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4G World CFN Presentation Mobile Backhaul

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4G World CFN Presentation Mobile Backhaul

  1. 1. 4G World -Meeting the Challenges of MobileBackhaul – Financial Justification This document is confidential and is intended solely for the use and information of the client to whom it is addressed.
  2. 2. Financial Justification for Upgrading Networks   What you already know   Everyone has or is getting an IPhone, Android, etc   The existing infrastructure doesn’t exist at the scale we need   Significant upfront investment   While we don’t know how big this upgrade cycle will be, we know it is far from finished….   Last week – IPad channel expands to Verizon, AT&T stores and Walmart   Bandwidth intensive mobile and wireless applications growth   Will the upgrade investment get paid back…. We think so…. This document is proprietary and is intended solely for the use and information of the client to whom it is addressed. CFN Services 2
  3. 3. Is this a good investment?…. Or “what is the chance this is a repeat of the CLEC industry in 1998 (and the crash in 2001…)” This document is proprietary and is intended solely for the use and information of the client to whom it is addressed. CFN Services 3
  4. 4. Is this a good investment?…. Or “what is the chance this is a repeat of the CLEC industry in 1998 (and the crash in 2001…)   Much of the investment is by the big competitors which lends credibility   ILECs & MSOs   Minimal Regulatory uncertainty   CLEC regulatory environment shifted to favoring the incumbents   Demand is leading the investment   Less instances of “build it and they will come…” This document is proprietary and is intended solely for the use and information of the client to whom it is addressed. CFN Services 4
  5. 5. Rapid shift in the infrastructure mix North America Europe WorldWide 100% 80% 60% 40% 20% 0% 2008 2010 2008 2010 2008 2010 Copper Fiber MicrowaveSource: Yankee Group - 2010 This document is proprietary and is intended solely for the use and information of the client to whom it is addressed. 5
  6. 6. State of the Mobile Environment 1,500,000 Active Connections 1,000,000 Double the number of connections in 2 yrs -1B mobile broadband connections by 2012 500,000 0 2005A 2006A 2007A 2008A 2009E 2010E 2011E 2012E 2013E 2014E EVDO HSPA Mobile WiMAX LTE Source: Pyramid Research This document is proprietary and is intended solely for the use and information of the client to whom it is addressed. CFN Services 6
  7. 7. How do we invest to keep ahead of the infrastructure demand curve?Old Design Paradigm – had less variables 1. Planned the RF 2. Initiated Site Acquisition 3. Iterated around the variables 4. Contacted the ILEC to install a T1 or 2 This document is proprietary and is intended solely for the use and information of the client to whom it is addressed. 7
  8. 8. How do we invest to keep ahead of the demand curve?Old Design Paradigm – had less variables 1. Planned the RF 2. Initiated Site Acquisition 3. Iterated around the variables 4. Contacted the ILEC to install a T1 or 2New Design Paradigm – How do you plan to upgrade the network when a critical supply chain element – Backhaul - may be in place, may not be in place …. And what is the effect of that uncertainty on your design process? This document is proprietary and is intended solely for the use and information of the client to whom it is addressed. 8
  9. 9. How do we invest to keep ahead of the demand curve?New Paradigm – upgrade the network when a critical supply chain element may be in place or may not be in place…. Fiber Penetration Estimates • Dense Urban Areas: 70% - 100% Penetration • Suburban Areas: 50% - 70% Penetration • Rural Areas: 0% - 50% Penetration • Widely varying availability depending on location & ILEC, MSO, Alt Access Vendor, UtilityAnd if not: How will you get it there and how much will it cost? And how fast can you do it? If you iterate in the old paradigm, it will take even longer…because of additional variables This document is proprietary and is intended solely for the use and information of the client to whom it is addressed. 9
