EVOLUCIÓN COGNITIVA POST-INTERVENCIÓN

For more advanced services than “ADSL-like” ser- vices, the bandwidth requirment is more pronounced. If high frequency BFWA (HF-BFWA) for the con- sumer is commercially available in the short to medium term, there is a window of opportunity to get a fair slice of the broadband market. We assume that the operator launches Triple Play services with multi- cast IPTV over HF-BFWA in 2008 in areas where Figure 10 Urban area: Scenario 2, coverage radius = 2.5 km

Figure 11 Urban area: Scenario 3, coverage radius = 1.5 km

Figure 12 Urban area: Scenario 3, coverage radius = 2.5 km

Figure 13 Urban area: Scenario 4, coverage radius = 1.5 km

Figure 14 Urban area: Scenario 4, coverage radius = 2.5 km CAPEX IRR 500 700 900 1100 1300 1500 1700 1900 0 4 8 12 16 20IRR (%) CAPEX per su bscriber [¤] 0 200 400 600 Household density [Hh/km2_] 500 700 900 1100 1300 1500 1900 0 400 800 1200 1600 0 2 4 6 8 1700 CAPEX IRR IRR (%) CAPEX per su bscriber [¤] Household density [Hh/km2_] 0 200 400 600 800 0 4 8 12 16 CAPEX IRR IRR (%) 500 700 900 1100 1300 1500 1700 1900 CAPEX per su bscriber [¤] Household density [Hh/km2_] 500 700 900 1100 1300 1500 1900 0 400 800 1200 1600 0 2 4 6 8 1700 CAPEX IRR IRR (%) CAPEX per su bscriber [¤] Household density [Hh/km2_] 0 200 400 600 800 0 4 8 12 16 CAPEX IRR IRR (%) 500 700 900 1100 1300 1500 1700 1900 CAPEX per su bscriber [¤] Household density [Hh/km2]

extended coverage of DSL and fibre is too costly. 2008 is assumed to be a realistic timing for commer- cial HF-BFWA gear for the mass market.

We consider two categories of services for both resi- dential and business subscribers. The broadband take rates are shown in Figure 15.

The main service assumptions are as follows: Residential subscribers

“ADSL-like”:

Throughput first year: 0.5 Mb/s

Yearly traffic increase: 30 %, for seven years Contention rate: 20:1

ARPU (monthly): 35 EUR “Triple Play”:

Throughput first year: 1.0 Mb/s

Yearly traffic increase: 30 %, for seven years Contention rate: 20:1

ARPU (monthly): 50 EUR SME subscribers

“ADSL-like”:

Throughput first year: 0.7 Mb/s

Yearly traffic increase: 30 %, for seven years Contention rate: 5:1

ARPU (monthly): 55 EUR “High speed symmetric”:

Throughput first year: 2.0 Mb/s

Yearly traffic increase: 30 %, for seven years Contention rate: 2:1

ARPU (monthly): 90 EUR Figure 15 Broadband take rates

Table 5 CAPEX unit costs for BFWA in the 42 GHz frequency band 0 20 40 60 Br oadband adopt ion r at e (%) 2008 2009 2010 2011 2012 Br oadband adopt ion r at e (%)

Residential - "ADSL-like" Residential - "Triple Play" 20

40 60 80

CAPEX 2008 2009 2010 2011 2012 2013 2014 2015

Base station (BS) – 4 sectors 25 000 23 279 21 676 20 184 18 794 17 500 16 295 15 173

Base station (BS) – basic costs 5 000 4 656 4 335 4 037 3 759 3 500 3 259 3 035

Base station (BS) – omnidirectional 5 000 4 656 4 335 4 037 3 759 3 500 3 259 3 035

BS channel 5 000 4 656 4 335 4 037 3 759 3 500 3 259 3 035

HF – BFWA CPE – residential 800 666 555 462 384 320 266 222

HF – BFWA CPE – business 800 666 555 462 384 320 266 222

Radio link 34 Mb/s – incl. installation 17 000 17 000 17 000 17 000 17 000 17 000 17 000 17 000

Radio link 155 Mb/s – incl. installation 20 000 20 000 20 000 20 000 20 000 20 000 20 000 20 000

Radio link 1 GbE – incl. installation 22 000 22 000 22 000 22 000 22 000 22 000 22 000 22 000

CPE installation – town 400 400 400 400 400 400 400 400

CPE installation – urban (antenna sharing) 2 000 2 000 2 000 2 000 2 000 2 000 2 000 2 000

Micro DSLAM – basement (stackable) 1 026 975 926 880 836 836 836 836

Micro DSLAM – basement – installation 800 800 800 800 800 800 800 800

Fibre backhaul cost per km 50 000 50 000 50 000 50 000 50 000 50 000 50 000 50 000

1 GbE optical interface – SH 1 620 1 539 1 462 1 389 1 389 1 389 1 389 1 389

Site installation – co-siting 6 000 6 000 6 000 6 000 6 000 6 000 6 000 6 000

Site installation – new site 60 000 60 000 60 000 60 000 60 000 60 000 60 000 60 000

A channel capacity of 160 Mb/s is assumed. Urban four-sector base stations can handle up to ~2.5 Gb/s if more frequencies are used and if we assume up to four channels per sector.

Table 5 and Table 6 show the CAPEX and OPEX cost assumptions respectively.

3.1 Techno-economic evaluations – rural town/village

The same town/village + surroundings as treated in section 2.1 is analysed for HF-BFWA. LOS is assumed, but the coverage radius is now only 5 km in the 42 GHz frequency band compared to the 8–10 km for WiMAX in the 3.5 GHz band. The amount of additional households in the surroudings that can be covered from a single base station in the town centre is therefore smaller than for WiMAX, as can be seen by comparing Figure 2 and Figure 16, Broadband take rates.

