13 Techno-Economic and Business Feasibility Analysis of 5G Transport Networks
13 Techno-Economic and Business Feasibility Analysis of 5G Transport Networks
13 Techno-Economic and Business Feasibility Analysis of 5G Transport Networks
13
13.1 Introduction
The exponential growth of mobile data traffic, mainly driven by multimedia services and
an increase in the number of connected devices, brings new challenges for mobile net-
work operators (MNOs) [see Cisco - 2015; UMTS Forum - 2011; Osseiran et al. - 2013;
Zander and Mähönen - 2013]. Traditionally this capacity growth has been addressed by
looking for new spectrum opportunities, enhancing spectrum efficiency, and/or adding
macro cell sites. However, the spectrum is not an infinite resource, and its efficiency is
improving at a much slower pace than the increase in the capacity demand [see Femto
forum - 2010]. It is also complicated to acquire new base station (BS) sites in urban areas,
not to mention the inefficiency of using macro sites to serve users that mainly reside
indoors [see Norman - 2010; Ericsson AB - 2013]. A promising way to solve this capac-
ity crunch is to deploy heterogeneous networks (HetNets), where high-power macro
cells provide coverage, and less expensive outdoor/indoor small cells are deployed close
to the end user to ensure that capacity is provided only where it is needed.
The benefits of HetNets over homogeneous deployments (i.e. macro cells only) have
been demonstrated in a number of studies in terms of both cost and power consumption
[see Markendahl et al. - 2008; Markendahl and Mäkitalo - 2010; Aleksic et al. - 2013;
Khirallah and Rashvand - 2011; Claussen et al. - 2008]. The authors of [Markendahl
et al. - 2008] show that using only small cells, especially for indoor coverage, can decrease
the deployment cost of radio access networks (RANs) by nearly a factor of five. The study
in [Markendahl and Mäkitalo - 2010] emphasized that small cell deployments are a cost
efficient alternative to macro densification, especially in scenarios where the capacity
demand is high (e.g., beyond 100 Mbps km−2 ). The work in [Aleksic et al. - 2013] evalu-
ates the benefits of indoor small cells on improving the capacity available for residential
and enterprise users, while [Khirallah and Rashvand - 2011] discuss the energy reduction
that mobile operators can achieve thanks to HetNet deployments. Finally, the work in
[Claussen et al. - 2008] shows that with HetNet deployments it is possible to achieve
energy saving up to 60% in urban areas. On the other hand, the introduction of small cells
has an impact on the backhaul network [see Farias et al. - 2013a; Tombaz et al. - 2011],
which is responsible for collecting data traffic at the BSs (i.e. after baseband processing)
and for sending it to the metro/aggregation segment. With HetNets the backhaul seg-
ment tends to become more complex compared to homogeneous wireless deployment
solutions [see Juniper Networks - 2011]. This is because a large number of links are
required to aggregate the data traffic generated by all the small cells, each one working
at a peak rate at least tens of Mbps. These rates can hardly be guaranteed with legacy cop-
per based infrastructures. in particular not over a long distance [see Farias et al. - 2013b].
Such a scenario is likely to force mobile operators to upgrade their backhaul networks
to avoid potential bottlenecks in terms of capacity.
In a competitive telecom market, where new services and technologies are frequently
appearing, and the revenue margin is constantly reducing [see Giles et al. - 2004], for
each new deployment/upgrade all the possible cost drivers need to be carefully consid-
ered. Knowing that the cost of the backhaul segment is already a not negligible part of the
total cost of ownership (TCO) in homogeneous wireless networks [see Geitner - 2005], it
can be expected that with an increasing number of small cells (i.e. as in a HetNet deploy-
ment) the impact of the backhaul segment on the TCO of RANs will become even more
critical [see Skyfiber - 2013]. Therefore, finding cost efficient backhaul solutions have
become an important challenge in recent years. The rationale is simple: if not correctly
predicted, the extra backhaul cost might reduce the benefits brought by the deployment
of small cells.
