Day 2-t7-1510 tomi-paatsila-20120524


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LTE World Summit Barcelona May 2012 Day 2

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Day 2-t7-1510 tomi-paatsila-20120524

  1. 1. STRAIGHTFORWARD | TRUSTED | INTELLIGENT“All You Can Eat” Network Contracts: Feasibility and Target Price LTE World Summit – 24.5.2012 Barcelona Tomi Paatsila, CEO Omnitele
  2. 2. Bridging the gap between technology and business Technology Network Network Quality Strategy Design • Evaluating, selecting • Turnkey NW • Network Auditing, and managing planning services Optimisation and licenses, technologies for mobile and Performance and vendors broadcasting Management networks • Extensive experience, • Achieve best unbiased view and • All technologies, all possible end user coherent processes vendors perceived quality for sustainable and capture the full technology strategy • Maximised potential of existing utilisation of scarce network assets and expensive frequency assets  We have cutting edge knowledge and hands-on experience in the latest network technologies.  We bridge the gap between technology and business with a selection of strategy consulting and professional services.©Omnitele Ltd. 2012 2
  3. 3. CEO on holiday – Family to feed Son sports Wife on Daughter CEO always freak diet vegetarian hungry1000€/Family/Week 5-20€/Dish©Omnitele Ltd. 2012 3
  4. 4. Trends in network infrastructure pricing 2000 2006 2012 HW unit pricing SW unit pricing Traffic and volume based pricing All you can eat KPI pricing GSM+3G HSPA HSPA+LTE HSPA+LTE+? Build Build Capacity Spectrum coverage capacity crunch crunch©Omnitele Ltd. 2012 4
  5. 5. All You Can Eat contract – Win-Win? Operator • Simplicity • Less daily capacity planning • Predictability • Long term costs known benefits • Insurance • Cost savings in traffic boom Vendor • Front end revenues • Future capacity bought now benefits • Customer loyalty • Investments bound to current vendor • Sales and CC efficiency • Less negotiation and operation There are mutual benefits from avoided overheads.. … but is MNO losing independence on it’s network strategy? … can MNO ensure the TCO benefits?©Omnitele Ltd. 2012 5
  6. 6. All You Can Eat vs. Volume discounts Typical case: The more you buy – The less you pay for unit• Is the feature needed for 100% of coverage?• Which is more profitable: All You 1. 80% coverage with 40% discount Can Eat 2. 100% coverage with 45% discount? Feasible scale of implementation varies feature to feature Clever usage of volume discounts may be more beneficial than All You Can Eat©Omnitele Ltd. 2012 6
  7. 7. Target pricing for All You Can Eat • Analyse needed capacity and features for future traffic (worst case scenario) • Calculate cost per area with unit prices, include volume discounts QoS and traffic forecasts Baseline Maximum Network topology Dimen- setup setup sioning Offered features model and elements List pricing and discounts©Omnitele Ltd. 2012 7
  8. 8. Target pricing for All You Can Eat • Find break even point for All You Can Eat vs. list pricing • Add margin for “simplicity” QoS and traffic Target forecasts discount from All You Can Network topology Eat Dimen- sioning Savings must Offered features model cover expenses and elements - Premium for simplicity List pricing and discountsIf target price is not met, it is more profitable to dimension network with list prices + discounts, and save the rest for other investments such as new BTSs ©Omnitele Ltd. 2012 8
  9. 9. Closing remarks• “All you can eat” contract benefits MNO mainly from operational side  Simplified + predictable network development, if unexpected traffic boom• Short term costs increase, long term TCO benefits are NOT automatic  Clever usage of unit prices and volume discounts can be more profitable than “all you can eat”• The question is – What target price makes the case profitable? 780€ 1000€ Don’t over analyse family holiday.. But how is it with a 5 year network contract?©Omnitele Ltd. 2012 9
  10. 10. Thank You! Tomi Paatsila +358 44 5514400©Omnitele Ltd. 2012 10