Frequency allocation
WiMAX case study
SESSION 10: Challenges and opportunities facing Broadband Wireless Objectives
August 2009
Christoph Legutko
Wireless Standards and Regulations Manager
Intel Global Public Policy
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2
August 2009
GPP
1
Agenda
• Intel WiMAX Vision & Broadband Internet
• Intel WiMAX Roadmap & Targeted Profiles
• WiMAX Benefits and Worldwide Momentum
• Intel Spectrum Policy Recommendations for WiMAX
3
August 2009
GPP
Vision for Mobile Internet
Transparent
Affordable Internet
Access Wherever
You Are
Wi-Fi + Mobile WiMAX* = 1st generation Mobile Internet
4
4
* WiMAX
connectivity
requires a WiMAX enabled device and subscription to a WiMAX broadband service.
August
2009
Availability of WiMAX is limited, check with your carrier for details on availability.
GPP
2
Intel’s Vision:
Three Waves of Internet Access
1,400M
1,200M
10/100/1000
10/100/1000
Ethernet
Ethernet ports*
ports*
1,000M
Wi-Fi ports**
Wi
Wi-Fi
ports**
WiMAX
WiMAX ports***
ports***
800M
600M
400M
200M
0
1995
2002
• Defining ITU 4G Standards
• WiMAX into notebooks
• Securing Spectrum
5
August 2009
2008
2016
2020
• Driving the Roadmap, Silicon
• WiMAX Open Patent Alliance coordination
• Significant Intel Capital investment
*Source: Dell’Oro Group, Q1’08;
**Source: IDC, Q1’08; Intel estimates;
***Source: Intel Estimates
GPP
Intel WiMAX Solutions Roadmap
2009 “Broad CE Devices”
WiFi+WiMAX Integration
2008-09
“Nomadic & Mobile
WiMAX Devices”
2004-07
“WiMAX Modems”
6
August 2009
GPP
3
Why WiMAX
New business model
Technical performance
• New low cost embedded devices
• Lowest cost, all IP network
• Low cost & flexible service plans
• IEEE standard equipment
with many vendors
• New spectrum cheaper than 3G
• Open Internet access
• New activation & distribution
models
• Best available multi-megabit
bandwidth
• Scalable device design-in &
certification
The Opportunity to Drive Fixed,
Nomadic & Mobile Broadband
7
August 2009
GPP
Source: WiMAXCounts.com in collaboration with Maravedis Research, Sept 2007
> 300 Trials ,
8
August 2009
> 475 Commercial Deployments
> 95 Commercial Deployments
GPP
4
Illustration: Business Case for Turkey(*)
• Target Market
93% of Turkey population
• Deployment
Green field based on WiMAX IEEE 802.16e TDD
• Wholesale Operator Spectrum 2.5GHz 30MHz
• Services
• $20 for Fixed, Nomadic and Mobile:
- 2Mbps in Year 1
- 4Mbps in Year 10
• VoIP: $10 with 25% attach rate
Turkey Demographics
–
–
–
• Adoption
15% of population in 10 years
Total POPs: 73 M
Total HHs: 15.4 M
Total km²: 781.000
• WACC
(Weighted Average Cost of Capital)
5%
Turkey is a Good Example of an Emerging Market
*THIS IS A REPRESENTATIVE CASE STUDY FOR ILLUSTRATIVE PURPOSES ONLY
9
GPP
August 2009
2.5GHz is More Desirable than 3.5GHz(*)
CapEx Sensitivity to Frequency
NPV Sensitivity to Frequency
