Transcript ROI Analysis of WiFi Offloading

ROI Analysis
of
WiFi Offloading
© 2012 Wireless 20/20, LLC. – All rights reserved
2
…the bad news is…
To offload or not to offload…
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Operators of mobile cellular data networks (3G and
4G) face an uphill battle against increasing data
usage and declining ARPUs
ROI on macro network expansions scrutinized by
shareholders
iPhones, iPads, Android smartphones, netbooks are all
tapping the mobile network for access anywhere,
anytime
Majority of access occurs when the user is stationary in
high traffic density areas (home, office, coffee shop
etc.)
© 2012 Wireless 20/20, LLC. – All rights reserved
3
Comscore found that
more than one third
(37.2 percent) of U.S.
digital traffic coming
from mobile phones
occurred via a WiFi
connection.
by Karl Bode Thursday 27- Oct 2011
…the good news is WiFi offload
already occurs naturally…
Phil Marshall head of
Tolaga Research.
estimates that about
20 percent of iPhone
traffic on AT&T
Mobility's network is
landing on the public
WiFi network, and it's
likely that another 60
percent is landing on
home WiFi networks
now that the operator
has instituted tiered
data plans, he said.
“When you have WiFi,
you do more, and that
effect is pretty hard to
measure," Steve
Glapa, Rukus. "But
nonetheless, I would
say network traffic on
PCCW's network
would be 20 percent
higher than if it didn't
have WiFi. In some of
the dense traffic areas
of Hong Kong, some
80 percent of data
traffic is traveling over
WiFi”, he said
© 2012 Wireless 20/20, LLC. – All rights reserved
4
…a fair assumption according to
Light Reading would be…
65% of mobile data traffic already offloaded
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Users are in Wi-Fi coverage 63 percent of the time during the
day/
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65 percent of traffic can be offloaded to Wi-Fi under typical
usage conditions using on-the-spot offload
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Greater offload performance can be achieved if the user is
prepared to accept delayed offload (e.g., sync your videos
or photos when you get home)
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This means that out of the 7GB usage per month, 4.5GB would travel by
Wi-Fi and 2.5GB by cellular. Therefore a 2GB-3GB per month
cellular data plan is probably enough for most users.
Observation: A cellular service provider already benefits from WiFi Offload
without making any investment in deploying a WiFi Network of its own.
© 2012 Wireless 20/20, LLC. – All rights reserved
5
…in-depth analysis required to
make informed decision…
How do we quantify the offload dilemma?
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How do we analyze the impact of a 3G/4G
Service Provider’s Own WiFi Offload Deployment
on its overall Business Case?
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Does it make economic sense to deploy a WiFi
Offload Network?
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What is the Business Case for MNO WiFi Offload?
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What is the ROI of an MNO WiFi Offload?
Answer: Develop a WiROI™ Model to answer these questions
© 2012 Wireless 20/20, LLC. – All rights reserved
6
…the wireless 20|20 process…
Using a holistic approach
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Study the Impact of WiFi Offload on an Urban LTE Deployment
Deploy an LTE network for Coverage
Deploy a WiFi Network for Capacity
Surgically place the WiFi AP’s in high traffic areas
Calculate the TCO (CapEx and OpEx) for the WiFi Offload Network
Compare to the TCO of providing Capacity by deploying LTE Cells
for Capacity
Understand the key deployment parameters which lead to positive
economic impact of WiFi off load
Calculate and Compare ROI metrics such as NPV, IRR
© 2012 Wireless 20/20, LLC. – All rights reserved
7
…WiROI™ capabilities…
Real time simulation and analysis
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Allow the simulation of public wifi offload to vary the % of the natural
offload
Allow the simulation model to vary the % of the Urban Area covered by
WiFi
Allow the simulation model to vary the Density of WiFi AP’s per sq km
Vary WiFi Vendor Equipment Performance and Price (Cell Radius of
AP’s, cost of AP’s)
Vary the WiFi Backhaul Cost
Vary the operating cost of the WiFi network
Vary the total data capacity a user consumes on a monthly basis
Objective: Discover under what conditions WiFi Offload pays off
© 2012 Wireless 20/20, LLC. – All rights reserved
8
…CAPEX and OPEX drivers…
Major Assumptions
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One Time Costs (CapEx)
 Cost of WiFi Access Point
 Cost of WiFi AP installation
 Cost of Backhaul Equipment
 Cost of Backhaul Equipment Installation and provisioning
 WiFi Core Network Equipment (Servers, Portals, etc.)
