitive advantage for the enterprise, providing return on
investment above the average (CECCONELO e AJZENTAL, 2008 p. 114).
The deployment and operation of a WiMAX network require diverse and
different competencies of human resources and also from the organization. The
competence of an organization represents the summation of the learning of all
groups of abilities both at personal level and organizational level (Hamel
ePrahalad (1995, p.233).
Basically the competencies required to deploy and operate an WiMAX
network are:
• Knowledge and experience with radio-frequency engineering (it
requires knowledge and experience with propagation, network
design, antennas, etc). The challenge is to design a network to meet
day one requirements as well as future requirements
• WiMAX knowledge on both access and core sides
• Cellular network deployment experience
• Experience in site acquisition and site sharing
• Technological group to evaluate infra-structure equipment as well as
device hardware
• Experience in network operation, CRM, IP, billing, security and
services
• Marketing experience: coverage area segmentation and priorities,
traffic estimation and growth prediction, business models, subscriber
packages positioning, competitors knowledge
As already commented on this paper, the content is the crucial part of the
wireless broadband business. Users are not only interested on the broadband
pipe. They want the applications and services that the broadband can provide.
This means that the broadband provider needs to do partnerships with content
distributors and also brings to the market the more advanced end-user WiMAX
devices.
10. KEY SUCCESSES FACTORS
The business and competitor knowledge will allow to determine the key
successes factors which are the minimum requirements that are necessary for a
enterprise to compete with possibilities of success.
Based on literature, it is known that main success factors in the WiMAX
network operation are the availability of CPEs, laptops and smartphones, service
price and the cost of the backbone access to internet.
Regarding the project deployment, as per COMARCH, the main success
factors are the choice of WiMAX infra-structure provider totally engaged with this
technology. Also, it is very important to minimize the number of additional
providers for IP network, BTS backhaul, data servers, civil infra-structure, site
acquisition. Other important success factors are definition of site priorities;
maximize site sharing options, and a presence of a very skilled deployment team.
11. BUSINESS SUMMARY FRAMEWORK
In accordance to CECCONELLO and AJZENTAL (2008, p. 134), it is
important to aggregate all related information that concerns to the business plan
in a table in order to make available a qualitative and quantitative summary about
the aspects that can and cannot interfere directly or not directly in the business
that is being proposed. The elaboration of this frame intends to bring to the table
an integrated view about different existent variables that are pertinent to the
proposed business, pertinent to the definition of the business and to the generic
and marketing strategies. Table 11-1 provides this framework.
1 Potential Demand
Fixed broadband access lines should increase from 10.38 millions to 18.9 millions by 2013 (source: Pyramid Research 2008)
The number wireless broadband connections will surpass the number of broadband fixed connections by 201, when it wil reach 28 million connections (source: Pyramid Research 2009)
The number of 3G subscribers will reach 46 millions in 2012. More thant half of these subscribers will use the cellular handset to access the internet (source: Yankee Group and Ericsson 2009)
Infonetics Research (2009) forecasts 8 million WiMAX connections in Brazil by 2013 from 184 thousand connections in 2008. This means a CAGR of 112.64%
The incorporation of people and families into the consumer market
2 Problems in meeting the demand
Recent news show that there is a growing demand for broadband connections in a pace that the service providers cannot meet.
3 Not satisfied users
xDSL services (e.g. Speedy from Telefonica) has presented several complaints mostly due to congestion in the network
3G services need to improve the network quality
4 Strong and weaknesses of the services
xDSL services (e.g. Speedy from Telefonica) show throughput options that 3G services do not support
The strong aspect of 3G services is the mobility
5 Technical viability
Mobility restriction imposed by Anatel is one of the negative factors to be considered. However the subscriber can still access the internet from anywhere where there is service coverage
The 50 MHz range of spectrum proposed by Anatel in the 2.5 GHz band can make not feasible growing plans of the WiMAX. This 50 MHz band could be shared between up to two providers
6 Economic viability
Growing demand for broadband flags the WiMAX potential
Few availability of WiMAX handsets in comparison to 3G devices can kill the WiMAX technology
WiMAX will face heavy competitiveness from 3G systems which have more thant 800 different access devices in the world
It is not sure for investment banks what is the differential that the WiMAX provides in comparison to the 3G networks
WiMAX system at 3.5 GHz band will need a greater investment than 2.5 GHz systems (3,5 GHz coverage is pretty less than 2.5 GHz coverage)
Network deployment requires very intensive capital. Providers which already have transmission backhaul and internet backbone access, can deploy WiMAX with less capital
Table 11.1 – Framework for the business conception
12. BUSINESS CONCEPTION
The goal of this chapter is to provide a base foundation for, given the
opportunities analysis, to structure and develop a strategic proposal for , in the
sequence, to verify its viability.
12.1 Business Plan Definition
The business plan is a tool in which the entrepreneurs employs it in order
to detail their ideas in a concise way based in assumptions of quality where it is
demonstrated its viability and the probability of the business success.
In accordance to Chiavenato (2005), the business plan consists of an
anticipated planning in which the entrepreneur, based in a collection of data and
information about a business, try to make it viable
Business plans are needed at different scenarios. They can be used to
expand a manufacturer plant, to verify the viability in attending a new market, to
manufacture a new product, to offer a new service.
This study will show a business plan for a new business. This plan has as
the first goal to dissolve doubts for a possible decision maker about the quality of
the plan
In accordance to CECCONELLO and AJZENTAL (2008, p. 146), the
challenge of every business plan is to identify precisely the reasons that suggest
its elaboration. The reasons can be understood as the characterization of a
problem motivated by the uncertainties about the viability of the business. The
economic- financial analysis will reflect the verification of the hypothesis and
variables concerned to the problem under study.
In order to obtain a very trustful and solid economic-financial analysis, it
should be necessary to perform an exploratory research that connects trends
and correlations with the observed facts in the environment of the business.
The proposed business plan will show the viability of deploying a WiMAX
network at 2.5 GHz band. Several researches already commented; indicate an
extraordinary growth of the broadband users for the next years, therefore
showing a great business opportunity.
The proposed business plan can be defined as:
• Business: broadband access and content in any place
• Function: entertainment, research, games, information
• Groups: PC users and smartphones
• Technology: wireless
12.2 Strategic Planning
It is seen that there is a kind of difficulty to define the planning function in
the enterprise world, to define its real magnitude and reach (OLIVEIRA, 2007, p.
3). Steiner (1969, p. 12) defined five dimensions non-reciprocally exclusive and
without very defined borders of the planning:
• Subject of interest: manufacturing, research, new products, finance,
marketing, installations, human resource, etc.
• Planning elements: intents, objectives, strategies, politics, programs,
budget, standard, procedures, etc.
• Time dimension: long-term, medium-term or short-term
• Business unit: corporate planning, business unit strategy planning, affiliate
planning, functional groups planning, division planning, department planning,
product, services, etc..
• Characteristic: complex or simple, quantity or quality strategic or tactic
planning, public or confidential, formal or informal, expensive or non expensive
So, the planning is defined as a process based on the five shown
dimensions, done to reach a future scenario in more efficient and effective way,
using optimized efforts and resources from the organization.
In accordance to SLACK et all, (2002 p. 87), strategy is the global standard
of decisions and actions that position the organization on its environment and
has the mission to make it reaches its objectives of long term run. These
decisions will take place before, during and after the elaboration and deployment
of the plan.
The planning can be distinguished into three types: strategic, tactic and
operational.