On the other hand, restricting the analysis of the impact of backhaul only to TCO
assessment is risky. TCO can be used to compare the various backhaul alternatives, but
it provides estimates only about the cost aspects of a given technology/architecture.
This means that from a TCO analysis it is not possible to extrapolate any information
about the profitability of a specific backhaul solution, (i.e. the amount of money gained
with respect to the investment). These considerations include many other factors such
as yearly revenues, user penetration rates, the number of competitors in the area, and
regulations, just to name a few. As a result, profitability can only be assessed with a
comprehensive economic feasibility framework that in addition to TCO is also able to
provide estimates about the net present value (NPV) of a backhaul deployment [see
Cid et al. - 2010].
There are some attempts in the literature to provide cost modeling of mobile net-
works. [Frias and Pérez - 2012] numerically studied the cost savings achievable with the
deployment of indoor small cells in regards to RAN deployments. The work in [Ahmed
et al. - 2013] studies various wireless architectures (both homogeneous and heteroge-
neous) and tries to assess the impact of backhaul on the entire TCO. An author in [Frias
and Pérez - 2012] proposed a comprehensive methodology to analyze the TCO of a
number of backhaul network options based on fiber, copper, and microwave. The use
case under examination considers a European urban scenario with both outdoor and
indoor users. The latter is served by a layer of femto cells deployed inside the buildings
where they reside, while the former are catered by macro BSs. However, many details
are ignored that might affect the results in terms of cost saving. The authors in [Soh
et al. - 2003; Kuo et al. - 2010] compared different microwave based backhaul topologies
13.2 Mobile Backhaul Technologies 275
(including mesh and tree) with respect to their total cost. They reached the conclusion
that mesh structures are a cost efficient option for homogeneous wireless deployment,
but they did not consider HetNet deployments.
The study presented in [Senza fili - 2011] compares the deployment cost of back-
hauling in a long term evolution (LTE) homogeneous wireless network using fiber
and microwave technologies. This study concludes that for scenarios with low cell
density, the microwave is the cheapest option. However, only a homogeneous wireless
deployment was evaluated in this work. The works in [Monti et al. - 2012; Tombaz
et al. - 2014] compare different technology and topology options for backhauling a
HetNet deployment, but their main focus is only on energy consumption. The work
in [Mahloo et al. - 2014b] introduces for the first time a general TCO evaluation
methodology of mobile backhaul networks, including a detailed breakdown of the
capital expenditure (CAPEX) and operational expenditure (OPEX). On the other
hand, no NPV analysis is provided. From the list of research efforts described so far,
it becomes clear that there is a need for an assessment framework that in addition to
mere cost evaluation also estimates the NPV of a given backhaul deployment. This issue
has been addressed in [Yaghoubi et al. - 2018] where the authors provided complete
economic feasibility evaluation considering TCO and NPV calculation.
This chapter introduces a techno-economic framework that provides a complete mar-
ket analysis of the various business actors for any type of mobile access network deploy-
ments (including both the homogeneous and the heterogeneous cases). The aim of the
proposed model is to advise operators on what type of backhaul investment should be
made, at which point in time, and based on what technology, in order to maximize their
profits. This is done by providing a complete cash flow and NPV evaluation on top of a
detailed TCO estimation. It should be noted that in techno-economics, the NPV is the
most important criteria for understanding whether a network deployment is profitable
or not. Finally, a sensitivity analysis of several important cost factors is also included,
showing the influence of uncertainty on the assumptions and input values used in the
case studies.
Macro BS
MW antenna
MW hub
Metro Network
Coldrey et al. - 2013]. Regardless of the topology in which it is organized (i.e. mesh, tree,
ring, star, or any combination of them), a microwave based backhaul consists of several
point-to-point (P2P) or point-to-multipoint (P2MP) links, each one requiring antennas
at every endpoint. In the case of a P2P link, which is the major focus of this chapter, one
antenna is located at the BS (or on top of a building), while the other one is connected
either to a switch at the first aggregation point of the backhaul infrastructure (in the
case of a multi-stage backhaul) or directly to a switch at the metro/aggregation node.
