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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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Figure 8.2 Techno-economic framework
System gain
' > ň ň________
Link budget calculations
180
ECONOMICS OF WiMAX
Techno-economic Framework
Broadband services open up new revenue possibilities for operators. At the same time, the upgrading of access networks to support these services requires large investments, and many alternative technologies can be used. Techno-economic analyses are required to discover the optimal technologies and systems for different environments. We will use these analyses to find out whether or not the WiMAX networks are really competitive with the other technologies (Figure 8.2).
For the purposes of this section ‘techno-economic analysis’ is defined as an analysis seeking to determine the economic feasibility of a technology. Much of the terminology, methodology and tools related to these techno-economic analyses of broadband access networks have been developed in the various research projects funded by various bodies across the globe, especially the European Union, including those in the Table 8.1 below.
The techno-economic framework basically consists of the following building blocks:
• area definition - geography and existing network infrastructure situation;
• service definitions for each user segment with adoption rates and tariffs;
• network dimensioning rules and cost trends of relevant network equipment;
• cost models for investments (CAPEX) and operation costs (OPEX);
• discounted cash flow model;
• output metrics based on NPV.
Table 8.1 Research related to techno-economics of broadband networks
Research
programme
(framework
Project name programme) Timeframe
TITAN (tool for introduction scenario and RACE II (FP3) 1990-1994
techno-economic evaluation of access network) ACTS (FP4) 1994-1998
OPTIMUM (optimized architectures for ACTS (FP4) 1994-1998
multimedia networks and services) IST (FP5) 1998-2002
TERA (techno-economic results from ACTS)
TONIC (techno-economics of IP optimized
networks and services)
THE BUSINESS CASE FOR WiMAX
181
Scenarios as Inputs
A number of choices, assumptions and predictions have to be made before proceeding to the techno-economic analysis of a broadband access network. These include the selection of the geographical areas and customer segments to be served, the services to be provided, and the technology to be used for providing the services. Assumptions and predictions are needed, e.g. on the level of competition in the market, the penetration rates of different throughput classes, and the price evolution of service tariffs and network components.
In the present framework, scenarios are used to depict the access network evolution from the existing situation to the long-term company target. A scenario is defined as a description of a network environment, including one or several operators providing a set of services to a number of users within a certain area and timeframe. A complete scenario is composed of the regulatory, environmental, service, and technology scenarios, each characterized by a number of scenario attributes.
The regulatory scenario describes the tariff structures and the revenues of the operators, as well as the sharing of the potential market between the operators. The attributes to be defined include the number of competitors both in the service market and access network provisioning, and the percentage shares of the competitors in these markets.
The environmental scenario describes the geographic and demographic characteristics of the area that is to be provided with a new network or a network upgrade. In addition, the existing network infrastructure is described.
The service scenario describes the services provided to the end-users by the service operators. The time evolution of the penetrations and the tariffs of these services are also defined.
The technology scenario describes the technologies, systems and architectures that are used to provide the selected services to the end-users. The evolutionary steps between the existing network and the final network architecture are defined. Also, the cost of network equipment and installation, together with the cost of operations, administration and maintenance (OA&M) procedures, is defined.
The scenario attributes are not fixed figures, but change over time. Accordingly, the attributes have to be defined as time series for the whole study period.
182
ECONOMICS OF WiMAX
Expenditure
The costs of building and operating a broadband network can be divided into capital expenditures and operational expenditures. CAPEX includes the investments to the network infrastructure and devices, as well as the hardware required for the OAM&P functions such as network management systems and billing and charging systems. OPEX includes the labour costs and expenses originating from operating and managing the networks as well as costs related to, for example, marketing, sales and customer care.
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