4g world – show me the money – 4g implementations this document is confidential and is intended...
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4G World –
Show me the Money – 4G Implementations
This document is confidential and is intended solely for the use and information of the client to whom it is addressed.
Presented by
Randall P Muench
February 3, 2011
314-578-0957 ( m )
2
Show me the Money in 4G investment
• The key – there is a driver for growth
• Technology makes it better and the user agrees - 1B to 3.5B subscribers in 3.5 Years
• Conversion from wired to wireless
• Data traffic volume from mobile devices growing by more than 10X per year
• Broadband video will drive 80% of mobile traffic
• Just as importantly, growth figures
continue to be too low!
• Cisco predicts 149% worldwide mobile
data traffic growth for 2010 and it comes in
at 159%
• Nobody (except maybe Apple) predicted
they’d sell what they sold in 4Q
3This document is proprietary and is intended solely for the use and information of the client to whom it is addressed. CFN Services
Is this a good investment?
…. Or “what is the chance this is a repeat of the CLEC industry in 1998 (and the crash in 2001…)
Much of the investment is by the big competitors which lends credibility
ILECs & MSOs
New entrants like Lightsquared & Clearwire with big plans to over choice
Minimal Regulatory uncertainty
CLEC regulatory environment shifted to favoring the incumbents
Demand is leading the investment
Less instances of “build it and they will come…”
4This document is proprietary and is intended solely for the use and information of the client to whom it is addressed. CFN Services
Who is CFN Services
5This document is proprietary and is intended solely for the use and information of the client to whom it is addressed. CFN Services
CFN Services Value and Managed Services for Mobile Initiatives
CFN offers a unique blend of experience, proprietary network knowledge, tools and methodologies, refined and proven through the first 4G deployments in the US.
• Experience: Lead technical team experienced in iDEN, GSM, CDMA, WiMax, and LTE technologies; Ethernet and TDM backhaul over fiber, copper, and microwave.
• People: Our technical staff have been instrumental in all aspects of wireless network planning, design, deployment, optimization, and operations
• Processes & tools: CFN Services have developed proven methodologies and best in class tools which integrate RAN design, Backhaul Design, and Site Acquisition processes in a seamless manner delivering game – changing time to market advantages.
• Network Knowledge: CFN Services is unique in its proprietary backhaul planning tool called FiberSource, an integrated database of existing fiber infrastructure, cost data, and structures suitable for wireless deployment.
In 2010, CFN will support 6 of the 9 largest Wireless providers (by capital spend)
6This document is proprietary and is intended solely for the use and information of the client to whom it is addressed. CFN Services
2005A 2006A 2007A 2008A 2009E 2010E 2011E 2012E 2013E 2014E0
500,000
1,000,000
1,500,000
EVDO HSPA Mobile WiMAX LTE
Ac
tiv
e C
on
ne
cti
on
s
Double the number of connections in 2 yrs -1B
mobile broadband connections by 2012
Source: Pyramid Research
State of the Mobile Environment
7This document is proprietary and is intended solely for the use and information of the client to whom it is addressed. CFN Services
Will the Carriers keep up with the deployment demand…
CFN probably looked at 100,000 towers for Carriers last year
There’s an exciting eco-system underway to drive this
4G Services
Infrastructure Devices
Applications …. And they are pulling each other up the improvement curve
8This document is proprietary and is intended solely for the use and information of the client to whom it is addressed. CFN Services
This eco-system is just an “adolescent” in the demand curve….
By adolescent, I mean…
It keeps asking for more
It’s never enough
You can and should expect some surprises!
A steady focus should get you where you want to be…
9This document is proprietary and is intended solely for the use and information of the client to whom it is addressed. CFN Services
This eco-system is just an “adolescent” in the demand curve….
• Applications:
• Not just apps, but video & recent announcements for mobile payments
• Devices:
• The rush to tablet plus video & business applications for tablets
• Innovation in handheld devices
• Apple and Microsoft getting into the Living Room
• Infrastructure
• Build out of Microwave & Fiber to the tower
• 4G Equipment
• Relentless improvement in Equipment from the top vendors
• New competition with Europe & Far East experience and competency
10This document is proprietary and is intended solely for the use and information of the client to whom it is addressed. CFN Services
Let’s bring this back to ROI considerations …
Where is the business case the most profitable?
Tier 1 markets
The business case is already made
50% of the towers or will have fiber, significant customer count, diversified revenue stream between customer types
Multiple providers rolling out service and customers are upgrading
Tier 2 / 3 markets
The business case will be met
Need some additional investment in fiber / MW infrastructure but that is coming
Small & rural markets
Difficult business case
Near the highway, near the remote city
If a small ILEC or cable company has fiber investment
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How does a provider plan the 4G network for positive ROI?
Old Design Paradigm – had less variables
1. Planned the RF
2. Initiated Site Acquisition
3. Iterated around the variables
4. Contacted the ILEC to install a T1 or 2
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How do we invest to keep ahead of the demand curve?
