Making the Technology Choice: Commodity vs Proprietary

1
Making the Technology ChoiceCommodity vs
Proprietary
2
Outline

• Baseline study characteristics, architecture and
  methodology
• Analysis methodology
• Baseline 802.11b results
• Sensitivity studies from 802.11b baseline The
  4 Cs
• Coverage
• Capacity
• CPE Cost
• Competition (market share)
• Technology variants
• Additional services
• Break-even results
• Conclusions

3
Baseline Study Characteristics

• Geographic Areas
• 100K population with 2 annual growth
• 50 mi2 suburban, 2000 mi2 rural
• Market Size and Growth
• Fisher-Pry (S-shaped) market growth, with 50
  eventual market penetration and 5 year growth to
  25 penetration
• 25 market share, 10 churn per year
• Browsing Service
• 1 Mbps asynchronous 5 duty down, 1 duty up
• 35 per month 5 sessions/hr 100 seconds each
• IP Voice Service
• 16 kbps, no voice activity detection
• 10 per month 3 calls/hr 180 seconds each
• Additional Access Port Site expenses
• 20,000 one-time per site
• 10,000 per year per site (rental)

4
Baseline Architecture Technology
OC3 (155 Mbps) Up to 4 30,000 100/km
OC3 (5,000 100/mo)

• 802.11b Wireless Link
• Avg Throughput 2 Mbps

Point-to-Point Wireless 10 Mbps Shared
Capacity 10,000 100/mo
ISP 200/mo for 256 kbps
Router 100 Mbps Capacity, 8 Input Ports 10,000
100/mo
CPE Xmit Pwr 17 dBm Antenna Gain 10
dBi 250, 100 connect, 50 Equipment Recovery
Access Point Xmit Power 20 dBm
Antenna Gain 10 dBi 2,000
20/mo Channels (500 10/mo)
5
Analysis Methodology

• Establish 802.11b Baseline
• Investigate Sensitivity to
• Path Loss
• Capacity
• CPE Cost
• Market Share
• How about 5.8 GHz? Other technologies?
• Add IP Voice?

Build for Coverage
Expand for Capacity
Size and Cost Equipment
Generate Business Case Metrics
Create Summary Graphs
As a function of time
Calculations performed using WirelessSWAT for
WISPs
6
Baseline 802.11b Financial Results - Rural

• Large initial capital investment required due
  to low subscriber density
• coverage-limited deployment
• No further capital required for 8 years
• ROI 21.2, NPV of EBITDA 2.69M

7
Baseline 802.11b Study Results - Suburban

• More incremental capital investment as
  deployment becomes
• capacity-limited
• Significantly lower early capital investment
  than for rural deployment
• ROI 54.7, NPV of EBITDA 5.43M

8
Baseline 802.11b Study ResultsRisk vs Reward

• Rural deployment is coverage-limited during
  most of study,
• so takes longer to break even
• Same overall capital investment both
  deployments serve the
• same market size and both are eventually
  capacity-limited
• Break-even period 5.6 years for suburban, 8.9
  years for rural

9
802.11b 2.4 GHz Baseline ROI NPV vs Excess
Path Loss (Coverage)
suburban
rural

• Suburban deployment is capacity-limited, rural
  deployment is
• coverage-limited except at low excess
  path loss values
• Successful rural deployment requires relatively
  unobstructed paths
• Suburban ROI is relatively insensitive to
  excess path loss
• ROI and NPV yield equivalent qualitative
  conclusions

10
802.11b 2.4 GHz Baseline ROI NPV vs
Sectors/Access Point (Capacity)
suburban
rural

• Increased capacity at an Access Point is useful
  in suburban
• deployments, but not in rural deployments
• Note 3 or more sectors per Access point not
  practical at 2.4 GHz,
• due to insufficient spectrum

11
802.11b 2.4 GHz Baseline ROI vs CPE Cost

• Increased CPE cost is a significant contributor
  to reduced ROI
• in all deployments

12
802.11b 2.4 GHz Baseline ROI vs Purchased Link
Margin
suburban
rural

• CPE cost spent on additional link margin is
  detrimental in the
• capacity-limited suburban environment
• ROI is maximized in rural deployments by
  moderate additional
• CPE cost to improve link margin (here
  around 75)

13
802.11b 2.4 GHz Baseline ROI vs Market Share
(Competition)
suburban
rural

• Increased market share in suburban deployments
  increases absolute
• returns, but does not significantly
  increase ROI
• Increased market share in rural deployments
  significantly increases
• both absolute returns and ROI
• Use of 2 sectors per Access Point significantly
  increases ROI
• except in rural deployments with low
  market share

14
General 802.11b Financial Trends

• Excess path loss is more detrimental in rural
  deployments
• Additional capacity at an Access Point is more
  useful in suburban deployments
• CPE cost is a significant component of overall
  business plan
• Moderate CPE expenditure to increase link margin
  is beneficial in rural deployments, but
  detrimental in suburban deployments
• Increased market share improves ROI only in rural
  environments

15
802.11b at 5.8 GHzROI vs Sectors/Access Point

• Additional link margin has negative benefit in
  suburban deployments
• (capacity-limited design is unchanged,
  but costs increase)
• 5.8 GHz slightly inferior to 2.4 GHz unless
  additional capacity per
• Access Point is needed

16
High-Capacity 5.8 GHz TDD TechnologyROI vs
Market Share

• 7 Mbps in 10 MHz RF bandwidth 17 dBm
  transmitter powers
• 10 dBi antenna gains 6
  sectors per Access Point
• Optimized for high subscriber densities
• Moderate additional antenna gain can protect
  against low achieved
• market penetration

17
Adding Voice-over-IP Services
0
18
ROI Break-Even Period for Voice Data Data Only
19
Conclusions

• The viability of 802.11b depends very much on the
  density of users to which the service is provided
• CPE cost can be a controlling parameter but
  minimizing it is not always the answer. Moderate
  expenditure to increase link margin is justified
  in rural environments
• Sectorization is more beneficial in areas with
  higher subscriber density
• Use of 5.8 GHz is acceptable where capacity is
  needed but range is not
• IP voice can be a good plan to obtain additional
  revenues from unused capacity and to reduce
  break-even period
• Proprietary technologies or 802.11b modifications
  can help to address market and environment
  variations
• Combined engineering and business case analysis
  should always be done prior to investing money