Where several microwave antennas are co-located in one place, a tower mast (i.e. also
referred to microwave hub) needs to be installed. When possible microwave antennas
can be also installed on the same tower as the macro base station antennas. Figure 13.1
shows an example of a simple microwave based backhaul architecture.
Copper-based backhaul segments amount approximately to 20% of all current exist-
ing backhaul deployments [see Tipmongkolsilp et al. - 2011; Ercisson AB - 2017]. Most
likely, they will be gradually replaced by other technologies due to their limited ability to
provide high capacities over long distances (i.e. more than 100 Mbps can be guaranteed
only up to 300 m [see Farias et al. - 2013b]). However, there is some new advancement
in copper technology that may lead to its survival for several more years before it is
replaced totally by other technologies. One example is the G.fast standard that is cur-
rently developed by ITU-T and aims at achieving bit rates up to 1 Gbps but still over
short distances [see Lins et al. - 2013; Nokia - 2018].
Fiber based backhaul can provide ultra-high capacity over long distances. However, it
is relatively time-consuming and expensive to deploy a fiber infrastructure, especially if
it is done from scratch (i.e. greenfield deployment). On the other hand, in places where a
cable infrastructure (e.g., ducts from a previous copper installation) is already available,
faster deployment of fiber is possible [see Farias et al. - 2016].
Fiber access networks can be deployed as P2MP topology or as P2P interconnection.
In the latter case, one optical line terminal (OLT), a device corresponding to the service
provider endpoint, located in the central office (CO) is connected to an optical net-
work unit (ONU), the endpoint at the user/wireless network side, via a dedicated fiber
link (Figure 13.2a). In a P2MP architecture (Figure 13.2b), each OLT is connected to
several ONUs via a passive splitter (i.e. in the case of passive optical networks (PONs)),
13.2 Mobile Backhaul Technologies 277
ONU
CO
Fibers ONU
(a)
OLT ONU
ONU
CO cabinet
Fiber
Fiber Switch/ Fiber ONU
(b)
splitter Fiber
OLT
ONU
or through an ethernet switch (i.e. in the case of active optical networks). Splitters and
ethernet switches are located in a node that is referred to as the remote node. Thanks
to the ability of fiber to deliver high capacity over long distances (i.e. in the order of sev-
eral tens of kilometers), a backhaul network based on the optical transmission makes it
possible to connect cells directly to the mobile core network, without any intermediate
stages. This is not the case for a microwave based backhaul network where the con-
nectivity between the microwave hub and the mobile core network typically requires a
fiber link (Figure 13.1). Fiber cables are often installed inside ducts that are buried under
the ground. This process is referred to as digging (trenching) and it represents the most
expensive part of a fiber network deployment.
To achieve better utilization of the radio resources some operators prefer to use a cen-
tralized radio access network (C-RAN) architecture [see Chih-Lin et al. - 2014]. Unlike
traditional RANs, where the radio unit and the baseband processing unit (BBU) are
co-located at the base station site, in a C-RAN architecture, BBUs are decoupled from
the BSs and centralized into one or more BBU hotel(s). In a C-RAN architecture, the
transport network is divided into two parts: fronthaul and backhaul. The fronthaul seg-
ment is responsible for transporting the traffic between the remote radio units (RRUs)
and the BBU hotels, while the backhaul part provides transport connectivity between
the BBU hotels and the mobile core network. The communication between RRUs and
BBUs, which can be based on, e.g., the common public radio interface (CPRI) protocol
[see CPRI - 2013], normally requires capacities in the order of tens of Gbps, making opti-
cal transmissions (i.e. in particular, radio over fiber techniques) the perfect candidate for
fronthaul.
