roi analysisof wifioffloading
TRANSCRIPT
© 2012 Wireless 20/20, LLC. – All rights reserved
ROI Analysis of
WiFi Offloading
© 2012 Wireless 20/20, LLC. – All rights reserved
To offload or not to offload… Operators of mobile cellular data networks (3G and
4G) face an uphill battle against increasing data usage and declining ARPUs
ROI on macro network expansions scrutinized by shareholders
iPhones, iPads, Android smartphones, netbooks are all tapping the mobile network for access anywhere, anytime
Majority of access occurs when the user is stationary in high traffic density areas (home, office, coffee shop etc.)
2 …the bad news is…
© 2012 Wireless 20/20, LLC. – All rights reserved
3
Comscore found that more than one third (37.2 percent) of U.S. digital traffic coming from mobile phones occurred via a WiFi connection.
by Karl Bode Thursday 27- Oct 2011
Phil Marshall head of Tolaga Research. estimates that about 20 percent of iPhone traffic on AT&T Mobility's network is landing on the public WiFi network, and it's likely that another 60 percent is landing on home WiFi networks now that the operator has instituted tiered data plans, he said.
“When you have WiFi, you do more, and that effect is pretty hard to measure," Steve Glapa, Rukus. "But nonetheless, I would say network traffic on PCCW's network would be 20 percent higher than if it didn't have WiFi. In some of the dense traffic areas of Hong Kong, some 80 percent of data traffic is traveling over WiFi”, he said
…the good news is WiFi offload already occurs naturally…
© 2012 Wireless 20/20, LLC. – All rights reserved
65% of mobile data traffic already offloaded Users are in Wi-Fi coverage 63 percent of the time
during the day/
65 percent of traffic can be offloaded to Wi-Fi under typical usage conditions using on-the-spot offload
Greater offload performance can be achieved if the user is prepared to accept delayed offload (e.g., sync your videos or photos when you get home)
This means that out of the 7GB usage per month, 4.5GB would
travel by Wi-Fi and 2.5GB by cellular. Therefore a 2GB-3GB per month cellular data plan is probably enough for most users.
4
…a fair assumption according to Light Reading would be…
Observation: A cellular service provider already benefits from WiFi Offload without making any investment in deploying a WiFi Network of
its own.
© 2012 Wireless 20/20, LLC. – All rights reserved
How do we quantify the offload dilemma?
How do we analyze the impact of a 3G/4G Service Provider’s Own WiFi Offload Deployment on its overall Business Case?
Does it make economic sense to deploy a WiFi Offload Network?
What is the Business Case for MNO WiFi Offload?
What is the ROI of an MNO WiFi Offload?
5
Answer: Develop a WiROI™ Model to answer these questions
…in-depth analysis required to make informed decision…
© 2012 Wireless 20/20, LLC. – All rights reserved
Using a holistic approach Study the Impact of WiFi Offload on an Urban LTE Deployment Deploy an LTE network for Coverage Deploy a WiFi Network for Capacity Surgically place the WiFi AP’s in high traffic areas Calculate the TCO (CapEx and OpEx) for the WiFi Offload Network Compare to the TCO of providing Capacity by deploying LTE Cells
for Capacity Understand the key deployment parameters which lead to
positive economic impact of WiFi off load Calculate and Compare ROI metrics such as NPV, IRR
6 …the wireless 20|20 process…
© 2012 Wireless 20/20, LLC. – All rights reserved
Real time simulation and analysis Allow the simulation of public wifi offload to vary the % of the natural
offload Allow the simulation model to vary the % of the Urban Area covered
by WiFi Allow the simulation model to vary the Density of WiFi AP’s per sq km Vary WiFi Vendor Equipment Performance and Price (Cell Radius of
AP’s, cost of AP’s) Vary the WiFi Backhaul Cost Vary the operating cost of the WiFi network Vary the total data capacity a user consumes on a monthly basis
7 …WiROI™ capabilities…
Objective: Discover under what conditions WiFi Offload pays off
© 2012 Wireless 20/20, LLC. – All rights reserved
Major Assumptions One Time Costs (CapEx)
Cost of WiFi Access Point Cost of WiFi AP installation Cost of Backhaul Equipment Cost of Backhaul Equipment Installation and provisioning WiFi Core Network Equipment (Servers, Portals, etc.)