3,000,000
3,000,000
2.5 GHz
3.5 GHz
2,500,000
$ in thousands
2,000,000
1,500,000
1,000,000
500,000
2,000,000
1,500,000
1,000,000
500,000
0
NPV Assumes WACC of
Metrics
15.0%
9
Ye
ar
Ye
ar
10
8
7
Ye
ar
Ye
ar
6
5
Ye
ar
Ye
ar
3
4
Ye
ar
Ye
ar
1
Ye
ar
2
0
Ye
ar
1
Ye
ar
2
Ye
ar
3
Ye
ar
4
Ye
ar
5
Ye
ar
6
Ye
ar
7
Ye
ar
8
Ye
ar
9
Ye
ar
10
(500,000)
Ye
ar
$ in thousands
3.5 GHz
2.5 GHz
2,500,000
16e - 2.5GHz – 30MHz
16e - 3.5GHz – 30MHz
Payback
~3 years
5.5 years
NPV
$2.46 B
$2.01 B
Peak Capital Need
$240 M
$478 M
The 2.5GHz case has better NPV, shorter payback
and needs less peak capital
*THIS IS A REPRESENTATIVE CASE STUDY FOR ILLUSTRATIVE PURPOSES ONLY
10
August 2009
GPP
5
(*)
16e Brings Significant Advantages over 16d
CapEx Sensitivity to Technology (2.5GHz)
NPV Sensitivity to Technology (2.5GHz)
3,000,000
2,500,000
Mobile WiMAX 802.16e
Fixed WiMAX 802.16d
2,500,000
Mobile WiMAX 802.16e
Fixed WiMAX 802.16d
2,000,000
$ in thousands
$ in thousands
2,000,000
1,500,000
1,000,000
500,000
1,500,000
1,000,000
500,000
0
Metrics
2.5GHz – 30MHz
9
10
Ye
ar
Ye
ar
8
7
Ye
ar
6
Ye
ar
5
Ye
ar
Ye
ar
3
4
Ye
ar
Ye
ar
1
Ye
ar
Ye
ar
2
0
Ye
ar
1
Ye
ar
2
Ye
ar
3
Ye
ar
4
Ye
ar
5
Ye
ar
6
Ye
ar
7
Ye
ar
8
Ye
ar
9
Ye
ar
10
(500,000)
3.5GHz – 30MHz
IEEE 802.16e
IEEE 802.16d
IEEE 802.16e
IEEE 802.16d
~3 years
7.5 years
5.5 years
9 years
NPV
$2.46 B
$131 M
$2.01 B
$48 M
Peak Capital Need
$240 M
$170 M
$478 M
$239 M
Payback
16e has much better spectral efficiency and better
service penetration than 16d
*THIS IS A REPRESENTATIVE CASE STUDY FOR ILLUSTRATIVE PURPOSES ONLY
11
GPP
August 2009
A Sustainable Business Requires 30+MHz(*)
CapEx Sensitivity to Spectrum Inventory
NPV Sensitivity to Spectrum Inventory
3,000,000
4,500,000
30MHz
15MHz
2,500,000
15MHz
30MHz
4,000,000
3,500,000
$ in thousands
$ in thousands
2,000,000
1,500,000
1,000,000
500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
0
500,000
Ye
a
10
Ye
ar
r9
r8
Ye
a
r7
Ye
a
r5
r6
Ye
a
Ye
a
r4
Ye
a
r3
Ye
a
r2
Ye
a
Ye
a
r1
10
r9
Ye
ar
r7
r8
Ye
a
Ye
a
r6
Ye
a
r5
Ye
a
r4
Ye
a
r3
Ye
a
Ye
a
Ye
a
Ye
a
r2
0
r1
(500,000)
Metrics
IEEE 802.16e - 2.5GHz – 30MHz
IEEE 802.16e - 2.5GHz – 15MHz
Payback
~3 years
~4 years
NPV
$2.46 B
$1.57 B
Peak Capital Need
$240 M
$249 M
Allocating at least 30MHz – net band - of
spectrum improves significantly the business case
*THIS IS A REPRESENTATIVE CASE STUDY FOR ILLUSTRATIVE PURPOSES ONLY
12
August 2009
GPP
6
Nationwide Licensing Catalyze Success
Nationwide License
Single Core Network
Network Cost
Multiple Regional Licenses
• Replicating Core network in every region
is very expensive
• Additional costs to implement roaming
infrastructure are required
Service
Adoption
Seamless roaming
• Roaming fees and different authentication
methods/network profiles can cannibalize
service adoption
Interference
on Region
Boundaries
No dead zone between