In summary, there is a consensus that fiber and microwave are the two main candi-
dates for backhauling current and future mobile network deployments. For this reason,
the case study carried out in this chapter focuses on these two technologies. In addi-
tion, the framework proposed in this chapter addresses specifically only the backhaul
segment (i.e. no C-RAN), but it is general enough to also be applied to the other 5G
transport solutions (e.g., fronthaul).
278 13 Techno-economic and Business Feasibility Analysis of 5G Transport Networks
Initial
Teardown
installation
Operational
phase
13.3 Techno-economic Framework 279
Market
Topology
module
module
Network
dimensioning
tool
Business
Cost module
module
Total cost of
owner ship
(TCO) module
Techno-economic results
CAPEX OPEX
Maintenance
the network deployment phase, when an upfront investment is required, up to all cost
aspects related to the operational processes).
Figure 13.5 presents the cost classification according to the proposed cost module.
Since, in general, a backhaul segment may comprise more than one technology (i.e. a
hybrid architecture), the proposed module accounts for the presence of both fiber and
microwave. The details of each part are presented next.
Equipment cost The equipment cost is the sum of all expenses related to purchasing
the backhaul components, i.e. according to the results of the dimensioning tool, and
to install them in their specific locations.
Infrastructure cost The total infrastructure cost of a mobile backhaul segment corre-
sponds to the investment needed to deploy the fiber infrastructure as well as the cost
of leasing fibers (when the fiber infrastructure has already been deployed by other
providers and is available for leasing). It also includes the expenses needed to install the
microwave hubs, i.e. masts and antennas, where needed. The fiber infrastructure cost
includes all the expenses related to trenching, purchasing of fiber cables, and pumping
fibers into the ducts. Trenching can be defined as placing the optical fibers inside the
ducts that are buried under the ground. In many cases, MNOs prefer to lease fibers
instead of deploying their infrastructure. In such a case, the infrastructure cost includes
an upfront charge per kilometer of leased fiber paid to the infrastructure owner.
Spectrum and fiber leasing This cost refers to the fee that should be paid to lease
microwave spectrum or fiber infrastructure. When leasing fibers, an MNO is charged
a yearly fee for the maintenance and reparation of the rented fibers in addition to the
upfront expenses. The yearly cost of spectrum leasing for a licensed microwave link
varies depending on channel capacity (i.e. class i) and the frequency band.
Energy cost The electricity bill is part of the OPEX. This cost is obtained by summing
up the energy cost of all the active equipment in the various backhaul locations (i.e. CO,
cabinets, microwave sites, and equipment placed inside buildings).
Fault management Fault management refers to the expenses related to the reparation of
failures that might occur in a backhaul network. The total yearly reparation cost for the
backhaul network is defined as the sum of the reparation cost of each failure occurring
during the year as well as the penalty paid to the users as specified in the service level
agreement (SLA).
The reparation cost depends on the cost of replacing a failed component (if needed)
in each year, the mean reparation time of each device, and the time to travel to the
location of the failure. The penalty quantifies the fine that operators need to pay to
the customers when the service interruption is longer than the threshold defined in
the SLA, TSLA . Let t show a period where TSLA needs to be satisfied, which can be a
year, a month or even a day. If the mobile backhaul has a failure in this period t, one
or more macro cells might be out of service, and potentially a large number of cus-
tomers can lose connectivity. Therefore, we can consider penalty costs for a backhaul
provider when the macro cell backhaul connectivity is lost due to a failure. NjMac and
unAvij denote the number of macro cells with high importance in year j and the con-
co∕h
nection unavailability of the backhaul link to the macro cell i. The penalty rate Pi
is agreed in the SLA and is dependent on the importance of service outage for the
customer.
N Mac
∑
Ln
∑
j
co∕h
Penalty = Pi (unAvij − TSLA ). (13.2)
j=1 i=1
The above equation is valid if the service outage time is larger than TSLA , otherwise the
penalty cost is equal to zero.