According to OLIVEIRA, (2007, p. 17), the strategic planning is the
administrative process which provides marketing sustentation in order to
establish the best direction an organization should follow, aiming an optimized
level of interaction with the external factors - non manageable – and acting in an
innovative and differentiate way.
According to FISCHMANN and ALMEIDA (1991, p. 25), strategic planning
is an administrative technique which based on the organization environment, it
creates the conscious of the opportunities and threats, strengthens and
weaknesses of the organization for the accomplishment of its mission. Based
on this conscious, it is established the purpose of the direction that the
organization should follow in order to take advantage of the opportunities and
avoid risks.
According to OLIVEIRA (2007, p. 18), the objective of the tactic planning is
to optimize the results of determined area of the organization. So, it works with
the decomposition of the objectives, strategies and politics that were established
in the strategic planning. It is developed by the intermediate management levels
of the organization.
OLIVEIRA, (2007, p.19) defines operational planning as the formalization
of the methodologies of development and deployment of specific results to be
reached by the functional areas of the organization.
The subject matter of this work is the supply of wireless broadband
services and contents with an objective of return on investment in seven years.
The scenario that is expected for the next years (2010 – 2014) is
characterized by a sustainable economic growth (better than 4% a year). The
increase in the power consumption of the population will stimulate the
appearance of new services and increase the dispute among cellular operators,
internet via Cable Modem and ADSL service providers.
12.3 Purpose of the Organization: Vision, Mission, Believes & Values, and Objectives
According to CECCONELLO and AJZENTAL, (2008, p. 149), the purpose
of one organization gathers vision, mission, believes & values, and objectives,
which help the arrangement of the organization. These aspects are important in
order for the entrepreneur to build the identity of its business, establishing the
organization climate, the standard of behaviors to be followed, what is really
being pursued on its business.
According to OLIVEIRA, (2007, p.65), the vision is defined as the limits that
the owners and main executive people can visualize within a certain period of a
longer time and one wider approach. Within this context, the vision provides a
solid outline of the strategic planning to be developed and deployed by the
organization. The vision represents what the organization intends to be.
According to OLIVEIRA, (2007, p.107), the mission is the reason of being
of the organization. Therefore, it tries to find what is real business of the
organization, why it exists, what activities the organization will concentrate in the
future.
According to OLIVEIRA, (2007, p.67), the values represent a set of
foundations and fundamental beliefs of an organization, and at the same time
they provide sustentation for all your main decisions. The values should have a
strong interaction with ethical and moral values of the organization.
According to OLIVEIRA, (2007, p.141), the objective may be defined as a
state, situation or a future result that the executive intends to reach. It relates to
everything that implies in obtaining a final result. Objective is a target with a
defined execution deadline and assigned responsibilities.
According to OLIVEIRA, (2007, p.141), the objective may be defined as a
state, situation or a future result that the executive intends to reach. It relates to
everything that implies in obtaining a final result. Objective is a target with a
defined execution deadline and assigned responsibilities.
According to CECCONELLO and AJZENTAL, (2008, p. 155), the
objectives show a more quantitative approach of the company goals, on the
revenue, market share and profitability sides.
Four our business plan, there are:
• Vision: innovate and offer entertainment, information and communication
at any place
• Mission: provide excellence in content services
• Main objective : reach 360 thousand subscribers within five years
12.4 Generic Competitive Strategies
According to OLIVEIRA (2007, p. 181), strategy is defined as a path, or
way, or a defined and appropriate action to reach, preferably in a differentiate
way, the goals, the challenges and established objectives, in a better positioning
of the company in front of its environment.. The strategies may be defined in
accordance with the situation of the company, it may be related to the survival of
the company, growing or development .
Porter (1996) identified three generic competitive strategies which a firm
can face and tackle the competitive strengths of the industry in which the firm
acts: cost leadership strategy, level of differentiation, and scope of target market
or approach. These strategies are defined below:
• Cost Leadership : this strategy aims to obtain a cost structure that
is lower to the firm’s competitors, allowing it to obtain a great revenue volume.
The firms that adopt this strategy need to minimize costs by controlling
administrative, marketing, distribution, research and development, human
resources costs etc..
• Differentiation: the firm distinguishes its products in way that they
are noticed as unique on its industry. The differentiation may be in the offer of
products or services, on the deployed technology, on the delivery system, on the
market process, on the brand, style, performance, post-sale support, etc..
• Scope of target market : this strategy consists of concentrating the
efforts in a determined group of customers, in a product line segment or in a
specific market. This strategy is based on the assumption that a firm is different
when it better attends the needs of a specific market, or provide lower costs for
this specific market or both things.
For the proposed business plan, intends to be:
• Cost leader when compared to 3G systems . The differentiation
will appear as a consequence of the business. If a fixed wireline operator deploys
this project, it will be the only company to offer fixed and mobile broadband
access at the same time.
12.4 Marketing Strategy
The marketing strategy should be elaborated with the aim of reaching the
purposes of the organization and or of the business.
According to KOTLER & ARMSTRONG (1993, p. 367), the strategic plan
defines the mission and general objectives of the firm. Each business unit should
prepare its functional plans, including the marketing plan. If the business unit
consists of so many product lines, brands and markets, it may be necessary to
develop plans for each of them. The marketing plans may include product, brand
and market plans.
12.4.1 Marketing Plan Definition
According to CECCONELLO and AJZENTAL (2008, p.161), the marketing
plan integrates the interdependent elements of the marketing such as sales,
product management, customer assistance, advertisement, merchandise, sales
promotion, lobby, public relations, brand and distribution.
The marketing mix defines the strategic position of a product in the
market. It includes the four main variables that a firm can administer in order to
implement its market strategy: Product, Place (distribution), Promotion and Price.
According to CECCONELLO and AJZENTAL (2008, p.161), the marketing
plan should be specific for product line, by market and by region and must be
supported by the market research. The main objectives are to provide the
executive board a concise and complete financial and marketing summary report
containing the forecast result and objectives.
The proposed business plan intends to provide:
• Executive summary: the broadband service will attend firstly the
urban areas where there are greatest fixed broadband subscriber density
• Current market situation is dominated by a great expansion of 3G
broadband subscribers. 3G system quality is still a issue (EXAME magazine
report, 15/July/2009 p. 91)
• As described in the beginning of this work, there will be a great
demand for broadband services on the next years. This is the great opportunity
The threat is the lack of user devices such as smartphones, USB dongles, and
laptops with embedded WiMAX modem.
• Be present in the fixed broadband users market, by offering them
wireless broadband access by a small additional amount. The plan is to capture
360 thousand subscribers in five years.
12.4.1 Market Segmentation
1. Segmentation
Market segmentation consists of identifiable groups within a market:
Benefit segmentation consists in dividing a market into groups based
on the different benefits that consumers seek on a product or service
(people that seek for low prices, others that seek superior quality, and
others that seek service quality).
Demographic segmentation consists in dividing the market into
groups based on age, sex, education, income, religion, etc..
Occasion segmentation consists in dividing the market into groups
according to the occasion when the consumers get the idea, purchase,
use the product (e.g.: passengers traveling by business, by leisure or
emergency reasons
Usage rate segmentation means in grouping persons based on their
usage rate: heavy, medium, light, and nonusers of a product. For
instance, some people drink one cup of coffee per day (light users)
while others drink five or more cups per day (heavy users).
