Business modeling for future broadband PPDR networks

1
Business modeling for future broadband PPDR
networks

• Henryk Gierszal, Karina Pawlina, Piotr Tyczka,
  Krzysztof Romanowski, Damien Lavaux, Christos
  Katsigiannis

2
Presentation plan

• Introduction
• End-users requirements
• Business models for PPDR system acquisition and
  operation
• Business-oriented tool
• A case study analysis
• Conclusions

3
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

4
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

5
Main services needed by PPDR
6
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

7
Models for system acquisition
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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

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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, BSs, exchanges, NOCs
• backhaul and backbone networks

10
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

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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

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A case study

• Polish energy sectors 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 BSs 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

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Results

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

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
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CAPEX and OPEX
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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