Cost Drivers Of 4 G Evolution Safdar Imam Omantel

Cost and Profitability Drivers of 4G Evolution

Safdar Imam Sr. Costing Specialist Omantel

Innovate and build totally connected community - together

About Omantel• Omani Market

– Population 2.7 m – Area (sq. km.) 309,500 – GDP per capita US $ 22 k– Telecoms penetration

• Fixed 11%• Mobile 170%• BB 69%

• Omantel is the leading Integrated Telco of Oman;– Market Capitalization US $ 2.2 b – Widest PSTN and GSM Networks – Largest GSM deployment - 2G / 3.5 G– Successful LTE TDD testing in July 2010

Examining Cost and Profitability Drivers of Technology Evolution on the Path to 4G Technologies

• Internet and Mobile communication has dramatically transformed our way of life.

• Increasing data wealth of the Information Age has created demands ever faster speed and wider coverage of communication networks

• Problem: Operators are under great pressure to evolve networks to meet increasing market expectations despite decreasing prices with growing competition.

• Solution: – Implement network evolution with optimum timing and costs – Revive profitability focus with two sided business model– Analyze regulatory developments

Examining Cost and Profitability Drivers of Technology Evolution on the Path to 4G Technologies

• Knowing the CostsHow should we analyze

the costs associated with 4G evolution?

• Building New Business Model

How can operators maximize value for customers/

investors - profitability?

• Managing RegulationWhat are the impacts of regulation on the

Migration to 4G?

Knowing the Costs of Technology Evolution

•Radio•Backhaul•Core

Network Costs are the

major cost driving

avenues in the migration of 2G/3G to 4G

Cost Drivers of Network Elements - Radio

•Overlay Network: Overlay solution is optimal. No switched off for existing HSPA. LTE HW (b.band & radio) required to be overlaid in the new RF band (2600/ 800 MHz). •Capex Efficiency: Maximum utilization of existing site infrastructure, power and facilities•Selection of sites: Factors in consideration; (i) Data Traffic, (ii) Demand projections, (iii) Evolution stage and age of existing eqpt.; (iv) LTE on wheels•Integration and Interface: Ensure seamless network and seemless QoS

Radio last mile is where meat of

the MBB network TCO

resides

Cost Drivers of Network Elements - Backhaul

•With LTE, backhauling require special attention during network testing before and after upload•To achieve users’ satisfaction, 4G is supposed to resolve congestion but only network deployment cannot be taken for granted• Typical LTE site may present BH load of nearly 100 Mbps avg. throughput•Occasional peaks could be well above that.•Today’s backhauling techniques – throwing in E1’s – may be unsuited for 4G technologies

Re-dimensioning of Backhaul is critical for 4

G Migration

Cost Drivers of Network Elements – Core

•Migration to EPC system •LTE for Data only with dual mode devices•Voice over LTE – IMS •Traffic Engg., Network management and other OSS•Platforms reconfiguration – IP v6•Network Security

Merger Issues of Core and IP Layers

are significant

Profitability Focus – Two sided Business Model

• New generation technologies are building blocks of “digital economy”.

• ‘Two-sided’ platform-based business models’ have the potential to open up new market opportunities for telcos.

• Telco provides services to ‘upstream’ service providers and ‘downstream’ end-users by enabling them to interact via a Telco platform

• Telco collects revenue from users of the platform on both sides

Telco

Developers

Retailers

Government

Media Companies

ASPs

Telco – Retail

$ $

Millions of Customers

Thousands of Segments

Side 1: Upstream Customers

Side 2: Downstream Customers

Source: www.telco2.com

Regulatory Aspects – Spectrum and Licensing for Broadband

• Incentivizing Broadband investment• Ensuring spectrum availability; re-farming and

digital dividend• Funding passive infrastructure for Broadband

transport.• Moving towards Convergence; Future of

mobile and fixed hinges on integrating networks and communication services.

Finally; Take Away Thoughts• Change is permanent. In the info age,

communication industry has faster rate of change

• Telcos should;– Evolve networks with optimum timing– Optimize networks; with two sided business

model and utilizing existing investments– Use lessons learns from previous evolutions (1st

to 3rd Generation)– Build new data pricing models and balance two

sides of network demands. – Move regulatory environment to facilitate

network and business cost optimization through convergence.

– Innovate to build connected community, together with optimal networking, wireless or wireline.

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