Life style segmentation is a type of psychographic segmentation
which consists in grouping persons or diving a market based on
preferences of their lifestyle (for instance high class people which
consume imported cigars and use sport cars, people that enjoy outdoor
life, etc)
According to KOTLER (2009, p. 45), the market professional can
concentrate its efforts into one or two segments and which of them
receiving the appropriate consideration.
2. Market Niche
KOTLER (2009, p. 45) defines niches as a group of small customers which
show more defined characteristics, or a unique combination of needs. By
concentrating in attending a niche provides some advantages, including the
opportunity of knowing each customer in a more personal way, to face less
competitors and sell services and products with a superior margin once the
customers intend to pay more for the fact of having their specific needs attended.
3. Local Market
According to KOTLER (2009, p. 47), the firms may identify smaller
customer groups which share some characteristics and offer market
opportunities known as local market. Many companies provide customer
databases which contain information about demography, previous customer
purchase, preferences and other customer characteristics
Our business plan intends to:
• Use demographic segmentation: the network rollout will start in the
high income areas and reach the suburban areas in a later date.
12.4.1 Marketing Mix
The marketing mix, also know as the 4P’s - product, price, promotion, and
distribution (place) - translates into actions that should be performed in order to
influence the buyer.
As per CECCONELLO and AJZENTAL (2008, p.163), and KOTLER
(2009, p. 126), the 4P’s are described as:
• Product: attributes of any good, service, idea, person, institution,
etc., which potentially has an exchange value. It is featured by
variety, quality, design, brand, package, size, warranty,
reimbursement.
• Price: attributes that reflect the cost of the product to the consumer,
as the price itself, payment conditions, acceptance or not of credit
cards among others. It includes price list, discounts, licenses,
payment deadline, credit conditions.
• Distribution (Place): is everything that relates to the distribution,
physical location and logistics to make the product arrives to the
final consumer. It consists of channels, coverage, location, stock,
transport.
• Promotion: is the active communication process of the attributes
and benefits of a product for the intended target market. It is
characterized by sales promotion, advertisement, sales force, public
relations, direct marketing.
KOTLER (2009, p. 127) considers the inclusion of two other P’s that are
very important for the global market: politics and public opinion.
CECCONELLO and AJZENTAL (2008, p.164) state that when a service is
being offered, three more P’s may be added to the 4P’s:
• People: they are the individuals involved in the service delivery
(how they are trained, how they behave in the service delivery, etc..)
• Processes: consist of the activities that the individuals perform to
provide the service delivery
• Physical evidence : it is an element of the marketing mix which
customers can actually experience or visualize when they use a
service, and which contributes to the perceived quality of this
service. It is the place where the service is delivered (airplane,
doctor’s clinic, etc)
Our business plan consists of:
• Product: wireless broadband and differentiated content
• Competitive price when compared to the 3G systems
• Establish a process where the service subscription may be
completed in five minutes
• Service will be delivered in any place in São Paulo city where there
is network coverage
The table 12.1 presents a summary frame of the business plan conception.
Dimension DefinitionBusiness: Broadband and content access anywhereFunction: entertainment, research, games, informationGroups: portable computer and smartphones usersTechnology: wireless (WiMAX)
2 Strategic Planning
The subject matter of this work is the supply of wireless broadband services and contents with an objective of return on investment in seven years.The scenario that is expected for the next years (2010 – 2014) is characterized by a sustainable economic growth (better than 4% a year). The increase in the power consumption of the population will stimulate the appearance of new services and increase the dispute among cellular operators, internet via Cable Modem and ADSL service providers. Vision: innovate and offer entertainment, information and communication at any placeMission: provide excellence in content servicesMain objective: reach 360 thousand subscribers within five years
4Generic Competitive Strategies
Cost leader when compared to 3G systems. The differentiation will appear as a consequence of the business. If a fixed wireline operator deploys this project, it will be the only company to offer fixed and mobile broadband access at the same time
5 Marketing Strategy
Executive summary: the broadband service will attend firstly the urban areas where there are greatest fixed broadband subscriber densityCurrent market situation is dominated by a great expansion of 3G broadband subscribers. 3G system quality is still a issue (EXAME magazine report, 15/July/2009 p. 91)As described in the beginning of this work, there will be a great demand for broadband services on the next years. This is the great opportunity The threat is the lack of user devices such as smartphones, USB dongles, and laptops with embedded WiMAX modemBe present in the fixed broadband users market, by offering them wireless broadband access by a small additional amount. The plan is to capture 360 thousand subscribers in five years
2Market Segmentation
Use demographic segmentation: the network rollout will start in the high income areas and reach the suburban areas in a later date.Product: wireless broadband and differentiated contentCompetitive price when compared to the 3G systemsEstablish a process where the service subscription may be completed in five minutesService will be delivered in any place in São Paulo city where there is network coverage
3 Marketing Mix
1 Marketing Plan
3Purpose of the Organization
1 Business Plan
Table 12.1 – Business plan conception summary frame
13. WIMAX NETWORK BUSINESS PLAN
The elaboration of the business plan is the first step in order to build a
WiMAX network. It is a critical step whose final results will depend heavily on the
assumptions defined on this phase. Bad assumptions will improperly influence
the next steps of the project.
The business plan is characterized by several analyzes involving the
technical and economic areas that will provide profitability and risks estimations
derived from the assumed assumptions.
The business plan should consider the competitors that are part of the
broadband market and their technologies, initial investment to build the network
and the operation costs of this network. The competitors are the 3G networks
(1xEVDO and mainly the HSPA networks0, WiFi networks, Cable modem
internet service providers, and ADSL internet service providers (Haig Sarkiassian
and Randal Schwartz, 2007), and the LTE networks. Some authors such as
Ethevaldo Siqueira (2008), mention that WiMAX will be an advanced alternative
for the broadband access, while the 3G and WiMAX would complement
themselves.
The sensibility analysis will determine what are the factors that strongly
affect the return of investiment of the business.
Several methodologies and tools may be used to estimate the profitability
of the business. The discounted cash flow (DCF) is one of them. This tool can
determine the period of return of the business and also the Net Present Value
(NPV) based on an estimation of the discounted future cash flows in order to give
their present values.
In the analysis of the WiMAX business, it should be necessary to estimate
the service penetration and its evolution in the next years, the churn rate and the
allowance for doubtful accounts, the revenue evolution and the network operation
costs. The terms CAPEX (capitalized expenses which are the network infra-
structure costs) and OPEX (expended costs which are the operation and
maintenance costs of the network) will used on this analysis.
The elaboration of this business plan will be based on the methodology
described by Sarkissian and Schwartz (2007).
13.1 Input Parameters
The first step for the elaboration of the business plan is to obtain all
relevant parameters that concerns to the business.
13.1.1 Morphologic Area
It includes the morphologic areas to be attended by the broadband
services: high density urban areas, urban areas, suburban and rural areas. It is
important to obtain detailed information for each morphologic area about number
of inhabitants, houses, companies, terrain profile (flat, mountain, etc) and type of
vegetation (grass, trees, etc).
For this plan, the intention is to attend the areas described in the table 13.1
Environment Total area (km²)
Dense urban / urban 187.06 Urban / Suburban 519.62 Suburban / Rural 504.13 Total 1210.81
Table 13.1 – Profile of the areas to be serviced
13.1.2 Spectrum and Bandwidth
For a wireless operator, the spectrum ownership is its more valuable
asset. The spectrum cost is one of the more critical items of the business plan. A
well elaborated business plan determines how much a future operator can offer
by the acquisition of the spectrum in order to provide a reasonable return of
investment to its investors.