Recurring Costs (OpEx) Monthly WiFi and Backhaul Site Rental Monthly WiFi and Backhaul Maintenance Monthly Traffic Backhaul Cost
8 …CAPEX and OPEX drivers…
Objective: Discover under what conditions WiFi Offload pays off
© 2012 Wireless 20/20, LLC. – All rights reserved
Cover Areas of High Traffic Density
9
…customized analysis of traffic density…
© 2012 Wireless 20/20, LLC. – All rights reserved
More AP’s per Sq Km provide better offload
10 …and WiFi AP Density…
© 2012 Wireless 20/20, LLC. – All rights reserved
Coverage vs. Traffic Offload
11
Hotspot coverage of high traffic density areas versus contiguous coverage yields better offload percentage
Customized formulas for different market conditions
…coverage vs. traffic offload…
Coverage
© 2012 Wireless 20/20, LLC. – All rights reserved
WiROI™ Research AnalysisCase Study 1 – LTE Deployment on New York City
12
© 2012 Wireless 20/20, LLC. – All rights reserved
Baseline: New York City
13
NYC
8 million POPS
LTE using 1800Mhz
10Mhz Channel
Coverage 789 sq km
2,194,000 subscribers
216 Coverage Sites
1,879 Capacity Sites
Cumulative CAPEX $514M
Cumulative OPEX $3,006M
TCO $3,520M
Assumption: LTE deployment in NYC
Activity: Simulate TCO impact of implementing MNO WiFi Offload Network
Identify: The scenario for optimal financial return
Analyze: Understand main drivers of the results
…large dense urban city…
© 2012 Wireless 20/20, LLC. – All rights reserved
Assumptions: CapEx & OpEx
CapEx Assumptions WiFi AP LTE Macro Cell
Cost of 3-Sector BTS $45,000
Cost of WiFi Access Point
$500
New Site Acquisition $600 $150,000
Collocation $50,000
Backhaul $300 $5,000
OpEx Assumptions WiFi AP LTE Macro Cell
Monthly Site Rental $20 $1,000
Site Maintenance /month
$10 $200
14 …WiFi vs. LTE assumptions…
© 2012 Wireless 20/20, LLC. – All rights reserved
Analysis: TCO impact of WiFi Offload
15
TCO savings of about $123m already with only 20% coverage and density of 24 AP’s per sq km.
Optimal TCO savings of $253m is achieved with 100% coverage and 42 AP’s per sq km. The number of macro LTE
capacity sites reduced by 1,447 and replaced by 33,138 WiFi access points.
…WiFi offload results…
TCO Savings $123m
TCO Savings $253m
Observation: Optimal Financial Return might not be Optimal Commercial Proposition
Optimal Commercial Proposition?
© 2012 Wireless 20/20, LLC. – All rights reserved
Analysis: Optimal TCO Results
16
LTE OnlyWiFi
OffloadDelta % / $
Total CapEx $514m $284m 44.7% / $230m
Total OpEx $3,006m $2,983m 0.90% / $23m
TCO $3,520m $3,267m 7.20% / $253m
LTE OnlyWiFi
OffloadDelta % / $
Cumulative Free Cash Flow
$6,680 $6,967 4.3% / $287m
…New York results…
© 2012 Wireless 20/20, LLC. – All rights reserved
WiROI™ Research AnalysisCase Study 2 – LTE Deployment in San Diego, USA
17
© 2012 Wireless 20/20, LLC. – All rights reserved
Baseline: San Diego
18
San Diego
1.07 million POPS
LTE using 1800Mhz
10Mhz Channel
Coverage 250 sq km
206,330 subscribers
69 Coverage Sites
206 Capacity Sites
Cumulative CapEx $69M
Cumulative OpEx $396M
TCO $465M
Assumption: LTE deployment in San Diego
Activity: Simulate TCO impact of implementing MNO WiFi Offload Network
Identify: The scenario for optimal financial return
Analyze: Understand main drivers of the results
…midsize urban city…
© 2012 Wireless 20/20, LLC. – All rights reserved
Analysis: TCO impact of WiFi Offload
19
TCO savings of about $10m already with only 20% coverage and density of 24 AP’s per sq km.
Optimal TCO savings of $16m is achieved with 40% coverage coverage and 24 AP’s per sq km. At 40% the number of macro LTE
capacity sites reduced by 100 and replaced by 2,400 WiFi access points.
…WiFi offload results…
TCO Savings $10m
TCO Savings $16m
Observation: Beyond 80% coverage you start to see diminishing returns
© 2012 Wireless 20/20, LLC. – All rights reserved
Analysis: Optimal TCO Results
20
LTE OnlyWiFi
OffloadDelta % / $
Total CapEx $69m $55m 20.3% / $14m
Total OpEx $396m $394m 0.01% / $2m
TCO $465m $449m 3.40% / $16m
LTE OnlyWiFi
OffloadDelta % / $
Cumulative Free Cash Flow
$869 $888 2.2% / $19m
…San Diego results…
© 2012 Wireless 20/20, LLC. – All rights reserved
Conclusions & Recommendations In New York, a dense urban environment with high traffic
profile, MNO WiFi Offload is optimal at 100% coverage In San Diego, a urban environment, with high traffic profile,
MNO offload is optimal at 40% with diminishing return beyond 80%
MNO WiFi offload makes an compelling business case under the right circumstances
Main driver is OpEx, especially the WiFi site rental and backhaul costs as well as the assumed growth of the traffic demand on the 3G/4G network.
OpEx less than $40 per month a highly attractive solution OpEx exceed $100-$150 per month, it becomes challenging
21
Recommendation: Create a customized WiROI™ Tool for your market to drive informed decisions. Contact us at www.wireless2020.com
…large vs. midsize city deployment…
© 2012 Wireless 20/20, LLC. – All rights reserved
WiROI™ Tool Demo
22
Test drive the WiROI™ Tool by register online at www.wireless2020.com to gain access to our online
demo or contact us for a WebEx Demo.
USA - Western RegionRandall C. [email protected]
Armenia OfficeLevon Mkrtchyan+374 91 [email protected]
Spain OfficeAzat [email protected]
Tonse Telecom#446, 2nd Cross,9th Main, HAL 2nd StageBangalore India 560 038Phone: +91 80 4211 5355
USA - Eastern RegionHaig A. [email protected]
Peru OfficeMagnus Johansson+51 988 [email protected]
Media RelationsRobin L. [email protected]
…test drive our WiROI™ 4G WiFi Offloading Tool online…