Old Design Paradigm – had less variables
1. Planned the RF
2. Initiated Site Acquisition
3. Iterated around the variables
4. Contacted the ILEC to install a T1 or 2
New Design Paradigm –
How do you plan to upgrade the network when a critical supply chain element…. Backhaul –
May be in place, may not be in place
And what is the effect of that uncertainty on your design process?
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How do we invest to keep ahead of the demand curve?
New Paradigm –
upgrade the network when a critical supply chain element may be in place or may not be in place….
Fiber Penetration Estimates• Dense Urban Areas: 70% - 100% Penetration
• Suburban Areas: 50% - 70% Penetration
• Rural Areas: 0% - 50% Penetration
• Widely varying availability depending on location & ILEC, MSO, Alt Access Vendor, Utility
And if not:
How will you get it there and how much will it cost?
And how fast can you do it?
If you iterate in the old paradigm, it will take even longer…because of additional variables
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Automation - Proper Ecosystem Drives a Success- Based Approach
• RF Design• Propagation Plots• Link budget assessments• Site acquisition target list
• Morphology Classification• Drive Testing• Post-processing • Model Calibration• Model Database• Network Prelim. Design Assessment
• Search Rings • Site Visits•Alternate Site Studies• Network redesign analysis• Network Prelim. Design Assessment
• Antenna Azimuth and tilts• Cell parameter settings• Frequency Plans• Network C/I and Ecio plots
• Site Level Tracker• Site Configurations• Leasing, Zoning• Mapping and data collateral • Testimonials• Site Justification
FiberSource ®
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$
Los Angeles--Long Beach--Santa Ana
Los Angeles, CA
Legend
! Cell Sites
$ MSC
#* Preferred Cell Sites 1500ft
#* Preferred Cell Sites 2500ft
#* Preferred Cell Sites 5000ft
FiberSource 0 4 8 12 162Miles
• Existing structures• MLA sites• Wireless Carriers• Fiber Infrastructure• On-Net facilities• Carrier-Neutral facilities• Target “anchor” site candidate list
Fast Track Processes• Speed to market• Highly iterative• Volume - centric
Quality Assurance Processes• Design accuracy• Targeted service areas, “fill-in”• Performance - centric
15
Plan the RAN and the backhaul options simultaneously
• Planning the RAN and Backhaul together reduces lifecycle costs
• Use Fibersource to identify the potential sites
• Planning the RAN sites with a view towards fiber availability is critical
• Failure to plan appropriately leads to high fiber and thus backhaul costs
19
Financial Analysis
Actual Customer completed in 2010 with CIC, a microwave partner
Key Assumptions:
Fiber sites / Hub sites
50 mg IP MRR at $1100/ 100 mg at approx $1350
< $2k per site NRC for fixed network
Microwave Sites
$34k - $35k microwave cost per site
$1,150/mo cost for lease and maintenance per microwave site
21
Cumulative Cashflows Analysis
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
(12,000,000)
(10,000,000)
(8,000,000)
(6,000,000)
(4,000,000)
(2,000,000)
-
2,000,000
Cumulative Cash Flow & Payback
Backhaul Design #1
Backhaul Design #2
Backhaul Design #3
22
Sensitivity Analysis
• Fiber provided by ILECs:• Traditional pricing model compared to alternative access providers
• Alternate providers can’t price irrationally – they have a business case to make and a different investment model to meet
• Sensitivity in the prior business case?• Remember at original rates, Backhaul Design #1 had the best NPV at $256k
• If monthly recurring fixed network costs dropped by 10%:
Backhaul design # 1- 105 fiber sites $256k grows to $1.6M NPV
Backhaul design # 3 - 356 fiber sites - $ ($316k) grows to $ 2.3M NPV
• Therefore:
Each market and each design needs to have payback calculations at the tower level
Regional differences and negotiated contracts have a significant impact
23
Some Opportunities and Hazards in building these scalable networks ….
4G networks will payback BECAUSE OF CUSTOMER DEMAND with the growth over the next 5 years of mobile use and video traffic
There is still a lot of headroom in building mobile backhaul networks:
Of 250,000 towers, less than 100,000 have been built to
Many “built” towers were built for a single provider – but the average tower has > 1 provider on it.
Fiber / Microwave mix will change
Current solution will change depending on the rate of bandwidth growth/user
How much longer for Microwave? As bandwidth requirements explode, another round of investment to upgrade lower bandwidth microwave towers or convert those sites to fiber?
The 2008-09 investments will require capacity augments sooner rather than later!
CFN Services – Managed Backhaul Solutions email – [email protected]
Experience Participation in all the major 3G and 4G
planning Unified, proactive management Managed Service Solution History
Turn-Key Solutions Planning, Design, and Implementation Full Service management, monitoring and
notifications Owner’s Economics
Building the foundation
of tomorrow’s networks today
Solution Flexibility Customized Solutions Hybrid solutions: Copper, Ethernet and
Microwave