Presentation Transcript
Broadband Fixed Wireless Access 40GHz BFWACG(00)36Market and financial modelling Preliminary Findings : Industry Consultative Group
14 July 2000 Broadband Fixed Wireless Access 40GHz BFWACG(00)36 Market and financial modelling Preliminary Findings
Contents : Contents Background
40GHz BFWA market
Market & financial assessment
Conclusions
Next steps
Study objectives : Study objectives The objective of this study has been to assess whether a market for 40GHz in the UK is viable. This has been carried out through:
consultation with operators, vendors and other interested parties
market modelling - estimating potential revenues from businesses and households at a detailed county level
financial modelling - to determine the extent that the overall 40GHz business will be profitable for operators
Conclusions from phase one : Conclusions from phase one INDUSTRY CONSULTATION
There is interest in the market
The 40GHz market appears to be broader than 28GHz with both business and residential segments and telecoms and broadcast services
Internet is expected to be the key revenue driver by most respondents and broadcast revenues also expected to be important
But the overall service composition appears uncertain
No respondent suggested delaying the licensing
There is still uncertainty about timing, equipment costs and when and if economies of scale will be achieved
MARKET ASSESSMENT
Total revenues for 2004 were estimated (indicative only)
Contents : Contents Background
40GHz BFWA market
Market & financial assessment
Conclusions
Next steps
Market definition : Market definition 28GHz 40GHz Data rates > 64 kbps > 64 kbps Services voice, data (internet) voice, data (internet), Broadcast Target customers business and residential - size: SMEs and medium to large corporates - region sub-urban and urban Availability Q1 2001 Q1 2002 Technology PMP PMP Geographic coverage UK UK Usage access only i.e. no backhaul access only i.e. no backhaul business - size: focused on SMEs - region: sub-urban The KPMG market assessment model assumes 40GHz BFWA will address the following: Characteristic Our market assessment also assumes:
that 40GHz provides complementary services to 28GHz i.e. does not take market share from 28GHz
the cell radii or reach of the two technologies are the same
BFWA addressable market : BFWA addressable market Residential Very Small Small Medium Large Urban Suburban Rural BFWA speed of roll-out
cost availability
cost? ADSL bandwidth
speed of roll-out
cost speed of roll-out
bandwidth
availability
cost 40GHz 28GHz SATELLITE CABLE FIBRE
Contents : Contents Background
40GHz BFWA market
Market & financial assessment
Conclusions
Next steps
Slide9 : Market and financial model overview Revenue per subscriber & Number of subscribers Business model county
industry sector
size of business
SOHOs coverage of fibre, cable, ADSL, BFWA & Satellite
potential market
market share
average business spend number of business units
revenue per customer
average price Residential telecoms model county
household coverage of ADSL, BFWA & cable
potential market - broadband telecoms
market share
average b’band internet spend number of households
revenue per household
average price Residential broadcast model coverage of ADSL, BFWA, cable & DTT
potential market- pay TV pen.
market share
average pay TV spend number of households
revenue per household
average price Level
of analysis Key inputs Outputs Key inputs Outputs county
household
Market model results : Market model results
Market model base case results : Market model base case results substantial revenues projected for business telecoms market
SOHO telecoms market revenues significant
residential market revenues sizeable (broadcast and telecoms)
Financial model : Financial model
Slide13 : Key changes to 28GHz methods Broadcasting costs introduced e.g. server, head end, set top boxes and programming costs
New costs associated with residential customers e.g. launch costs
Increase in business capacity requirements from 2mbps to 4mbps
Base station expenditure increases
Slide14 : Results - medium market scenario Business telecoms - profitable
Business and residential telecoms - marginally profitable
Business, residential and SOHO telecoms - positive IRR
Total telecoms residential broadcasting - negative IRR
Contents : Contents Background
40GHz BFWA market
Market & financial assessment
Conclusions
Next steps
Conclusions : Conclusions Business telecoms appears to be a profitable market
The addition of SOHO and residential markets under both base and high case scenarios result in businesses where it appears difficult to realise significant profits, given current cost assumptions
The financial model results are highly sensitive to the costs of CPEs, base stations and launch. Equipment costs and base stations are especially uncertain
Contents : Contents Background
40GHz BFWA market
Market & financial assessment
Conclusions
Next steps
Next steps : Next steps Further sensitivity analysis
Discuss results with RA
Finalise results
Regional analysis
Catch the
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