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The business of wimax - Pareek D.

Pareek D. The business of wimax - Wiley publishing , 2006. - 330 p.
ISBN-10 0-470-02691
Download (direct link): thebusinessof2006.pdf
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• While paying fees for access to elevated areas such as towers and buildings is not atypical, these fees, associated logistics and
The Business of WiMAX Deepak Pareek © 2006 John Wiley & Sons, Ltd
contractual agreements are often minimal compared with the infrastructural costs of other broadband access technologies.
• Businesses can generate revenue in less time through the deployment of wireless solutions because a wireless system can be assembled and brought online in as little as 2-3 h.
• This technology enables service providers to sell access without having to wait for current providers to provide access or backhaul.
• Wireless technologies play a key role in quickly and reliably extending the reach of cable, fibre and DSL markets, while also providing a competitive alternative to broadband wireline.
Today WBA already seems to represent an economically viable alternative in rural areas, which often are underserved in terms of broadband access. An xDSL cable-based deployment will have significantly higher capital costs than a WBA deployment. xDSL capital costs can range from $100k to millions of dollars while the cost of a BAW base station ranges from $10k to $100k. The economics generally become better where the wired infrastructure is poor and the geographic region is more dispersed.
So far the incumbent network operators have only covered local exchanges (LE) over a given size (in terms of number of telephone lines) with DSL from economical criteria. LEs with few lines - under the threshold specified by the incumbent - and/or with too expensive backhaul costs are left out of the DSL coverage plans. The dramatic cost reduction of DSL equipment during recent years and the development of smaller units, e.g. ‘mini’ or ‘micro’ DSLAMs, have steadily brought this threshold down and are responsible for explosive growth of DSL over the past few years, but backhaul costs are still prohibitive in many areas.
Another key issue with DSL is that in many cases, even for areas with DSL coverage, subscribers cannot be served even though they are close to the central office. In such cases either the wireline to the subscriber is not economically viable or the increase in subscriber numbers is not economically feasible for that LE. Except some parts of Europe and North America, DSL does not serve even 75 % of the subscribers falling under DSL coverage. For the remaining subscribers wireless solutions
are necessary. There are two segments of the ‘broadband residual market’ or ‘unserved DSL areas’ in DSL coverage:
• prospects in rural and remote areas with few telephone lines and/or high backhaul costs;
• prospects with too long or poor quality copper loops - these occur in all COs - and where CO capacity is an issue.
Sometimes a typical 0.5 Mbps DSL access will not be adequate for new services. Owing to the shorter reach of DSL for higher capacities, the ‘residual market’ with respect to these high-capacity levels will increase.
Other drivers to use wireless are low deployment costs and time as well as low recurring costs. Also, the ageing existing copper plant and difficult terrains make wireless an attractive option. A larger footprint (coverage) of different wireless technologies is therefore foreseen to provide high-capacity services to both fixed and nomadic users.
Traditionally, a profitable business case for wireless technology can be built in a range of demographic environments. However, underpinning the model are high-population-density, steep adoption curves and high ARPU assumptions. When the population density drops, the viability of network deployment can quickly fall away.
In addition, the marketing costs required to compete in a developing market can significantly impact project profitability. Without significant expenditure, the ability of a wireless broadband operator to win a share from existing operators should not be assumed. Assessing the viability of wireless broadband deployment requires a detailed and integrated assessment of market dynamics.
Using a 5 year investment horizon, networking a typical metropolitan area of 7000 square kilometres does not become an NPV-positive business proposition until the population density is greater than 135 potential subscribers per square kilometre. However, with the advent of WiMAX, this situation will change completely.
One of the theoretical business cases presented by one of the many market research companies is built on the idea that a carrier might build a WiMAX network that covers 75 % of the US population at a cost of
$1.5 billion covering 85 million potential subscribers. The theoretical case relies on a $45-per-month charge and results in the carrier’s breaking even at 3.35 % penetration, or 2.87 million homes.
WiMAX provides more a viable business case with wider profitability zone because of the low cost and the flexibility to cherry-pick subscribers along with possibility of tiered service delivery.
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