Floor space cost The floor space cost is a yearly rental fee paid by an operator to house
its equipment, i.e. to place components in racks with standard size in various locations.
13.3 Techno-economic Framework 283
Architecture model Two options are assumed for the wireless deployment: homogeneous
(i.e. using macro BSs only), and heterogeneous (i.e. macro BSs serve outdoor users while
small cells are deployed indoors to provide coverage inside for indoor users). The guar-
anteed bandwidths of 300 Mbps per building and 600 Mbps per macro cell are assumed.
Two backhaul technologies are considered in the case study: microwave and fiber. For
the microwave only case, P2P microwave links are used to backhaul the data traffic from
both the macro BS and the small cells. At each building, a switch gathers the data traffic
from all its indoor cells and send them via a rooftop microwave antenna to the closest
hub in the area. The hubs then transfer the data traffic to the metro/aggregation network
via other P2P microwave links. Traffic from the macro cells is also sent to the backbone
via one or more hops of P2P microwave links depending on the distances from the metro
node (Figure 13.6).
In the scenario with fiber backhauling, the data traffic from the indoor users is col-
lected using a fiber to the building architecture, i.e. an aggregation switch inside each
Macro BS
MW antenna
MW hub
Fiber link
Mw link
Metro Network
Macro BS
OLT
Splitter
AWG
Fiber link
ONU
Metro Network
Market model The main criteria considered for the dimensioning of RAN is the required
throughput per square kilometer in each year (shown in Table 13.1) as well as the
286 13 Techno-economic and Business Feasibility Analysis of 5G Transport Networks
Table 13.1 Considered throughput per square kilometer [see Tombaz et al. - 2014].
80%
Customer penetration
60%
40%
20%
0%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Year
coverage constraint, which is fulfilled using macro and small cell deployments. We
used the model presented in [Tombaz et al. - 2014] to calculate the required number of
macro and small cells. Figure 13.8 represents the considered penetration curve related
to the mobile customers joining the network in each year.
Table 13.2 summarizes the cost parameters used to calculate the TCO. The fault man-
agement cost is calculated based on the values in [see Mahloo et al. - 2013; Telecom
India - 2014]. The results of the dimensioning work for the RAN, based on the inputs
from the market module, are shown in Table 13.3. We assume to have one small cell per
building in the first year in order to have enough indoor coverage. Half of the users are
covered using the macro, and the other half is served by the indoor cells.
Business model In order to assess the total required investment cost of an MNO
in the worst case scenario, we selected the business model number 3 presented in
section 13.3.7. For small cells, we consider the open subscriber group model where
indoor cells are managed and owned by the MNO. We assume that the operator has
30% of the market share in the region, i.e. only 30% of the total users are considered for
the revenue calculations.
Table 13.2 Input values used for cost calculation gathered from
[Frias and Pérez - 2012a; Ahmed et al. - 2013; Mahloo et al. - 2014a,
2013; Paolini - 2011; Oughton and Frias - 2017].
Component/parameter Value
Heterogeneous Homogeneous
2014 4 2500 8
2016 6 4000 15
2018 9 5750 30
2020 18 7500 60
2022 36 10000 119
2024 72 12500 237
288 13 Techno-economic and Business Feasibility Analysis of 5G Transport Networks
14
BH_CAPEX BH_OPEX wireless
12
10
TCO (million €)
0
Ho_MW He_MW Ho_Tr Ho_Tr Ho_Le He_Le
Figure 13.9 Total cost of ownership of a mobile network including both RAN and backhaul.
backhaul for HetNet, in all scenarios, is more than twice as expensive (in terms of TCO)
than the corresponding homogeneous case. The results show that HetNet deployment
with microwave backhauling is the most expensive scenario. This is due to the com-
ponent cost and the power consumed by the microwave links, which increase almost
linearly with the number of small cells. Moreover, the bigger the area, the higher the
possibility to share some infrastructure using a fiber based backhaul compared to the
microwave backhaul case. Therefore, fiber based backhauling is more cost efficient, in
areas with a high density of small cells, even if an operator needs to deploy its fiber
infrastructure. This confirms the claim made earlier in the chapter that it is important
to carefully choose a proper backhaul technology in order to minimize the impact on
the TCO of a HetNet deployment.