Recurring Costs (OpEx)
 Monthly WiFi and Backhaul Site Rental
 Monthly WiFi and Backhaul Maintenance
 Monthly Traffic Backhaul Cost
Objective: Discover under what conditions WiFi Offload pays off
© 2012 Wireless 20/20, LLC. – All rights reserved
9
…customized analysis of traffic
density…
Cover Areas of High Traffic Density
© 2012 Wireless 20/20, LLC. – All rights reserved
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…and WiFi AP Density…
More AP’s per Sq Km provide better offload
© 2012 Wireless 20/20, LLC. – All rights reserved
11
…coverage vs. traffic offload…
Coverage vs. Traffic Offload
 Hotspot
Traffic
120%
100%
80%
60%
40%
20%
Coverage
0%
T=C^(1/2)
T=(1-C)^1/2-1
T=C^(1/3)
coverage of
high traffic density
areas versus
contiguous
coverage yields
better offload
percentage
 Customized formulas
for different market
conditions
© 2012 Wireless 20/20, LLC. – All rights reserved
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WiROI™ Research Analysis
Case Study 1 – LTE Deployment on New York City
© 2012 Wireless 20/20, LLC. – All rights reserved
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…large dense urban city…
Baseline: New York City
NYC
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8 million POPS
LTE using 1800Mhz
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10Mhz Channel
Coverage 789 sq km
2,194,000 subscribers
216 Coverage Sites
1,879 Capacity Sites
Cumulative CAPEX $514M
Cumulative OPEX $3,006M
TCO $3,520M
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Assumption: LTE
deployment in NYC
Activity: Simulate TCO
impact of implementing
MNO WiFi Offload
Network
Identify: The scenario for
optimal financial return
Analyze: Understand
main drivers of the
results
© 2012 Wireless 20/20, LLC. – All rights reserved
14
…WiFi vs. LTE assumptions…
Assumptions: CapEx & OpEx
CapEx Assumptions
WiFi AP
Cost of 3-Sector BTS
LTE Macro Cell
$45,000
Cost of WiFi Access Point
$500
New Site Acquisition
$600
Collocation
$150,000
$50,000
Backhaul
$300
$5,000
OpEx Assumptions
WiFi AP
LTE Macro Cell
Monthly Site Rental
$20
$1,000
Site Maintenance
/month
$10
$200
© 2012 Wireless 20/20, LLC. – All rights reserved
…WiFi offload results…
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Analysis: TCO impact of WiFi Offload
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TCO savings of about $123m
already with only 20% coverage
and density of 24 AP’s per sq km.
Optimal TCO savings of $253m is
achieved with 100% coverage
and 42 AP’s per sq km.
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The number of macro LTE
capacity sites reduced by 1,447
and replaced by 33,138 WiFi
access points.
Manhattan – WiFi Access
Points per sq km
$3,550
$3,500
TCO Savings $123m
$3,450
Optimal Commercial Proposition?
$3,400
$3,350
TCO Savings $253m
$3,300
$3,250
0%
20%
40%
60%
LTE TCO Baseline
80%
100%
24 AP's
42 AP's
60 AP's
78 AP's
96 AP's
120%
120 AP's
Observation: Optimal Financial Return might not be Optimal Commercial Proposition
© 2012 Wireless 20/20, LLC. – All rights reserved
16
…New York results…
Analysis: Optimal TCO Results
LTE Only
WiFi Offload
Delta % / $
Total CapEx
$514m
$284m
44.7% / $230m
Total OpEx
$3,006m
$2,983m
0.90% / $23m
TCO
$3,520m
$3,267m
7.20% / $253m
LTE Only
WiFi Offload
Delta % / $
$6,680
$6,967
4.3% / $287m
Cumulative Free
Cash Flow
© 2012 Wireless 20/20, LLC. – All rights reserved
17
WiROI™ Research Analysis
Case Study 2 – LTE Deployment in San Diego, USA
© 2012 Wireless 20/20, LLC. – All rights reserved
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…midsize urban city…
Baseline: San Diego
San Diego
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1.07 million POPS
LTE using 1800Mhz
10Mhz Channel
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Coverage 250 sq km
206,330 subscribers
69 Coverage Sites
206 Capacity Sites
Cumulative CapEx $69M
Cumulative OpEx $396M
TCO $465M
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Assumption: LTE
deployment in San
Diego
Activity: Simulate TCO
impact of implementing
MNO WiFi Offload
Network
Identify: The scenario for
optimal financial return
Analyze: Understand
main drivers of the
results
© 2012 Wireless 20/20, LLC. – All rights reserved
…WiFi offload results…
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Analysis: TCO impact of WiFi Offload
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TCO savings of about $10m
already with only 20%
coverage and density of 24
AP’s per sq km.
Optimal TCO savings of $16m is
achieved with 40% coverage
coverage and 24 AP’s per sq
km.
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At 40% the number of macro LTE
capacity sites reduced by 100
and replaced by 2,400 WiFi
access points.
San Diego - WiFi Access
Points per sq km
$530
$520
$510
$500
$490
$480
$470
$460
$450
TCO Savings $16m
TCO Savings $10m
0%
20%
40%
60%
80%
LTE TCO Baseline
24 AP's
42 AP's
60 AP's
78 AP's
96 AP's
100%
120%
120 AP's
Observation: Beyond 80% coverage you start to see diminishing returns
© 2012 Wireless 20/20, LLC. – All rights reserved
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…San Diego results…
Analysis: Optimal TCO Results
LTE Only
WiFi Offload
Delta % / $
Total CapEx
$69m
$55m
20.3% / $14m
Total OpEx
$396m
$394m
0.01% / $2m
TCO
$465m
$449m
3.40% / $16m
LTE Only
WiFi Offload
Delta % / $
$869
$888
2.2% / $19m
Cumulative Free
Cash Flow
© 2012 Wireless 20/20, LLC. – All rights reserved
21
…large vs. midsize city
deployment…
Conclusions & Recommendations
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In New York, a dense urban environment with high traffic profile,
MNO WiFi Offload is optimal at 100% coverage
In San Diego, a urban environment, with high traffic profile, MNO
offload is optimal at 40% with diminishing return beyond 80%
MNO WiFi offload makes an compelling business case under the right
circumstances
Main driver is OpEx, especially the WiFi site rental and backhaul costs
as well as the assumed growth of the traffic demand on the 3G/4G
network.
OpEx less than $40 per month a highly attractive solution
OpEx exceed $100-$150 per month, it becomes challenging
Recommendation: Create a customized WiROI™ Tool for your market
to drive informed decisions. Contact us at www.wireless2020.com
© 2012 Wireless 20/20, LLC. – All rights reserved
…test drive our WiROI™ 4G WiFi
22
Offloading Tool online…
WiROI Tool Demo
™
Test drive the WiROI™ Tool by register online at
www.wireless2020.com to gain access to our online
demo or contact us for a WebEx Demo.
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