Personal Broadband Observatory

4G Business Case for 2.6 GHz

Andrea Calcagno, Observatory Chairman

and CEO & EVP WiTech SpA

Agenda
4G Technologies 4G Deployment Model Business Case
Conclusion

4G Technologies

Mobile WiMAX
Rel 1.0 802.16e-2005

Rel 1.5 802.16e-2005

IP E2E Network

Rel 2.0 802.16m

3GPP
HSPA Rel-6
HSPA+ Rel-7 &Rel-8

IMTAdvanced

CKT Switched Network

LTE & LTE Advanced

IP E2E Network

2008

2009

2010

2011
CDMA - Based

2012
OFDMA - Based

4G Technologies

2G/3G/3.5G

T1,E1

2G/3G/3.5G Core Network

Next Generation Access Network

Data Overlay or Replacement
Increased BH Capacity

All-IP Core Network

LTE or WiMAX

Comparable Capex New Spectrum Need

4G Technologies

Deployment Model

Hotspot coverage

Home Base Station

Urban Coverage

National Coverage

Business Case

Operator Type: CLEC (COMPETITIVE LOCAL EXCHANGE CARRIER) or Green Field Scenario: Urban Coverage ( Roma, Milano, Napoli, Torino , Firenze)
Urban Scenario Dense Urban Scenario

4G Technology: LTE ( 10 MHz, FDD, MIMO 2x2) Band: 2.6 GHz Target Market: Consumer Service Profile: Mobile Broadband (Flat Data and VoIP) Devices: Handset and Tablet

Business Case Tool: TEA|LTE

Business Case Market Analysis

Summary

Roma

Business Case Market Analysis|Service Profile

Handset 70% - Tablet 30%

Business Case Market Analysis|Forecast

Roma|Total Users Forecast

Business Case Market Analysis|Forecast

Roma|Lost Users Forecast

Business Case Market Analysis|Forecast

Roma|Net Users Forecast

Business Case Market Analysis|Forecast

Total Net Users Forecast

Business Case Market Analysis|Forecast

Total Revenues

Business Case Technical Analysis|Technology

4G Technology: LTE ( 10 MHz, FDD, MIMO 2x2) Band: 2.6 GHz

Business Case Technical Analysis|Equipment

Base Station: eNode B

Devices

Business Case Technical Analysis|Perfomance

Business Case Technical Analysis|Perfomance

Business Case Technical Network Dimensioning

MME
S-GW/P-GW

eNode B

UT

Business Case Technical Network Dimensioning

MME

DA RIFARE

S-GW/P-GW

eNode B

UT

e Node B with MW BH Urban 20% Dense Urban 10%

Business Case Roll Out

MME
S-GW/P-GW

eNode B

UT

Business Case EF Analysis

Personnel

Business Case EF Analysis

CAPEX & OPEX

Business Case EF Analysis

Income Statement

EBITDA > 0 3rd Year EBIT > 0 4th Year Net Income > 0 6th Year

Business Case EF Analysis

Cash Flow

Peak Funding 74 M PBP 6.3 Years NPV 18,45 M CFCF 100 M

Business Case Conclusion

4G Business Case Urban Coverage CLEC/Green Field

ARPU
Customer Lifetime

Value Added Applications Advertising Revenues Broadband Devices

New pricing model More devices for User Appl. Open Access Better User Experience

OPEX

No Legacy FTTS Flat Architecture

CAPEX

Economies of scale All-IP Network Spectral Effinciency Virtual Network Opportunity

Backup Slide sul Business Case Tool: TEA-LTE

WiMAX & LTE Project Life-Cycle (1)

As for any carrier-class Broadband Wireless Access infrastructure, building a WiMAX & LTE network is and will remain a complex undertaking,

Business Case

Definitive Project

Quality Assurance Services Launch

Optimization

Budget Allocation

Network Building

WiMAX & LTE Project Life-Cycle (2)

and the initial planning phases are particularly critical to set a solid foundation for the success of the initiative.

Business Case

Definitive Project Quality Assurance

Optimization

Budget Allocation Network Building

Services Launch

A Holistic, Iterative Approach is Needed Since the Outset

Taking into account all technology and business aspects to ensure an iterative alignment of business and technology strategies allowing to identify all main cost drivers

Market Analysis

Evaluating the potential market for WiMAX & LTE services, identifying target markets, defining service profiles, and forecasting Revenues

Scenario & Sensitivity Analysis

Iterative fine-tuning of the WiMAX & LTE Business Plan, analyzing the influence of parameter and boundary condition changes

Technical Analysis
Dimensioning the WiMAX & LTE Access and Backhauling network infrastructures, defining the required bill of quantities

Economic & Financial Analysis

Calculating Capex & Opex and evaluating all WiMAX & LTE Business Plans KPI

WiTech TEA Family of Business Case Analysis Tools

Supporting 4G operators, vendors and consultants in their strategic planning activities with thoroughly integrated techno-economic analyses
TM

Market Analysis

TM

Scenario & Sensitivity Analysis

Technical Analysis

LTE

Economic & Financial Analysis

WiTech TEA Family of Business Case Analysis Tools

TM

Based on real best practices Equipped with well calibrated, WiMAX & LTE technology-related market, technical, and economic models
TM

Presenting manageable Input and Output with meaningful correlations Supporting an iterative way of working by design through an easy-to-use, dashboardstyled GUI

LTE

TEA|WIMAX & TEA|LTE Market Analysis

Evaluating the potential market for WiMAX & LTE services, considering:
Type of territory (dense urban, urban, suburban/exurban, rural) Type of segment (residential/soho; small, middle, and large enterprises/institutions) Type of application model (fixed, nomadic, portable, and mobile) Type of service (technical characteristics and pricing policies) Churn impact

TEA|WIMAX & TEA|LTE Technical Analysis

Preliminary dimensioning the WiMAX & LTE Access & Backhauling network infrastructures, considering:
Down-link and up-link capacity demand (by market segment and rollout plan) Aggregated total capacity Existing backbone infrastructures Type of wireless backhauling technology (SDH, PDH, IP Ethernet, License exempt) Base Station / Enhanced Node B & User Terminal / User Equipment characterization (antenna gain, transmit power, diversity gain, losses, sector number, terminal type, MIMO) Path loss model (Cost-231, SUI, ECC-33, Log-Normal with/without Shadowing, Free Space) Compliance with standard WiMAX Forums Fixed & Mobile System Profiles (plus the possibility to define custom profiles)

TEA|WIMAX & TEA|LTE Economic & Financial Analysis

Calculating all key economic & financial figures and evaluating KPI in the WiMAX & LTE initiative's Business Plan:
Capex & Opex (spectrum license, connectivity, backhauling, BTS / eNB, UT / UE, ASN GW & CSN / EPC & CN, personnel, marketing, SG&A, etc.) Depreciations TCO (Total Cost of Ownership) Relevant Indicators (Gross Margin, EBITDA, EBIT, NPV, IRR, PBP, Shareholder value, etc.)

TEA|WIMAX & TEA|LTE Scenario & Sensitivity Analysis

Enabling the user to fine-tune the WiMAX & LTE initiatives business plan, in real-time and total privacy, and to view the results in an animated graphical format instantly for all analyses:
Market Analysis Technical Analysis Economic & Financial Analysis