Figure 13.10 presents the cost breakdown to assess the impact of each cost element
of the TCO for the backhaul segment. The considered cost elements are: fault man-
agement (FM), floor space (FS), spectrum and fiber leasing (Sp&Le), maintenance (M),
energy (En.), infrastructure (Infra.), and component cost (Equip.). From Figure 13.10 it
becomes evident that each cost item has a different impact on the TCO depending on the
80%
70%
60%
50%
40%
30%
20%
10%
0%
Ho_MW He_MW Ho_Tr He_Tr Ho_Le He_Le
deployed strategy. For example, energy and equipment cost are the dominant part of a
microwave based backhaul while these two elements always amount to less than 30% for
a fiber based backhaul. The figure also shows that the impact of FM cost increases in the
case of HetNet deployments due to the higher amount of equipment and infrastructure
needed in the network.
Figure 13.11 shows the TCO evolution for all the scenarios presenting a TCO break-
down year by year. As can be seen from the figure both the backhaul technology and
the RAN deployment strategy influence the distribution of expenses in the time domain
during the considered ten years. In the case of HetNet deployments, huge upfront invest-
ment is required in the first year to have good indoor coverage backhauling all the small
cells (one small cell per building in the first year is considered). For the scenarios with
fiber trenching, also a significant amount of money needs to be invested in the first year
as most of the trenching needs to be done in the beginning.
Another interesting aspect presented in Figure 13.11 is the proportion of CAPEX
and OPEX for the backhaul technologies. In the scenario with microwave backhaul for
homogeneous wireless deployment, the OPEX is huge, and it increases considerably
with capacity growth. However, the OPEX is a tiny portion of the yearly expenses in
case of fiber based backhaul with trenching, where the infrastructure cost is dominant.
Considering an average monthly subscription fee of €30 per user (for voice and data)
and a discount rate of 10%, the NPV has been calculated for all the scenarios, and it is
presented in Figure 13.12. Except for the case of HetNet deployments with microwave
backhaul (i.e. where the backhaul TCO is extremely expensive), all the scenarios have
a positive NPV and can be considered economically viable. Another interesting aspect
to notice is the following. The He-Tr deployment has the lowest TCO value compared
to all three homogeneous scenarios. On the other hand, its NPV (i.e. the total amount
of profit at the end of the 10 year network lifetime) is the lowest. This is because most
of the investment for both backhaul and RAN needs to be done in the first years of
the project. Typically the same amount of money is worth more at present than in the
future due to the potential of producing income if invested earlier. This example shows
the importance of business viability analyses, i.e. the technology with the lowest TCO
value might not be the one economically preferable for a long-term investment project.
(d)
(a)
Cost (million €)
0
1
2
3
4
5
6
0
0.4
0.8
1.2
1.6
2
2.4
2.8
3.2
20 20
14 14
20 20
15 15
20 20
16 16
20 20
17 17
20 20
18 18
20 20
OPEX
19 19
OPEX
20 20
20 20
20 20
21 21
CAPEX
20 20
CAPEX
2 2
20 2 20 2
23 23
20 20
24 24
(e)
(b)
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
0
0.2
0.4
0.6
0.8
1
1.2
1.4
20 20
14 14
20 20
15 15
20 20
16 16
20 20
17 17
20 20
18 18
20 20
OPEX
19 19
OPEX
20 20
20 20
20 20
21 21
CAPEX
20 20
CAPEX
2 2
20 2 20 2
23 23
20 20
24 24
(f)
(c)
0
0.3
0.6
0.9
1.2
1.5
1.8
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
20 20
14 14
20 20
15 15
20 20
16 16
Figure 13.11 Backhaul TCO evolution per year for (a) Ho-MW, (b) Ho-Tr, (c) Ho-Le, (d) He-MW, (e) He-Tr, and (f ) He-Le scenarios.
