ITU Cross Regional Seminar on Broadband
Access (Fixed, Wireless including Mobile) for
CIS, ASP and EUR Regions
Session 6
Economic Impact of BWA
Implementation
Ignat Stanev
ITU Consultant, Bulgaria
ITU Seminar
Chisinau, Moldova, 4-6 October 2011
Session 6_IS - 1
Content of the presentation :
Economic impact of BWA implementation
Problem 1 – Economic Selection of BWA
Technology:
Example I – BA in urban area
Example II – BA in urban area
Example III – Segmented by technology BA
Problem 2 – Economic impact of BWA in
Rural areas:
Bulgaria rural area – WBA network
Tajikistan rural area – WBA network
Georgia rural area – BWA network
Moldova rural area - BB access network
ITU Seminar
Chisinau, Moldova, 4-6 October 2011
Session 6_IS - 2
1
Economic impact of telecom network
Optimum
Costs
CAPEX
Total
Acquisition
Installation
NODES
Exchanges
Maintenance
CORE
Circuits
Subscribers
ACCESS
Overall economic results –
Revenues, Cost, Cash-flow and Net Present Value
no. of exchanges
nodes
Cost components of
telecom network
OPEX
Fusibility studies –
Profits and Expenses
ITU Seminar
Session 6_IS - 3
Chisinau, Moldova, 4-6 October 2011
BWA implementation – rural areas
Mobile broadband subscriptions per 100 inhabitants, 2000-2010*
Rural areas telecom case :
60
51.1
Devel oped
50
usually not interesting from
business point of view
Worl d
Per 100 inhabitants
Devel opi ng
40
30
telecom development should
be supported by government
20
13.6
10
5.4
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010*
Fixed broadband subscriptions per 100 inhabitants, 2000-2010*
*Es ti ma tes
The devel oped/developi ng country cla ssi fi ca tions are ba sed on the UN M49, see:
http://www.i tu.int/ITU-D/i ct/defini ti ons/regi ons/i ndex.html
Source: ITU World Telecommuni cation /ICT Indi cators databa se
30
Devel oped
25
24.6
Worl d
Devel oping
Per 100 inhabitants
Percentage of the population living in rural
areas
75%
71%
71%
20
15
10
8.0
27%
Latin
America
5
SubSaharan
Africa
East
Asia &
Pacific
South
Asia
Source: The World Bank(1992)
ITU Seminar
4.4
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010*
*Es ti ma tes
The devel oped/devel opi ng country cla s si fi ca ti ons a re ba sed on the UN M49, see:
http://www.itu.i nt/ITU-D/ict/defi niti ons /regions /index.html
Source: ITU Worl d Tel ecommuni ca tion /ICT Indi ca tors da ta ba se
Chisinau, Moldova, 4-6 October 2011
Session 6_IS - 4
2
Problem 1 – Economic Selection of BWA
Technology
Aim is to investigate the technoeconomical impact of BWA compared to
other broadband access technologies
Multiple techno-economical studies are
carrier out for the purpose to determine
the optimum access technology for the
network
Selection is done by comparison of the
economical parameters for each access
technology
ITU Seminar
Session 6_IS - 5
Chisinau, Moldova, 4-6 October 2011
Planning guidelines for BWA technology
Low subscriber
base
Y
Wireless
*
N
Is area
Greenfield
pocket within
Brownfield?
N
Is there high
growth for
service
demand?
N
Y
Y
Is existing
MSAN
capacity &
BB reach?
N
OLT exists or
planned?
