Business modeling for future broadband

PPDR networks

Henryk Gierszal, Karina Pawlina, Piotr Tyczka, Krzysztof Romanowski,

Damien Lavaux, Christos Katsigiannis

Presentation plan

• Introduction

• End-users’ requirements

• Business models for PPDR system acquisition and operation

• Business-oriented tool

• A case study analysis

• Conclusions

Introduction

• Due to evolution of technologies and some new needs required by PPDR organizations the migration to broadband mobile networks becomes an emerge issue to be deployed in near future in an efficient way

• The new services needed by PPDR agencies include broadband data and even video transmission but voice and narrowband data remain indispensable for every day

End-user requirements identified

Three operational scenario were defined by end-users:

• Routine day-to-day activities• Major events - planned in advance

– higher communication needs are needed as compared to routine day-to-day activities but the location and requirements are known in advance

• Major incidents or disasters - not pre-planned– higher communication needs have to be available

at very short notice and the location and requirements are not known in advancea

Main services needed by PPDRGroups Functionalities

push-to-talk

private call

group call

emergency/priority call

call retention/busy queuing

direct mode operation

ambience listening

voice over the Public Switched Telephone Network (PTSN)

Voice (common PPDR voice services)

area selection/Dynamic Group Number Assignment (DGNA)

messaging and notifications

low resolution photos

automatic telemetrics

location-based information

mobile workspace applications

access to internal databases

Narrowband data (data transmission up to 384 kbps)

access to external sources

Groups Functionalities

rapid file transfer

high resolution photos

remote operations

mapping with Geographic Information System (GIS) layers

mobile workspace applications

access to internal databases

Broadband data (data transmission over 384 kbps)

access to external sources

video transmission

video streaming

Video (data transmission with tighter latency and coding requirements)

video call

extension of coverage

extension of availability

Transversal services (extension of voice and data capabilities and performance)

encryption tools

proximity services Challenging services (services enabled by the next generation of technologies)

augmented reality

Business models• Analysis of business models allows finding an optimum

solution for acquisition of the new network that can balance CAPEX and OPEX

• Three strategic groups have been identified:– dedicated networks — they are built by PPDR organizations

themselves, or the building process and then operation of the new network are done by the commercial operator based on a turnkey contract

– commercial networks — PPDR services are provided by commercial operators and are based on their public networks that can be fitted to end-users’ requirements in some areas

– hybrid networks — some parts of the broadband infrastructure are based on dedicated network(s) acquired by PPDR organizations, and simultaneously existing public network(s) are deployed in the other parts of that infrastructures

Models for system acquisition

Dedicated network(s) infrastructure

Commercial network(s) infrastructure

Mobile broadband network planned,

built run and owned by the PPDR agency

Mobile broadband service provided through service

offering by tenders

Same mobile broadband services

to PPDR as for public customers

Mobile broadband services to PPDR agency but with

special requirements

Hybrid partly dedicated and partly

commercial network(s) infrastructure

Geographical split between dedicated and commercial

network(s) infrastructure

MVNO: PPDR users and

public users share RAN

MVNO: partly dedicated /

partly shared RAN network(s)

MVNO/MNO: PPDR agency has dedicated core and

dedicated carriers in commercial

operator’s RAN

Pure MVNO

Levels of business modelling• technical — identification of functionalities and the

dimension of a communication system

• financial — financial analysis including cash flow, CAPEX and OPEX

• economic — estimation of different economic benefits that an end-user can gain due to acquiring a new system that are expressed in money

• organizational — allocation of investments and operating/managing/maintaining costs associated with a communication system into entities of three roles: owner, operator (MNO or MVNO) or user

Steps in configuration of PPDR system using a tool developed

• 31 functionalities classified into 6 groups• up-to three system technologies selected

among: LTE, TETRA, TEDS, DMR, P.25, TETRAPOL, cdma2000, WiMAX and SATCOM

• parameters for network elements of each system:– coverage– number of terminals, BS’s, exchanges, NOC’s– backhaul and backbone networks

Analyses• Bottom-up analysis provides a set of financial-

economic factors to assess the business efficiency of a scenario– a scenario creats a superposition of all deployed network

elements belonging to all systems– each system can be based on seperate business model

for its acquisition• Top-down analysis adjusts the value of parameters

(e.g. dimension of a system, a number of terminals, a number of base stations, a number of years of investment) for assumed maximum expenses– modification of parameters introduced in the bottom-up

analysis in order to tune and optimize the overall result for a known budget

Result template• configuration characteristic of each network component of

the system– dimensions of each network, resulting functionalities, etc.

• financial data and efficiency indicators presented in an aggregated or break-down form– Total Cost of Ownership (TCO), CAPEX and OPEX, Net Present

Value (NPV), Internal Rate of Return (IRR)

• economic data and efficiency indicators presented in an aggregated or break-down form– Economic NPV, Economic IRR, Benefit-Cost ratio (B/C), Dynamic

Generation Cost (DGC)

• organizational analysis• Strength, Weakness, Opportunity, Threat (SWOT) analysis

A case study• Polish energy sector’s company is going to acquire

a digital system and wants to compare two options:– TETRA built by its own– leased services based on CDMA2000 network provided

by a commercial network operator• no. of terminals:

– 7,500 handheld– 15,000 for data transmission

• no. of BS’s: 250• a lifetime of the project: 15 years• investment period: 4 years• a number of masts: existing — 30%, to be built —

40% and to be leased — 30%

Results

Business model OPEX per km2 TCO per km2

System 1: Own network - TETRA 569.62 € 57.78 €

System 2: Leased service - CDMA 2554.41 € 173.06 €

• CAPEX, OPEX and TCO can be expressed in absolute and relative values

CAPEX and OPEX

0 50 100 150 200 250 300 350

CAPEX

OPEX

Expenditures [mln euro]

System 2System 1

Conclusions• broadband PPDR networks based on LTE/LTE-A

emerge soon• their acquisition depends on many factories but

overall costs seem to be a significant constraint for the decision-makers

• hybrid business models can ensure a reasonable trade-off between TCO and many quality parameters (Quality of Service, coverage, etc.)

• to simulate these costs one can use the tool for technical and financial-economic analyses because it can support the PPDR decision-makers to select the optimum strategy in order to acquire a mobile communication system that fits to their new requirements