20 20
17 17
20 20
18 18
OPEX
20 20
OPEX
19 19
20 20
20 20
20 20
CAPEX
21 21
CAPEX
20 20
2 22
20 2 20
23 23
20 20
24 24
13.4 Case Study 291
3
NPV (million €)
0
Ho_MW He_MW Ho_Tr Ho_Le He_Tr He_Le
–1
–2
–3
–4
24
22
20
TCO (million €)
18
16
14
12
10
8
Ho_MWHe_MW Ho_MWHe_MW Ho_Tr He_Tr Ho_Le He_Le
Figure 13.13 Sensitivity analysis of the TCO varying: (a) energy cost (±50%), (b) MW antenna price
(±50%), (c) amount of re-usable trenching (from 0% to 100%), (d) price of leasing (±50%).
of these elements, Figure 13.13 shows the fluctuation of the TCO of a mobile network
deployment (including both RAN and backhaul).
The grey circles in Figure 13.13, represent the TCO values for each scenario calculated
in the previous section, and the green bars demonstrate its variation if the values of cor-
responding input parameters are changed. It can be seen that even by decreasing the
energy price by half or by using antennas costing half the price, microwave based solu-
tions are still the most expensive options among all the scenarios. An interesting finding
from Figure 13.13 is the difference between a greenfield scenario where no infrastructure
is available (0%) and a brownfield one where a certain amount of fiber infrastructure is
available, and only partial trenching is needed (> 0%). If more than half of the required
trenching is available, then fiber based backhaul for a HetNet scenario offers the low-
est TCO for providing mobile services. The price of leasing fibers, which varies a lot
292 13 Techno-economic and Business Feasibility Analysis of 5G Transport Networks
20
Ho_MW He_MW Ho_Tr Ho_Le He_Tr He_Le
15
10
NPV (million €)
0
10 15 20 25 30 35 40 45 50
–5
–10
–15
Figure 13.14 Sensitivity analysis of NPV based on the variation of the monthly subscription fee.
depending on the country and region, has a huge influence on the investment cost. With
a 50% increase in the leasing price, fiber trenching becomes a cheaper and more attrac-
tive option than fiber leasing from a TCO point of view.
Another important parameter in any business viability analyses is the revenue that is
related to the project profitability. In order to investigate the impact of revenue per user
and to find the lowest monthly subscription fee resulting in a positive NPV, Figure 13.14
presents a sensitivity analysis based on the variation of the subscription fee per user. It
is evident that if the average monthly fee per user is more than €40 all six scenarios,
even He-Mw, can reach a positive NPV, and all the cases have a negative NPV when the
charged monthly fee is €15 or less.
13.5 Conclusion
In summary, this chapter presented a comprehensive techno-economic framework for
estimating the TCO of a backhaul network segment as well as for analyzing the business
viability of a given wireless network deployment. The chapter focused on two backhaul
technologies: microwave and fiber. The proposed framework is applied to a case study to
estimate the TCO and the NPV of a heterogeneous and homogeneous wireless deploy-
ment. The results showed a considerable increase in the value of the backhaul TCO
in the case of a heterogeneous deployment compared to a conventional homogeneous
scenario. The results also showed that fiber is the most cost-efficient technology to pro-
vide a high capacity backhaul for heterogeneous wireless deployments. The cheapest
alternative is to lease fiber connectivity when possible. Our results also highlight the
importance of selecting the right backhaul technology in order to keep the economic
benefits brought by heterogeneous wireless deployments. The proposed business via-
bility analysis also indicated the importance of having a complete techno-economic
assessment instead of having a pure cost calculation. Our NPV results showed that a
lower TCO does not always lead to a higher profit because in the long-term project
investments done in different time periods affect the total profit of the project.
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