The investment level and profitability have been determined for optimal base station configurations. Small low-cost omnidirectional base stations are used for very small villages and towns. For larger towns, base stations with more sectors are used. Additional sectors are added over time with increasing capacity. For small (and isolated) towns and villages, prof- itabilty cannot be obtained even in the monopoly situation due to the small amount of potential sub- scribers to share the fixed investment (wireless cover- age, backhaul etc.). For medium and large towns, profitability is easier to obtain than for the WiMAX in section 2.1. The reasons are the (much) larger residual market with no wireline alternative, the much higher capacity offered by HF-BFWA com- pared to WiMAX (so that capacity limitation is not occuring until later in time) and the higher ARPU levels for advanced services.

The profitability and cost levels are very dependent on population size and market share. In case of 50 % market share, profitability is only obtained for large towns and in the “Alternative” scenario. The total average investment per subscriber after five years of service is in the area of 1,000 EUR for large towns. The CPE cost (variable cost) is the dominant factor. For smaller towns and villages, the investment per subscriber in many cases exceeds 1,500 EUR. Sub- sidisation or other financing schemes are therefore required in such areas.

3.2 Techno-economic evaluations – suburban and urban areas

As in section 2.2, we vary the coverage from 1.5 to 2.5 km in the calculations. The same service and equipment cost assumptions as in section 3.1 are used.

It is assumed that 20 households/businesses per building in suburban areas and 40 households/ businesses per building in urban areas can share a receiver antenna placed on the rooftop. This cost sharing is beneficial for the business case. The HF- BFWA receiver feeds small stackable Ethernet-based Table 6 OPEX unit costs for BFWA in the 42 GHz frequency band

Figure 16 HF – BFWA coverage of small town/ village and surrounding scattered households

OPEX 2008 2009 2010 2011 2012 2013 2014 2015

Site rental – new site 6 000 6 000 6 000 6 000 6 000 6 000 6 000 6 000

Site rental – existing site 3 000 3 000 3 000 3 000 3 000 3 000 3 000 3 000

IP cost per subscriber – yearly 25 25 25 25 25 25 25 25

Network operation cost per subscr. – yearly 20 20 20 20 20 20 20 20

Sales & marketing 60 60 60 60 60 60 60 60

Support, billing etc. 100 100 100 100 100 100 100 100

Network maintenance – % of acc.

investment 7 % 7 % 7 % 7 % 7 % 7 % 7 % 7 %

mini/micro DSLAM in the basement by using fibre cable internally in the building between the HF- BFWA receiver and the mini-DSLAM. DSL is used over last copper drop to the customer. It is assumed that the property owner incurs the costs of internal cabling in the building.

In order to increase the area coverage probability, a configuration of four base stations and frequency reuse as shown in Figure 17 has been assumed. The economic results are summarised in Figure 18.

As can be seen from Figure 18, household density and coverage radius have a significant impact on the investment and the profitability. Profitability e.g. an IRR above 12 % is obtained in most cases. Dense urban areas show high profitability under the given assumptions due to a higher degree of cost sharing of both base station equipment and receiver antennas compared to the suburban areas.

9 Conclusions

WiMAX has the potential as a profitable fixed broad- band access solution under certain conditions: • As an alternative to wireline access in a town/

village of sufficient population (incl. surrounding area within the coverage range of a base station); • As a niche solution in urban areas of sufficent den-

sity of households and businesses; a critical mass is possible even with a moderate market share. The possibility to offer nomadic, hotspot and mobile services will be a unique selling point when com- peting with a traditional DSL or cable modem serv- cie offer at low/medium speeds e.g. below 2 Mb/s downstream;

• As a main solution in emerging markets e.g. coun- tries with a poor copper network infrastructure. However, WiMAX at 3.5 GHz has limited potential as a broadband access substitute for ADSL in mature markets with high broadband coverage. When WiMAX is used as a complementary fixed access solution in areas with partial wireline coverage, the market potential is not sufficient to secure break-even because of the existing high coverage levels of DSL. Figure 17 Frequency plan – four base stations with

four sectors each

Figure 18 HF-BFWA as an alternative technology – suburban and urban areas = f₁V = f2V = f1H = f2H 800 1000 1200 1400 100 200 300 400 500 100 200 300 400 500 0 10 20 IRR (%) Household density [Hh/km^2] CAPEX per su bscriber [¤] 600 700 800 900 500 600 700 800 900 1000 500 600 700 800 900 1000 15 20 25

CAPEX per subscriber [¤] IRR (%)

High frequency broadband fixed wireless access at frequencies above 20 GHz is interesting due to the larger residual markets for high capacity broadband. In such areas, the deployment costs of FTTC + ADSL2+/VDSL2 will generally be prohibitive. Therefore an interesting window of opportunity exists for such wireless networks at high frequencies, e.g. the 42 GHz band.

Investment levels for broadband deployment are gen- erally high in residual markets, however significant savings with the use of wireless access technologies and the option of hybrid architectures are possible compared to upgrading existing infrastructure with ADSL2+/VDSL2 in such areas.

Under the given assumptions, profitable deployment of BFWA in the 42 GHz band is possible in towns of sufficient size as well as in most of the urban/subur- ban areas being analysed except for suburban areas with coverage radius below 2 km and a household density below 300 households per km2.

However, there is very little activity at present in the standardization of broadband wireless access net- works above 20 GHz for the consumer market result- ing in high CPE prices; estimated market prices range from below 1,000 EUR to significantly higher prices. Although an interesting window of opportunity exists for 42 GHz BFWA, the limited activity in the indus- try makes it difficult to inititate mass market produc- tion with resulting reduction in equipment costs within the next few years. The CPE equipment price is the main cost driver at the moment.