the regions
• 50-100 km separation might be required
(dead zone) (if different technologies are
used or when operators are not
coordinated)
Digital Divide
A nationwide operator
can leverage on its
existing core network to
cover undesired regions
• Some regions might not be desirable (in
terms of ROI) because of low population
density and weak business case i.e. white
spots
13
GPP
August 2009
Enabling Mobility is Key(*)
NPV Sensitivity Service Penetration
€ 3,000,000
15% (Fixed+Nomadic+Mobile)
10% (Fixed+Nomadic)
5% (Fixed Only)
$ in thousands
€ 2,500,000
€ 2,000,000
CapEx Sensitivity to Service Penetration
€ 2,500,000
15% (Fixed+Nomadic+Mobile)
10% (Fixed+Nomadic)
5% (Fixed Only)
€ 2,000,000
€ 1,500,000
€ 1,500,000
€ 1,000,000
€ 1,000,000
€ 500,000
€0
€ 500,000
(€ 500,000)
10
Ye
ar
r9
r8
Ye
a
Ye
a
r6
r7
Ye
a
r5
Ye
a
Ye
a
r4
r3
Ye
a
Ye
a
r1
Ye
a
Ye
a
Ye
ar
Ye 9
ar
10
r7
r8
Ye
a
Ye
a
r6
r5
Ye
a
Ye
a
r4
r3
Ye
a
Ye
a
r2
r1
Ye
a
Ye
a
r2
€0
(€ 1,000,000)
15.0%
NPV Assumes WACC of
Metrics
Fixed–Nomadic-Mobile
IEEE 802.16e - 2.5GHz –
30MHz
Fixed–Nomadic
IEEE 802.16e - 2.5GHz –
30MHz
Payback
Fixed
IEEE 802.16e - 2.5GHz
– 30MHz
~3 years
~4.5 years
8 years
NPV
$2.46 B
$1.35 B
$149 M
Peak Capital Need
$240 M
$312 M
$728 M
Mobility brings new devices/usage, increases service
penetration and improves the business case
*THIS IS A REPRESENTATIVE CASE STUDY FOR ILLUSTRATIVE PURPOSES ONLY
14
August 2009
GPP
7
Business Model Summary(*)
Operating Profit (000)
3,500,000
3,000,000
Economic Returns (000)
8,000,000
OpEx
Revenue
EBITDA
7,000,000
Free Cash Flow
Cumulative Free Cash Flow
Net Present Value
6,000,000
2,500,000
5,000,000
2,000,000
4,000,000
3,000,000
1,500,000
2,000,000
1,000,000
1,000,000
500,000
0
0
Ye
ar
1
Ye
ar
2
Ye
ar
3
Ye
ar
4
Ye
ar
5
Ye
ar
6
Ye
ar
7
Ye
ar
8
Ye
ar
9
Ye
ar
10
Ye
ar
1
Ye
ar
2
Ye
ar
3
Ye
ar
4
Ye
ar
5
Ye
ar
6
Ye
ar
7
Ye
ar
8
Ye
ar
9
Ye
ar
10
(1,000,000)
Metrics
IEEE 802.16e - 2.5GHz – 30MHz
Payback
~3 years
NPV
(net present value)
Peak Capital Need
$2.46 B
$240 M
The case for a WiMAX 2.5GHz Nationwide
Operator Utilizing 30MHz is Quite Healthy
*THIS IS A REPRESENTATIVE CASE STUDY FOR ILLUSTRATIVE PURPOSES ONLY
15
August 2009
GPP
Summary - Recommendations for WiMAX
• Preferably 2.5 and 2.3 GHz band
• permit IEEE 802.16e TDD operation
• Minimum 30MHz of spectrum per license – guard bands excluded
• Nationwide licenses to avoid market fragmentation and weaken the
operator business case
• Wholesale model can help reduce the digital divide in the rural areas
and villages – cooperation with local governments and municipalities
to subsidy service
Create the Conditions to Accelerate Broadband
Adoption and Reduce the Digital Divide
16
August 2009
GPP
8
Thank You!
Christoph Legutko
Global Public Policy
Intel Corporation
T: +49 171 55 202 43
christoph.legutko@intel.com
17
August 2009
GPP
9