Y
FTTH
**
N
Y
Temp BB
wireless / Plan
OLT
Extend network from
MSAN
Sample guidelines
BB Access Network Planning
Guidelines
ITU Seminar
Chisinau, Moldova, 4-6 October 2011
Source : STC
Session 6_IS - 6
3
BWA Network Planning
BWA Planning
Process
BWLA Planning
Process
• BWA Planning
• Planning of alternative technologies
• Economic analysis
• Comparison of different technologies
ITU Seminar
Chisinau, Moldova, 4-6 October 2011
Session 6_IS - 7
Example I – BA in urban area
Wireline vs. wireless greenfield
Wireline
(FTTH)
ITU Seminar
Chisinau, Moldova, 4-6 October 2011
Session 6_IS - 8
4
Example I – BA in urban area
Wireless (WiMAX)
ITU Seminar
Session 6_IS - 9
Chisinau, Moldova, 4-6 October 2011
Example I – Economic results
FTTH vs. WiMAX Greenfield
UC_1_9c UC_1_9b
Net Present Value
500000
400000
300000
200000
USD
UC_1_9c
WiMAX
UC_1_9b
FTTH
100000
0
10/1/2008
10/1/2009
10/1/2010
10/1/2011
10/1/2012
-100000
-200000
ITU Seminar
Chisinau, Moldova, 4-6 October 2011
Session 6_IS - 10
5
Example II – BA in big city
Wireline vs. wireless greenfield
Wireline
Solution
MSAN
ITU Seminar
Session 6_IS - 11
Chisinau, Moldova, 4-6 October 2011
Example II – BA in big city
Wireless
solution
BS
ITU Seminar
Chisinau, Moldova, 4-6 October 2011
Session 6_IS - 12
6
Example II– Economic results
xDSL vs. WiMAX Brownfield
WiMAX
FTTH
ITU Seminar
Session 6_IS - 13
Chisinau, Moldova, 4-6 October 2011
Example III – Segmented by technology BA
Pessimistic scenario (20%)
Total Number of Subscribers
year
xDSL
WiMAX
FTTB
LAN+CATV
2009
67.4%
0.1%
17.4%
15.1%
2009
50916
76
13144
11407
2013
70%
2%
23%
5%
2013
101238
2893
33264
7231
Difference
50322
2817
20119
-4176
N umber of
Subscribers
120000
100000
80000
Total Number of
Subscribers
60000
40000
Estimated market segment
20000
0
2009
2010
2011
2012
2013
Time
Optimistic scenario (35%)
year
xDSL
WiMAX
FTTB
LAN+CATV
2009
67.4%
0.1%
17.4%
15.1%
2009
50916
76
13144
11407
2013
70%
2%
23%
5%
2013
177167
5062
58212
12655
Difference
126251
4986
45064
1248
ITU Seminar
Number of Subscribers
Estimated market segment
Number of Subscribers per Customer Class
250000
200000
150000
100000
50000
0
Chisinau, Moldova, 4-6 October 2011
BB_Bus
BB_Res
2009 2010 2011 2012 2013
Time
Session 6_IS - 14
7
Example III – Segmented by technology BA
xDSL
FTTB
WiMAX
ITU Seminar
Session 6_IS - 15
Chisinau, Moldova, 4-6 October 2011
Example III – Economic results
Chisinau - NPV
120000000
100000000
80000000
60000000
40000000
20000000
0
9/1/2009
9/1/2010
9/1/2011
Pessimistic
9/1/2012
9/1/2013
Optimistic
Results for NPV : xDSL+ WiMAX + FTTB
ITU Seminar
Chisinau, Moldova, 4-6 October 2011
Session 6_IS - 16
8
Problem II – Economic impact of BWA
in Rural areas
Broadband improves standard of live in
rural areas with the large number of services
offered to the inhabitants
Economic analysis based on planning of
rural broadband access completed with
feasibility studies could facilitate taking of
administrative decisions and implementing of
regulatory policies even if economically the
broadband implementation is not justified
ITU Seminar
Chisinau, Moldova, 4-6 October 2011