  10. 10. Automation - Proper Ecosystem Drives a Success- Based Approach Fast Track Processes Quality Assurance Processes •  Speed to market •  Design accuracy •  Highly iterative •  Targeted service areas, “fill-in” •  Volume - centric •  Performance - centric Network Knowledge Preliminary RF Design Site Acceptance & Model Tuning Optimization Backhaul Design Site Acquisition Fill in Sites FiberSource ®•  Existing structures •  RF Design •  Site Level Tracker •  Morphology •  Search Rings •  Antenna Azimuth•  MLA sites •  Propagation Plots •  Site Configurations Classification •  Site Visits and tilts•  Wireless Carriers •  Link budget •  Leasing, Zoning •  Drive Testing • Alternate Site •  Cell parameter•  Fiber Infrastructure assessments •  Mapping and data •  Post-processing Studies settings•  On-Net facilities •  Site acquisition collateral •  Model Calibration •  Network redesign •  Frequency Plans•  Carrier-Neutral target list •  Testimonials •  Model Database analysis •  Network C/I andfacilities •  Site Justification •  Network Prelim. •  Network Prelim. Ecio plots•  Target “anchor” Design Assessment Design Assessmentsite candidate list This document is proprietary and is intended solely for the use and information of the client to whom it is addressed. 10
  11. 11. Plan the RAN and Backhaul simultaneously•  Planning the RAN and Backhaul together reduces lifecycle costs •  Use Fibersource to identify the potential sites •  Planning the RAN sites with a view towards fiber availability is critical •  Failure to plan appropriately leads to high fiber and thus backhaul costs This document is proprietary and is intended solely for the use and information of the client to whom it is addressed. 11
  12. 12. Use Fibersource to quickly identify the backhaul options This document is proprietary and is intended solely for the use and information of the client to whom it is addressed. 12
  13. 13. This document is proprietary and is intended solely for the use and information of the client to whom it is addressed. 13
  14. 14. This document is proprietary and is intended solely for the use and information of the client to whom it is addressed. 14
  15. 15. This document is proprietary and is intended solely for the use and information of the client to whom it is addressed. 15
  16. 16. Financial Analysis   Actual Customer completed in 2010 with CIC, a microwave partner   Key Assumptions:   Fiber sites / Hub sites   50 mg IP MRR at $1100/ 100 mg at approx $1350   < $2k per site NRC for fixed network   Microwave Sites   $34k - $35k microwave cost per site   $1,150/mo cost for lease and maintenance per microwave site This document is proprietary and is intended solely for the use and information of the client to whom it is addressed. 16
  17. 17. 3 Models tested – Sensitivity Analysis This document is proprietary and is intended solely for the use and information of the client to whom it is addressed. 17
  18. 18. Cumulative Cashflows Analysis Cumulative Cash Flow & Payback 2,000,000 - Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 (2,000,000) Backhaul Design #1 (4,000,000) Backhaul Design #2 Backhaul Design #3 (6,000,000) (8,000,000)(10,000,000)(12,000,000) This document is proprietary and is intended solely for the use and information of the client to whom it is addressed. 18
  19. 19. Sensitivity Analysis•  Fiber provided by ILECs: •  Traditional pricing model compared to alternative access providers •  Alternate providers can’t price irrationally – they have a business case to make and a different investment model to meet•  Sensitivity in the prior business case? •  Remember at original rates, Backhaul Design #1 had the best NPV at $256k •  If monthly recurring fixed network costs dropped by 10%: Backhaul design # 1- 105 fiber sites $256k grows to $1.6M NPV Backhaul design # 3 - 356 fiber sites - $ ($316k) grows to $ 2.3M NPV•  Therefore: Each market and each design needs to have payback calculations at the tower level Regional differences and negotiated contracts have a significant impact This document is proprietary and is intended solely for the use and information of the client to whom it is addressed. 19
  20. 20. Mobile backhaul moving forward….   There is still a lot of headroom in building mobile backhaul networks:   Of 250,000 towers, less than 100,000 have been built to   Many “built” towers were built for a single provider – but the average tower has > 1 provider on it.   New Design Paradigm requires a new approach   Fiber / Microwave mix will change as the solution   Current solution will change depending on the rate of bandwidth growth/ user   But as bandwidth requirements explode, another round of investment to upgrade lower bandwidth microwave towers? This document is proprietary and is intended solely for the use and information of the client to whom it is addressed. 20
  21. 21. CFN Services – Managed Backhaul Solutions Experience   Participation in all the major 3G and 4G planning   Unified, proactive management   Managed Service Solution History Solution Flexibility Building the foundation   Customized Solutions of tomorrow’s   Hybrid solutions: Copper, Ethernet and networks today Microwave Turn-Key Solutions   Planning, Design, and Implementation   Full Service management, monitoring and notifications   Owner’s Economics

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