For this plan, it is assumed a bandwidth of 30 MHz (each BTS will have 3
channels of 10 MHz) in the 2.5 GHz spectrum band.
13.1.3 Coverage Area – Radio Frequency Engineering
To determine the coverage area of each base station in order to
dimension the network, it should be necessary to consider the morphologic
environment of each base station and the BTS overlapping factor.
The tables 13.2 and 13.3 show the generic link budget of a 2.5 GHz
WiMAX network for both downlink and uplink. The propagation model used is the
SUI (Erceg and others, 1999). Columns A, B and C refer to the morphologic
environment that can be referenced to the dense urban/urban, suburban and
suburban/rural.
The link budget refers to a WiMAX terminal (Smartphone or laptop with
embedded modem) in the cell border with rates of 1.5 Mbps and 512 Kbps for the
downlink and uplink respectively.
Parameters Downlink A B C Operation Frequency (MHz) 2500 2500 2500 Frequency reuse N =3 N =3 N =3 Mobility Fixo Fixo Fixo BTS power transmitter (dBm) 36 36 36 Gain: MIMO + array (dB) 5 5 5 Ganho da antena da ERB (dB) 17.5 17.5 17.5 Jumper losses (dB) 0.5 0.5 0.5 Terminal receiver antenna gain (dBi) 0 0 0 Terminal receiver sensitivity (BPSK 1/2) (dBm) -96.5 -96.5 -96.5 Fading margin (90% area reliability) (dB) 5 5 5 Interference margin (dB) 3 3 3 Building penetration loss (dB) 18 15 8 Maximum allowed loss (dB) 128.5 131.5 138.5 Coverage radius based on SUI model(km) 0.85 1.25 2.1
Table 13.1 – 2.5 GHz WiMAX link budget (downlink) Parameters Uplink A B C Terminal transmitter power (dBm) 26 26 26 Terminal antenna gain (dBi) 5 5 5 Receiver jumper losses of the BTS (dB) 0.5 0.5 0.5 Receiver antenna gain of the BTS (dBi) 17.5 17.5 17.5 Diversity gain (dB) 2 2 2 Array anrenna gain (dB) 0 0 0 BTS receiver sensibility (dBm) -99 -99 -99 Fading margin (90% area reliability) (dB) 5 5 5 Interference margin (dB) 3 3 3 Building penetration loss (dB) 18 15 8 Sub-channelization gain (512 kbps na borda) 3 9 9 Maximum allowed loss (dB) 126 135 142 Coverage radius based on SUI model(km) 0.75 1.55 2.55
Table 13.2 – 2.5 GHz WiMAX link budget (uplink)
The business plan intends to deploy 300 BTSs in São Paulo city (and
possibly in some areas in the metropolitan area) as:
• Dense urban / urban environment: 128 stations
• Urban / Suburban environment: 128 stations
• Suburban / Rural environment: 44 stations
Considering a consistent level of overlapping among cells, the quantities
described above meet the coverage needs described in table 13.1.
13.1.4 CAPEX Assumptions
The CAPEX includes the acquisition and construction cost of the stations,
the BTSs cost, the BTSs installation cost, power equipments, transmission
backhaul and Core network (ASN, routers, DHCP servers, AAA servers, billing
servers, NMS and CRM servers).
1. Sites
The future WiMAX operator can develop different strategies of site
sharing in order to install a WiMAX BTS. It may share the station, the
shelter, antennas, transmission backhaul. Dian and Kettani (2004) show
several alternatives of resources sharing.
For this plan, it will be used the strategy described in the table 13.4.
‘Table 13.4 – Sites deployment strategy
The sharing model is the traditional one where it is arranged a
place to install the BTS and the tower is shared to install the antennas.
2. Spectrum
The spectrum may be considered as the main asset of the operator.
According to Pyramid Research (2008), the average world price for the
Sites Percentage
New sites 30% Existing sites 30%
Shared sites 40%
Megahertz per population (PMP) is US$ 0.007. This price tends to be greater in
the emergent markets and less on the developed countries.
The spectrum price is a very sensitive parameter when determining the
payoff period of a business. A very high price will make not viable the business
plan. According to the Magazine Exame (August 2009, p. 11), it is described that
the purchase of TVA by Telefonica represented to the spanish operator a value
between R$ 1 billion and R$ 1.6 billions. It is estimated that 50% of this value is
due to the spectrum cost (190 MHz in the 2.5 GHz band).
For this plan, it is assumed a price for the spectrum much greater than the
world average price. It is being assumed a price of R$ 0,20 per Megahertz per
population. Segregating for the São Paulo city, the spectrum price will be R$ 66
millions (30 MHz spectrum band). This price is well in accordance with the price
Telefonica paid to acquire 190 MHz of spectrum from TVA for the cities of São
Paulo, Rio de Janeiro, Curitiba and Porto Alegre. These cities represent 21
million inhabitants. However, due to the need of guard band between MMDS and
WiMAX systems, it is being assumed a value of R$ 90 millions for 30 MHz
spectrum in the city of São Paulo.
3. BTS
The base station transceiver (BTS) is the network element responsible by
the communication of the WiMAX system with the subscriber devices. The
complete system contains BTSs, RF cables, antennas and a transmission
backhaul system. The backhaul is responsible of transmitting the aggregate
traffic of the subscribers under a BTS towards the network core.
It is being assumed that the proposed network will require 210 radio point-
to-point links. The remaining backhaul transmission will be provided by fiber
optics whose cost will be assumed as network operation. The table 13.5 shows
the estimated costs of acquisition of BTSs and accessories, antennas, radio links
and installation material.
Item
Unit price (R$) Number Total price
BTS, acessories, installation material 95.000 300 28.500.000 Antennas 600 1800 1.080.000
Digital - point-to-point (70% of the sites) including the installation material 68.500 210 14.385.000 Total 43.965.000
Table 13.5 – Expected costs for BTSs, antennas and radios acquisition
It will be assumed the following values for the installation costs
• BTS: R$ 8.000,00 per unit
• Radio: R$ 5.100,00 per link
4. Civil costs
The civil part includes all the necessary elements in order to prepare the
site to start the WiMAX BTS installation. It includes site acquisition costs
(purchase or rent), civil infra-structure construction costs and powering.
The table 13.6 exemplifies the costs where the scenario consists of 30%
new sites, 30% existing sites and 40% shared sites.
Table 13.6 – Infrastructure costs for new sites
Item Unit price (R$) Number Total price Metalic post (30% of the sites) 50.000 90 4.500.000 Metalic post foundation (30% of the sites) 80.000 90 7.200.000 Installation material (civil) 5.000 90 450.000 Civil construction 15.000 300 4.500.000 Site acquisition costs 7.500 90 675.000 Total 17.325.000
5. Core Network
The WiMAX core basically consists of the ASN (Access Service Network)
and CSN (Customer Service Network) entities.
The ASN includes the necessary functions to provide radio access to the
users terminals. The ASN entity consists of the BTSs and the ASN gateway.
The CSN consists of the AAA (entity responsible for authentication,
authorization and accounting of users traffic), DNS/DHCP (domain name service
and dynamic host configuration protocol. It is an entity for internet access), HA
(Home agent. It provides the PDSN (packet data service node) function and
provides IP connectivity to the users terminals), NMS (Network Management
System. It provides the function of operation administration and maintenance of
the network).
