Mobile Broadband Expansion

qualtaghblurtingMobile - Wireless

Dec 12, 2013 (3 years and 10 months ago)

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Mobile Broadband Expansion

Calls for More Spectrum or Base Stations

-

Analysis of the Value of Spectrum and the
Role of Spectrum Aggregation

Contents


Introduction


Methodology, models and assumptions


Analysis of engineering value


Analysis of Strategic value


Conclusions

2

Introduction

3

Two approaches

Modeling

Analysis

Conclusions

Mobile broadband expansion

Mobile broadband users + Data traffic

Access to additional spectrum

T
o upgrade capacity
Pushing up
capex

budget


Spectrum allocation problem asks “
what is the value of spectrum
?”


Introduction


Analysis of the value of spectrum


Engineering value


strategic value



Addresses two research questions


How is the production cost affected by different levels of
spectrums?


How does the use of spectrums aggregation influence the
evaluation of spectrums?



The role and value of spectrum aggregation


modeling different operators with different amount of
spectrums and cooperation strategies

4

Methodology, models and assumptions


The role and value of spectrum aggregation is carried
out by modeling four different operators



Engineering value : cost savings in the infrastructure of an
operator’s network


Strategic value : expected position and competitive advantage
as a result of the assigned



Market and demand



By modeling an Urban area where four operators each has a
25% market share


5, 20 and 80 GB per user and month. over eight hours per day,
translating into a busy hour rate of 12.5%


5

Methodology, models and assumptions


Network modeling, coverage and capacity and data
rates



Capacity = Bandwidth (MHz) * number of sites * sectors *
spectrum efficiency



Cost assumptions



Opex

(Operational expenditures) is set to 20% of accumulated
capex
, in line with estimates made by
Ofcom
(2009)


cost of capital (WACC) is set to 12.9%.


6

Analysis of engineering value


Four operators with different spectrum competing on
one market, network costs



How different levels of spectrum affect network costs


To capture the implicit value of spectrum as a function of
lower network cost through different levels of spectrum.



Network Analysis



The four operators with similar networks, equipped with the
same number of sites, each having a 25% market share


The amount of spectrum allocated is different (from 10 MHz,
20 MHz, 40 MHz to 80 MHz applicable for LTE services)

7

Analysis of engineering value

8

Figure1:Spectrum,peak rate and capacity per km
2

for
the four operator

Figure2:Utilization rate of the four network

Figure3:Number of sites required to manage increased
traffic

Figure4:
Capex

to upgrade

Analysis of engineering value

9

Analysis of engineering value


Conclusions engineering value



Operators with less amount of spectrum have options to
provide mobile broadband services.



A radical assumption of usage in order to stretch the analysis
and show the impact of increase usage to levels that currently
looks unlikely.



Operators that are able to obtain more spectrum than its
competition, and also pursue network sharing, and spectrum
aggregation

10

Analysis of Strategic value


How the value of spectrum can be influenced by the
user perception of service quality in terms of offered
data rates.




Offered data rates


Operators with more bandwidth are able to claim that “we can
offer higher data rates”



Higher peak data rates can be provided



More users can be served at a given data rate when the network
is loaded

11

Analysis of Strategic value


Impact of carrier aggregation and network modeling


12

Difference of carrier
aggregation

Analysis of Strategic value


Impact of carrier aggregation and network modeling


13

User satisfaction depends on user expectation

Analysis of Strategic value


Discussion


Two conclusions about user expectations and user satisfaction



It is important to provide what is promised



User will notice and compare if other operators can provide
“more”



14

Conclusions


Operator with access to 80 MHz is able to lower its
production cost with 94%when the usage increase
from 5 to 80 GB.


There is a direct relation between the amount of
spectrum and production cost


The competition on spectrum is set to increase, and
spectrum aggregation is set to play a key role on the
market


Contributions


Consider both the engineering and strategic value


Take into account existing infrastructure and consider both
upgrading of existing sites and deployment of new sites


15