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WiMAX Network Financial Modeling
Part one in a series on WiMAX network planning and deployment.
Business models and financial considerations for a successful WiMAX network
Companies or cities that are considering building and operating wireless WiMAX networks need to consider the array of financial and business planning models prior to developing RFPs and network designs. A number of independent yet connected issues need to be discussed, researched and documented into a complete view of the proposed network.
In order to avoid past lessons, it's vital that a wireless network be self-sustainable in some way. For a city, a WiMAX network must be justifiable and create value or cost savings for the town. For a commercial operator, a network must be able to attract customers, maintain them and thrive in a competitive market.
There are many business models for cities to consider including:
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A city-owned municipal WiMAX network to replace or enhance existing telecommunications infrastructure.
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A city-owned public/private WiMAX network for municipal, commercial and residential use.
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A private or cooperatively-owned and operated WiMAX network that the city supports by buying service, through promotion or some other means.
For a commercial operator, a WiMAX network will be privately owned and will be made available to consumers, businesses, municipal, state and federal institution and agencies as well as other entities.
The first step in planning any network from a business perspective is to inventory the existing environment including:
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A thorough analysis of current telecom offerings, both wired and wireless; including price points, service offerings and value add benefits to the customer.
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An inventory of current and future frequency options.
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An inventory of existing assets including building roof-tops, city owned towers and poles, existing telecom use and other ways you can improve your existing city services (for instance, faster response to crime through a broadband connection to your 125 police cars)
Once you have taken an assessment of your existing environment, you'll want to make some broad assumptions about the potential use of the network. Those uses can include:
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Fixed best efforts or carrier class data connectivity
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Fixed voice over IP via wireless services
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Mobile data services
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Business video surveillance or public safety video surveillance
This effort will assist in answering basic questions such as how much estimated bandwidth you'll need as well as how many cell sites may be needed.
Once you have made assumptions about potential applications, it's time to determine the number of potential customers in the market, the anticipated 5 year penetration rate, (given the current competitive market) and the potential customer churn rate.
Based on the planned service offerings (above), a city or operator can estimate retail pricing and if you are working with an experienced wireless integrator, they can provide you with an 'order of magnitude' budget for the network.
Once you have identified the potential customers, their uses for the network, the prices you will charge and the estimated cost of the network, you'll want to fill in details such as Internet backhaul, billing costs, technical support costs, maintenance and monitoring costs.
If you are a city, you will want to inventory the current costs of all fixed and mobile communication services for police, fire, emergency services, public works, utilities, building and codes and other departments. You will also want to account for potential soft cost savings through such things as crime reduction, productivity gains for police, fire, building inspectors and other mobile workers. These hard and soft cost savings will enable city planners to make an empirical cost justification for the network.