The WiMAX core network usually also includes a CRM (Customer
relationship management) platform and an IP network in order to interconnect all
platforms of the core network.
The table 13.7 shows the assumed values used for the Core network.
Item Unit price (R$) Number Total price
20 SUN V440 platforms (main and backup: AAA, Billing, DNS, CRM, NMS) 80.000 20 1.600.000 CRM Platform (software) 1.000.000 2 2.000.000 AAA Platform (Bridgewater or Metasolv) 150.000 2 300.000 NMS Platform (software) 500.000 4 2.000.000 Switch router 103.700 4 414.800 Firewall 25.000 2 50.000
Installation material for the interconnection of platforms and equipments 25.000 1 25.000 Total 6.389.800
Table 13.7 – Core network costs
6. Deployment costs
The deployment costs refer to the Project management, engineering and
installation costs. It is assumed a total cost of R$ 16 million reals for a 18-month
deployment.
13.1.5 Subscribers Growing Rate Assumptions
In the beginning of this work, it was elaborated an analysis to dimension the
wireless broadband subscribers base for the next years based on projections
from research institutions, education level of the Brazilian population, wireless
internet users profile and also projections based on the income rate of the
Brazilian population. The more pessimistic result provides a number of 4 million
wireless broadband users in the state of São Paulo.
The forecast of several research institutes is that the number of WiMAX
subscribers in the world will vary between 2% and 10% of the total 3G broadband
users. This forecast limits the number of WiMAX users. So, the strategy of the
plan is that a fixed operator (e.g. Telefonica in São Paulo), offer an additional
wireless broadband service to their subscribers.
This plan is limited to the São Paulo city where there is an estimation of a
capacity of up 2 million users of wireless internet in the next years. The goal is to
capture 360 thousand subscribers as depicted below:
1. Service plan
The WiMAX technology intends to provide a great price decrease of the
megabit. In addition, it provides a fast network deployment. Also, the presence in
the market of laptops and smartphones with WiMAX embedded modems, all this
will provide the operators a great competitive advantage.
The proposed service plan consists in providing for ADSL users the
possibility of acquiring a wireless broadband service by a small amount of
money.
The table 13.8 shows the service plan.
Class QoS DL OSR Users distribution
Price (R$)
Business Minimum 1500 kbps 25
5,0% 129 Maximum 5000 kbps 50
Platinum Minimum 512 kbps 25
10,0% 44.9 Maximum 1500 kbps 50
Gold Minimum 256 kbps 25
35.0% 34.9 Maximum 1000 kbps 50
Silver Best Effort 512 kbps 50 50,0% 24.9
Table 13.8 – Service Plan (QoS: Quality of service, DL: downlink, OSR:
oversubscription rate)
The OSR parameter informs the amount of the designed overload for the
network, i. e. , how much capacity is exceeded if all users access the network at
same under their designed nominal rate. Typical overload values are between 25
and 40.
The business plan does not consider additional value services that the
operator may offer to their subscribers such as video and music download,
content distribution such as online news and specific on demand entertainment.
According to ANDRÉ RIEDEL and others, different ways of incentives may
reduce the traffic demand at congestion periods and allow to increase the
overbook value of the project subscribers.
2. Subscribers evolution growth
The subscribers growth plan forecasts:
• 54 thousand subscribersin average in the first year
• 144 thousand subscribers in average in the second year
• 230 thousand subscribersin average in the third year
• 300 thousand subscribers in average in the fourth year
• 360 thousand subscribers in average in the fifth year
13.1.5 OPEX Assumptions
OPEX represents the costs incurred to keep the firm in an operational state.
It includes the network operational costs and planning, transmission backhaul
maintenance, power, site rents, sales, marketing, promotion and customer
support.
According to some technical papers from WiMAX Forum, “Business Case
Models for Fixed Broadband Wireless Access based on WiMAX Technology and
the 802.16 Standard” (2004) and “WiMAX: The Business Case for Fixed Wireless
Access in Emerging Markets” (2005), it was developed the assumptions for the
network operation costs. These publications also contain the estimation of the
costs for internet connectivity. It is estimated the internet connectivity costs will
vary between R$ 5 million reals and R$ 17 million reals per year. The table 13.9
shows the cost assumptions for the network operation.
Item Assumptions
Marketing and Sales expenses
20% of the revenue in the first year, decreasing
to 11% of the revenue in the fifth year and
beyond
Network Operation
10% of the revenue in the first year, decreasing
to 7% of the revenue in the fifth year and
beyond
G & A
6% of the revenue in the first year, decreasing to
3% of the revenue in the fifth year and beyond
BTS Maintenance 5% of the BTS CAPEX
NMS Maintenance 5% of the NMS CAPEX
Radio Maintenance 5% of the Radio CAPEX
Site rent R$ 1800,00 a month in average per site
Provision for bad debts 1% of the revenue
CRM Maintenance 5% of CRM CAPEX
AAA Maintenance 5% of AAA CAPEX
Sun platforms maintenance 5% of Sun CAPEX
Internet connectivity access Between 5 million and 17 million reals per year
Table 13.9 – OPEX assumptions
13.2 Output Parameters
The main Project output parameters are the period of return of the
investment, the Internal Rate of Return (IRR) and also the Net Present Value
(NPV) .
The network deployment will cost R$ 94 million of reals in equipments, sites
and project team. In the year zero, it will be necessary R$ 65.7 million of reals
and R$ 28.3 million of reals in the first year of network operation. Additional R$
18 million reals are necessary in the first year to operate the network in its first
year.
Based on the above assumptions, it is estimated that the period of return of
the investment will be six years. It is estimated an IRR of 11.56% on the end of
the seventh year of network operation.
The Business plan development of a WiMAX network is a very complex
process that takes so much time. As there are several involved variables, it is
crucial that the project assumptions be consistent and precise.
The sensibility analysis shows that the more sensible items are spectrum
license price and the internet connectivity price.
As already commented, this proposed service is to be offered to the fixed
broadband users (e..g. Speedy from Telefonica). So, by a small additional price,
these users could purchase wireless broadband internet with mobility. This
strategy is aligned with the studies done by LANOO and others.
14. WiMAX NETWORK DEPLOYMENT
A Project is a temporary effort undertaken to create a unique product,
service or result (PMBOK 2004). Temporary means that all projects consist of a
very well definite beginning and a definite end.
The projects are a way of organizing activities that cannot be approached
within the operational limits of an organization.
The PMBOK (Project Management Body of Knowledge) has become a
very widely used standard by several organizations in the world.
Together with the Project Management, the Six Sigma methodology has
been deployed by project managers and other professionals in search of greater
efficiency and effectiveness in the deployment of projects and business
management. ISREFANI C. de PAULA and others (2006) compare the approach
of Project Management and Six Sigma methodology, identifying similarities and
differences.
According to WERKEMA, the Six Sigma methodology is not just another
initiative of project management or a program of process improvement that uses
old concepts in a modern way. The Six Sigma methodology is a continuous
strategy based on data statistics information collected in projects and
organizations. According to ISTEFANI C. de PAULA and others (2006), on the
majority of the projects, the Six Sigma methodology is conducted by teams led
by Black Belts or Green Belts and it is usually deployed with the process
improvement method called DMAIC (Define, Measure, Analyze, Improve,
Control). According to to Eckes (2001), each phase means:
According to WERKEMA, the Six Sigma methodology is not just another
initiative of project management or a program of process improvement that uses
old concepts in a modern way. The Six Sigma methodology is a continuous
strategy based on data statistics information collected in projects and
organizations According to ISTEFANI C. de PAULA and others (2006), on the
majority of the projects, the Six Sigma methodology is led by teams leadered by
Black Belts or Green Belts and it is usually deployed with the process
improvement method called DMAIC (Define, Measure, Analyze, Improve,
Control). According to to Eckes (2001), each phase means:
1. Define: definition of improvement goals for the different levels of the
organization such as improvement of the profitability numbers of
operation and projects, manufacturing level and improvement, and
service quality improvement. The problems and the inefficiencies
should be considered as opportunities of improvement. In this phase, it
is started the stream value mapping.