Session 6_IS - 17
Broadband in rural areas - Bulgaria
Number of villages in Bulgaria without Internet
service provider, with 1, 2, more than 2 ISP :
4500
3997
4000
3500
no Internet
С е ла в които ня ма нито
е дин доста вчик
3000
1 ISP
С е ла в които има 1
дос та вчик
2500
2000
2 ISP
С е ла в които има 2
дос та вчика
1500
1000
Distribution of
the population
> 2 ISP
708
228
500
116
С е ла в които има пове че
от 2 дос та вчика
0
1
Usually in the capital and in the big cities broadband
penetration is higher than in the rural areas,
especially in remote, mountainous and border regions
ITU Seminar
Chisinau, Moldova, 4-6 October 2011
Session 6_IS - 18
9
Bulgaria rural area – WBA network
Scenario 2 ( 4 BS)
Scenario 1 ( 6 BS)
ITU Seminar
Session 6_IS - 19
Chisinau, Moldova, 4-6 October 2011
Bulgaria rural area – Feasibility studies
Net Present Value (IRR=6,5%)
0
-100000
-200000
-400000
NPV
-500000
Higher costs of
BB services
-600000
-700000
Net Present Value (IRR=163%)
1400000
-800000
2011
2012
2013
1200000
2014
2015
1000000
800000
600000
Pay back period after 5 years
in B G L
in BGL
-300000
400000
NPV
200000
0
-200000
-400000
-600000
2011
ITU Seminar
Urban area
Chisinau, Moldova, 4-6 October 2011
2012
2013
2014
2015
Session 6_IS - 20
10
Tajikistan rural area – WBA network
Results for wireless ( 3 BS - WiMAX )
ITU Seminar
Chisinau, Moldova, 4-6 October 2011
Session 6_IS - 21
Tajikistan rural area – Feasibility studies
Feasibility study
for the Capital
Pay back period 3-4 years
ITU Seminar
Urban area
Chisinau, Moldova, 4-6 October 2011
Session 6_IS - 22
11
Georgia rural area – BWA network
WiMAX
ITU Seminar
Session 6_IS - 23
Chisinau, Moldova, 4-6 October 2011
Georgia rural area – Feasibility study
Net Present Value
Tbilisi-Tskneti-Dighomi-Tabaxmela-xDSL_corr1; IRR=31.3%; Tbilisi-Tskneti-Dighomi-Tabaxmela-WiMAX; IRR=81.5%
400000
300000
200000
100000
in Euro
0
Tbilisi-Tskneti-Dighomi-Tabaxmela-xDSL_corr1
-100000
Tbilisi-Tskneti-Dighomi-Tabaxmela-WiMAX
-200000
-300000
-400000
-500000
2 year market
-600000
1
2
3
4
5
Net Present Value
Rural area -Tskneti-WiMAX-b-Year2; IRR=86.4%; Rural area -Tskneti-xDSL-Year2; IRR=0%
Pay back period 4-5 years
20000
0
in Euro
-20000
Rural area -Tskneti-WiMAX-b-Year2
-40000
Rural area -Tskneti-xDSL-Year2
-60000
-80000
-100000
1
ITU Seminar
Chisinau, Moldova, 4-6 October 2011
2
Session 6_IS - 24
12
Moldova rural area - BB access network
WiMAX
Segmented by
technology network
xDSL
Target access speed:
2 Mbit/s
ITU Seminar
Session 6_IS - 25
Chisinau, Moldova, 4-6 October 2011
Moldova rural area – Feasibility studies
Nisporeni-Rural
60000
xDSL + WiMAX
40000
20000
0
9/1/2009
9/1/2010
9/1/2011
9/1/2012
9/1/2013
-20000
xDSL &
WiMAX
-40000
-60000
Rural area - NPV
xDSL
WiMAX
100000
Feasibility study
for typical town
80000
60000
NPV - Nisporeni
40000
1200000
20000
1000000
800000
0
600000
9/1/2009
9/1/2010
9/1/2011
9/1/2012
9/1/2013
400000
-20000
200000
0
9/1/2009
-40000
9/1/2010
9/1/2011
9/1/2012
9/1/2013
WxDSL&WiMAX
-60000
xDSL&WiMAX
ITU Seminar
Chisinau, Moldova, 4-6 October 2011
Session 6_IS - 26
13