2. Measure: measure the efficiency and effectiveness of the current
system using reliable metrics that will allow to monitor the progress of
the system through these metrics. In this phase, it is the stream value
mapping is finished.
3. Analyze: use of techniques and statistics tools in order to eliminate the
gap between current performance and desired performance level. It is
determined the root cause of the problems and inefficiencies.
4. Improve: find creative methods based on root of the problems in order
to improve process that will result in way to accomplish the activities in a better
way providing the desired outcomes.
5. Control: Implement the control in the new system or process and
ensure that the improvements will be sustained in the future and that the desired
outcomes are achieved. The control should be done both at tactic and strategic
level of the organization. ]
According to PETERKA (2005), the search of the root cause of the
problems, the magnitude and accuracy of the Six Sigma methodology, all this
make the Six Sigma methodology different of the typical project management.
The Six Sigma method contains a Project Charter model very well defined that
describes the project scope, financial goals, benefits, milestones and others. It is
strongly based on data and economies with hard control (DMAIC) that performs
specific measurements, identify specific problems and their root causes, and
provide specific solutions that can be measured. In project management cases,
the organizations usually implement projects without a complete knowledge of
what are the financial gains.
According to MUNIZ (2008), in the implementation of a project, it should be
taken into account that the main goal is to create value to the final consumer
providing an enough and competitive profitability margin to the allocated project
capital.
Therefore, besides of the mastering of the process techniques (initiation,
planning, execution, control and administrative closure) and project management
tools, it is strictly necessary to consider the concepts and market analysis
techniques, risks modeling and evaluation, and the return of the project
investment. So, it is important that the project manager consider the investment,
financial and operational decisions. The Six Sigma methodology will provide
performance metrics in a continuous way to the project manager. So, decisions
can be taken in a fast and precise way.
14.1 Diamond Model
One of the more common myths in the world of project management is that
all projects are similar and that tools and similar methods can be used for all
project activities. This erroneous concept took several projects to succumb to the
failure and created great disappointments to the project managers, stakeholders
and project sponsors.
The reality is that projects differentiate by themselves in several aspects
and few organizations acknowledge this formally.
According to SHENHAR (2005), the diamond model consists in four
dimensions which are novelty, complexity, technology and pace. He shows how
to classify the projects and how to adapt the management style for the correct
project.
The four dimensions for distinction among project types are
• Novelty: how new is the product to customers and users
o Derivative, Platform, Breakthrough
• Technology: how much new technology is used
o Low-tech, Medium-tech, High-tech, Super-tech
• Complexity: how complex is the system and its subsystems
o Assembly, System, Array
• Pace: How critical is the time frame
o Regular, Fast/Competitive, Time-critical, Blitz
An example of incorrect use of this model was the project of the
construction of the Denver Airport. (technological dimension was
underestimated).
The exhibit 14.1 shows the Diamond Model that was defined for the
project described on this work.
In terms of novelty, it is a platform, i. e., the final user will have a product
(internet access) which is not a disruptive technology, i. e., the embedded
technology of this product is transparent for the user (user wants to access the
internet with mobility). In terms of complexity, this project fits as a system, i. e.,
the deployment will request a reasonable number of interactions in the
organization. In terms of technology, this project fits as high-tech because it has
never been deployed by the organization. Also, WiMAX is a relatively new
technology and considered as disruptive by many authors such as ORTHMAN
(2005). The deployment pace is fast / competitive (most of cellular network
deployments fits on this pace).
Therefore, based on above, it can be defined the management style
required for the Project as well identify the benefits and risks of the Project. The
dimension technology is identified as high-tech. This requires an engineering
team very well trained and experienced and a project management team very
conscious of this aspect of the project where it will be necessary an amount of
tests above the average of the other projects. This requires a conscious
dimensioning of the budget for this activities as well as a realistic estimation of
the deadline of the acceptance of the project.
Technology
Pace
ComplexityNovelty Low Tech
Medium Tech
High Tech
Super HIgh
Tech
Assembly System Array
Regular
Fast /
Competitive
Time-
Critical
Blitz
Derivativ
e
PlatformBreakthroug
h
Exhibit 14.1 – Diamond model of the WiMAX network
14.2 Project Charter
According to the PMBOK, the Project charter is the document that
authorizes formally a project and provides to the project manager the authority to
apply resources of the organization in the project. The project charter deals
mainly with the documentation of the needs of the project, the justification of the
project, the customer needs, the new product or service, or the project result.
The project charter should address the following information:
• Requirements that satisfy the needs, desires and expectations of the
customer, sponsor and other interested parties
• Business needs, high level project description or product requirements
for which a project is undertaken
• Project purpose or justification
• Allocation of the project manager and authority level assigned to
him/her
• Milestone schedule
• Influence of the interested parties
• Functional organizations and their participation
• Organizational, environmental and external assumptions
• Organizational, environmental and external constraints
• Project business case with return on investment and other financial
metrics
• Summarized budget
The table 14.1 provides the main topics of the project charter.
Information Answer
Problem or OpportunityOpportunity of offering wireless broadband internet access to Fixed internet users.
Therefore, compete with 3G systems
Proposition to solve the problem or
taking advantage of the opportunity
Deploy a wireless broadband network using the WiMAX technology in the city of São
Paulo. The network consists of 300 BTSs providing a total coverage area of 1200 km2.
Note: The business plan forecasts that 42.5% of the sites will be installed in dense
urban / urban environment, 42.5% in urban / suburban environment and 15% in
suburban / rural environment
Goal: reach 360 thousand subscribers after 5 years of network operation
Project TypeInnovation: platform; Technology: high-tech; Complexity: system; Pace: fast /
competitive
Success criterias
Deadline: 18 months
Project Budget: R$ 65.7 million reals in the first year plus R$ 28.3 million reals in the
second year (Total: R$ 94 million reals)
Project target: IRR of 11.59% at the end of the seventh year of network operation
Interested partiesSponsors, stakeholders, project team, vendors, government agency (Anatel), real state
agencies,subscribers
Project Scope
Definition of 300 hundred locations – for WiMAX BTS installation and Core Network
installation
The new sites that will built represent 30% and the shared sites represent 40% of the
total sites. Te remaining 30% of the sites will be existing ones.
Definition of the vendors for:
- WiMAX BTS
- Antennas
- Digital radios
- Core network (ASN, CSN, routers, DHCP severs, DNS servers, billing, security, CRM)
Project description - Acceptance
criteria
Installation, configuration and network testing.
The 300 BTSs should provide a coverage área of 300 km2 and each BTS should provide
45 Mbps of aggregate throughput.
Project description - External
dependencies
Local government approval of the installation projects and civil work of the sites.
Strikes in the Brazilian Federal Revenue Office may delay the customs clearance ;
Regulatory agencies (eg.: Anatel) may delay the certification of the BTSs
Exchange rate: dollar price between R$ 2.00 and R$ 2.20
Project description - assumptions
Availability of human resources for the several needs of the firm. Special attention to
the project management team which should contain experienced and certified people
due to the existence of several simultaneous activities in the project and several
acquisitions
The site civil projects need to be approved in the local government in a maximum
deadline of 20 days.
The average number of subscribers in the sixth year of operation should be close to
360,000 users. In order for this to become true, it is important that the Brazilian PIB
grows in average 4% per year on this period.
The BTSs will be purchased from a vendor which meets the required deadlines and
whose technical specifications of its WiMAX product be in accordance with the
standard. This vendor will also provide the ASG (BTS controller), NMS (BTS and ASG
management), WiMAX terminals, BTS antennas, routers, firewall, AAA platform, CRM
and spectrum clearance certification. During the network operation, the IP costs of
internet access should drop 10% per year.
Project description - restrictions Regulatory ( Anatel, city hall, others), budget, deadline
Table 14.1 – Project Charter
14.3 Work Breakdown Structure (WBS)
The WBS is part of the project scope management as well as scope
planning, scope definition, scope verification and scope control.
According to the PMBOK 2004, the WBS is the decomposition of the
project work. The WBS consists in the subdivision of the main project
deliverables and project work into smaller and more easily manageable pieces of
work. So, the estimation of budget, deadlines, resources and project
deliverables, is more easily defined. The WBS allows assigning tasks and
responsibilities, identifying interfaces and events, control and program the project
and coordinating the flow of information. In order to verify if the decomposition is
correct, it is necessary to determine if low level components of the WBS are
necessary and enough for the accomplishment of the deliverables of the
correspondent higher levels.
The decomposition technique provides a tree structure where each level
details the items of the above level until it is reached the work package level
which is lowest level in the WBS. At the work package level, it is possible to
better estimate schedule, cost and assign responsibilities.
Exhibit 14.2 depicts the WBS for the proposed WiMAX implementation.
Exhibit 14.2 – WiMAX deployment WBS
14.4 Planning – Activities estimation
After the definition of the WBS activities, it is necessary to estimate the
effort for each WBS work package level. This is a very difficult part of a project,
especially in new scenarios which it was never deployed. There are several
techniques and tools which may help to create estimations such as Wide Band
Delphi, software Construx and PERT.
For the proposed project, based on historical information from cellular
networks, it may be possible to estimate the necessary effort for each of the
activities described in the WBS.
It should be emphasized that the effort to be described herein concerns
only to the WiMAX operator. In the following example, the operator will be
responsible for the preliminary engineering (a), final engineering project part 1
(b), hiring of the equipment vendor (k), hiring of the site acquisition firm (i), hiring
of the civil work (l). All other activities will be provided by the equipment vendor
(BTS, digital radio, Core network including Sun stations, installation,
configuration and integration of all these hardware), site acquisition firm (search
sites in accordance to the preliminary engineering project), civil work firm (civil
work project, approval of these projects into city hall and other entities, project
execution). The WiMAX operator will participate in all these activities, providing
necessary information required for the elaboration of all described projects. The
table 14.2 shows a summary of the responsibilities.
Firm Responsibilitie s
Equipment vendor Provides BTS, digital rádios, antennas, cables, RF acessories, Core network (including Sun stations, softwares for AAA, DH|CP/DNS, NMS, Billing, and CRM, routers, firewall), installation, configuration, integrations and optimizations of all these equipments and network. It will be also responsible for the shipment, storage and delivery of all this hardware to the operator sites.
Site acquisition Site prospecting and a close interface with the operator engineering team. Elaboration of the legal part of the rent contracts
Civil Project elaboration, obtain approval and civil work execution
Table 14.2 – Responsibilities summary
So, based on the above responsibility frame, it is necessary an effort of
1,080 men-week for the operator (effort distributed among engineering,
marketing, commercial, project management, installation). This provides an
average of 14 resources for 1.5 years of work.
14.5 Planning – Activities sequence
At the same time that the estimation of the duration and resources of the
activities are done, it is possible to create the sequence of the activities.
According to the PMBOK 2004, the activities sequencing involves the
identification and documentation of logic relationships between the schedule
activities. The schedule activities can be sequenced logically with proper
precedence relationships as well as leads and lags to support later developments
of a realistic and achievable project schedule.
From the activities sequencing, it is possible to determine the critical path.
The critical path methods calculates the theoretical early start and finish dates,
and late start and finish dates for all schedule activities without considering any
resource limitations.
The exhibit 14.3 shows the activities sequencing of the WiMAX project.
Exhibit 14.3 – WiMAX activities sequencing
14.6 Risks
The Project plan includes assumptions and these contain embedded risks.
So, the risks should be managed in way of increasing the probability and the
impact of positive events and lowering the probability and impact of pessimistic
events. According to the PMBOK 2004, the risks management of the project
includes the processes which deal with the identification, analysis, responses,
and monitoring and control on a project.
The risks should therefore be identified and prioritized. Decisions should be
taken to avoid and mitigate the main risks.. The allocation of resources to the
project should be done for the elaboration of contingent plans against these risks.
There are also unpredictable risks that demand the construction a very robust
management system that is able to deal with the unknown and unexpected
events.
The tables 14.3 and 14.4 show the identified risks and possible mitigation
actions in the deployment of a WiMAX network.
Event Probability Impact Actions
Raining level above the average low high
Work with a priority plan of the sites
once the project starts
Dollar valuation high high
Transfer the risk to the equipment
vendor. Close an agreement based in a
fixed value of dollar or make a hedge
contract
Customs strike medium high
Schedule already considers a possible
customs strike of up to 6 weeks
PIB growth below 5% per year in the
next six years medium high
Accept the risk. A lower growth rate will
cause a greater payback period and a
smaller IRR
Subscriber handset price reduction less
than 10% a year low high
There will be impact the business plan
with a reduction of the expected number
of users per year. Plan is to work with
smaller expectations (hire less internet
connectivity band)
Internet connectivity prices not
decreasing low high
There will be impact in the business plan
with a reduction of the expected number
of users per year. band). Impact is
reduced with a very tight traffic control
at the user level
Civil project approval delay medium high
Work with a priority plan of the sites
once the project starts
Table 14.3 – Risk response plan – contingency
Event Probability Impact Actions
Management: Several activities taking
place simultaneously medium high
Strengthen project management team
with certified and experient professionals
(includes this in the project scope)
Delays in the site acquisition process medium high
Prioritize acquisitions based on a traffic
demand study
Equipment vendor providing products
and services without quality medium high
Use a rigid RFP criteria including penalties
in case of vendor not meeting deadlines
and quality metrics (KPIs)
Table 14.4 – Risk response plan - preventive
14.6 Adjustments
According to the PMBOK 2004, the critical paths have either a zero or
negative total float. It may be necessary adjustments in the activities duration,
logic relationships, leads and lags or other restrictions to the schedule may be
necessary in order to produce networks paths with a zero or positive total float.
The resources and cost constraints also require adjustments in the
schedule in order that it gets adapted to the real conditions of the organization.
The PMBOK 2004 describes some techniques of schedule adjustment as
duration compress (Crashing: this technique consists in additional resources
allocation, overtime hours and scope simplification; Fast tracking: parallelism).
Based on project experiences, the concept of fitting the schedule within a
pre-determined deadline without knowing the problems and resources
constraints, this will take the project to have a few probability or even no chance
to be successful. To maximize the success probability, the manager should
establish initially a real finish date using the critical path and not through an
arbitrary decision. Based on this date, the project manager may compress the
duration of schedule using resource management techniques and risk analysis.
The plan should also accommodate the uncertainties in the execution of the
activities in order to ensure the project will finish within the deadline. In case it is
not possible to compress the schedule using the above techniques, the project
sponsor and customer need to be informed about this.
15. REFERENCES
ALLEN, S. M. “Business Case Assessments of a Wireless Broadband
Network Deployment”.
Anatel: www.anatel.gov.br
Barômetro Cisco 2008 (Resumo Barômetro Cisco Banda Larga Brasil 2005-
2010): http://www.cisco.com/web/BR/assets/docs/Barometro_Site_v1.pdf
CECCONELLO, Antônio Renato; AJZENTAL, Alberto. A construção do
plano de negócios – São Paulo: Ed. Saraiva, 1ª edição, 2008
CHIAVENATO, Idalberto. Empreendedorismo – Dando asas ao espírito
empreendedor–São Paulo: Ed. Saraiva, 1ª. Ed. 2005
COMARCH, “Lowering the Barrier of Entry to the WiMAX Service Market - ow
to Solve WiMAX Business Chalenges”, disponível em http://www.wimax-
solution.com/en/download/HowToSolveWiMAXBusinessChallenges_Whitepa
per.pdf
DINAN, E; KETTANI, S. “RF Engineering Approach to Site and Antenna
Sharing”, 2004.
ECKES, G. A. Revolução Seis Sigma: o método que levou a GE e outras
empresas a transformar processos em lucros. Rio de Janeiro: Ed. Campus,
2001.
ERCEG V., GREENSTEIN L. J.; TJUNDRA, S. Y.; PARKOFF, S. R.; GUPTA,
A.; KULIC B.; JULIUS, A. A.; BIANCHI, R. “An empirically Based Path Loss
Model for Wireless Channels in Suburban Envrionments”, IEEE Journal on
Selected Areas in Communications, Vol. 17, No. 7, July 1999.
GOEMANN, Rafael Gustavo. A ABORDAGEM SISTÊMICA COMO
ALTERNATIVA ESTRATÉGICA PARA PROVEDORES LOCAIS DE
ACESSO À INTERNET , Universidade Regional de Blumenau - Centro de
Ciências Sociais Aplicadas - Programa de Pós-Graduação em Adminstração,
2005.
HAMEL, Gary; PRAHALAD, C.K. Competindo pelo futuro. Riode Janeiro:
Campus , 1995.
Infonetics Research (2009): Assinantes de WiMAX chegarão a 8 milhões no
Brasil em 2013, publicado por Teletime News em 31/07/2009.
Informa Telecoms & Media (2008): WiMAX Broadband Convergence:
Emerging Fixed, Portable & Mobile Internet Markets
Instituto Brasileiro de Geografia e Estatística – IBGE. Disponível em
www.ibge.gov.br
PAULA, C. Istefani de; SANT’ANNA, A. M.; BIASOLI P. M.; RIBEIRO, J. L. D.
“Análise da metodologia Seis Sigma e Gestão de Projetos”, 2006 (XXVI
ENEGEP)
KOTLER, Philip; ARMSTRONG, Gary. Princípios de marketing. 5. ed. Rio
de Janeiro Prentice-Hall do Brasil Ltda., 1993.
KOTLER, Philip. Administração de marketing: análise, planejamento,
implementação e controle. 5. ed. São Paulo: Atlas, 1998.
KOTLER, Philip. Marketing para o século XXI: como criar, conquistar e
dominar mercados. 1. ed. São Paulo: Ediouro, 2009.
LANNOO, B.; VERBRUGGE, S.; OOTEGHEM, J. V. ; QUINAR, B. ; COLLE
D. ; PICKAVET, M. ; DEMEESTER, P. “Business Scenarios for a WiMAX
Deployment in Belgium”.
Maravedis (2009): WiMAX deve superar 100 milhões de usuários em sete
nos, publicado em www.telecomonline.com.br
Meio & Mensagem: www.meioemensagem.com.br
MUNIZ, M. Gestão de Projetos de TI – I: Importância dos Aspectos
Financeiros e Econõmicos – publicado em www.teleco.com.br (03/03/2008)
OHRTMAN, Frank. “WiMAX Handbook – Building 802.16 Wireless Networks”,
McGraw-Hill, 2005.
OLIVEIRA, Djalma de Pinho Rebouças de, Planejamento estratégico:
conceitos, metodologia e práticas – 24 ed. – São Paulo: Atlas, 2007.
PETERKA, P. “The Difference between Typical Project Management and Six
Sigma Project Management”, artigo publicado em
http://www.buzzle.com/editorials/9-19-2005-77096.asp
PMOK 2004, Um Guia do Conjunto de Conhecimentos em Gerenciamento de
Projetos, Terceira edição, Uma Norma Nacional Americana ANSI/PMI 99-
001-2004
PORTER, Michael. Competitive advantage: creating and sustaining
competitive performance. New York: The Free Press, 1985.
Pyramid Research (2009): CRESCIMENTO ACELERADO: Conexões de
banda larga móvel superarão as fixas no Brasil até 2011, publicado por TI
INSIDE Online em 29 de julho de 2009
Pyramid Research (2008): Global Fixed and Mobile Broadband Outlook, The
Transformation of Networks - Business Models and Growth Opportunities,
December 2008
Pyramid Research (2007): The WiMAX Value Proposition - Capex, Opex,
Performance, May 14, 2007
Revista Exame: www.exame.com.br edições de 15/07/2009, 08/04/2009.
Revista Teletime: www.teletime.com.br edições de Julho/2009, Agosto/2009.
RIEDEL, A.; FISCHER, T.; HOGREFE D. "OPTIMISING WIMAX BUSINESS
MODELS USING INCENTIVE ENGINEERING”.
RIOS, J. M. Martin; BASSETO, F.; GIANSANTE, M.; NYVEA, M. S., “UMA
AGENDA DE COMPETITIVIDADE PARA A INDÚSTRIA PAULISTA
SERVIÇOS DE TELECOMUNICAÇÕES”, IPT / FIPE, 2008.
SARKISSIAN H.; SCHWARTZ, R. “ A Comprehensive WiMAX Operator –
Business Case Process”, LCC, September 2007.
SHENHAR, A. J.; DVIR, D. “Diamond Framework: A New Model for Project
Management”, 2005, Harvard Business Publishing.
SIQUEIRA, E. “WiMAX revoluciona a banda larga e o celular”, Jornal O
Estado de São Paulo, 12 de Outubro de 2008.
SMURA, T. “COMPETITIVE POTENTIAL OF WIMAX IN THE BROADBAND
ACCESS”, Helsinki University of Technology - Networking Laboratory
MARKET: A TECHNO-ECONOMIC ANALYSIS
Teleco: www.teleco.com.br
Teletime News online: www.teletime.com.br
WERCKEMA, Cristina “Integração entre o Design for Six Sigma (DFSS) e a
Metodologia de Gerenciamento de Projetos PMBoK”
WiMAX Forum (Junho 2008), “A Comparative Analysis of Spectrum
Alternatives for WiMAX Networks with Deployment Scenarios Based on the
U.S. 700 MHz Band”.
YARALI, A.; RAHMAN, S;MBULA B., “WiMAX: The Innovative Broadband
Wireless Access Technology”, Journal of Communications, Vol. 3, No. 2,
April, 2008.
