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A $1 trillion opportunity: Business drivers for connec6ng the unconnected via small cells 3rd March 2015
18/03/2015 1 © Real Wireless Ltd. 2015
Rural villages
Military
Public safety Disaster Recovery / humanitarian
Remote industrial
Special events
Transporta6on
About Real Wireless • Leading wireless advisory firm, bridging the
gap between wireless experts and wireless users
• Team of independent experts with deep technology and broad business experience
© Real Wireless Ltd. 2015 18/03/2015
Some Clients
Some Places Some Technologies
2
Small Cell Business Cases • Commissioned by Small Cell Forum but conducted independently by Real Wireless • A highly referenceable, credible starLng point for product and scenario-‐specific analysis • These are public: but many specific exercises conducted for real world cases
18/03/2015 © Real Wireless Ltd. 2015
Urban Enterprise Rural & Remote
3
Study seHng – Who are rural and remote users?
18/03/2015 4 © Real Wireless Ltd. 2015
Rural Community Coverage for underserved community beyond range of normal service
Remote Industrial Coverage for community of workers at a site hard to reach from exisLng infrastructure
Public Safety Coverage for emergency services & first responders.
Disaster Recovery / Humanitarian Rapid reinstatement of coverage aRer extensive damage to mobile infrastructure, and support for ongoing humanitarian efforts.
Special Event Services for temporary planned gathering
Military Service for military personnel
Transporta6on Services for passengers and operaLonal needs on all classes of shipping, aircraR and trains
Tradi6onally these users are poorly served
18/03/2015 5 © Real Wireless Ltd. 2015
• Alphonzo Samuels, CTO of Telekom South Africa, recently highlighted that urban populaLons take up just 2% of landmass but provide for operators [1]:
• 50% of revenue • 80% of profit
• Natural tendency to target urban so more cost effecLve rural soluLons needed.
• Even markets with high cellular penetraLon have a gap between urban and rural user mobile experience (as per Ofcom figure on right).
• GSMA esLmate average unique subscriber level 79% in developed countries but only 41% in developing countries [3].
• Implies main subscriber growth will come from rural and developing areas.
• But key barriers for operators are: • Deployment costs • Closed, bespoke equipment ecosystems
• Can small cells overcome these barriers?
The difference in the call comple6on rates across UK operators between rural and urban users from Ofcom [2]
Mobile adop6on versus rural popula6ons from GSMA [3]
Key Findings • Rural and remote users increasingly need mobile • MoLvaLons for mobile differ but there are
common mobile soluLon requirements • Small cells fit these common requirements
excepLonally well technically • Operators can tap into capLve, previously
untapped markets via: • Lower, more granular deployment costs • Enabling more flexible ecosystems with varying
levels of operator involvement
• Small cells challenge the assumpLon that there is necessary divide between urban users and rural and remote users
• The economic and social benefits from serving this market segment are compelling too
A trillion dollar opportunity! 18/03/2015 6 © Real Wireless Ltd. 2015
Users
Market drivers
Requirements
Ecosystems
Users
Market drivers
Requirements
Ecosystems
…
Sector customisaLons
Sector customisaLons
Core small cell capabiliLes
Small cell ecosystem
Mobile industry
Small cells are the “glue” across apparently disparate rural and remote applica6ons
Rural villages Transport Remote industrial
Special events
Public safety
Disaster recovery / humanitarian Military
R&R markets need mobile and are big markets • In developing naLons
• Mobile only means for medical assistance, employment and finances in some areas. • Mobile access higher than basic sanitaLon in some sub-‐Saharan countries [3]. • 10% improvement in mobile gives 1.4% increase in GDP [3].
• In developed naLons • Increased recogniLon of the importance of mobile by regulators • Teleworking rising – 80% increase in US from 2005 to 2012 [5] • Operators differenLaLng on user experience 1.6 billion subscribers could be added via small cells worldwide by 2017 -‐ rural populaLons are key
18/03/2015 7 © Real Wireless Ltd. 2015
Rural communi6es
o Huge capLve audience: 2.98 billion air passengers in 2012 (and growing) with 54.9 million flight hours [6]
o Passengers expect mobile – poor Internet second biggest stress factor for business passengers [7]
o Morale networks for staff key for staff retenLon o OperaLonal benefits and addiLonal revenue for transport companies o Growing M2M tracking freight o Access to on-‐shore markets in mariLme case
Transport
R&R markets need mobile and are big markets • Worldwide military expenditure of $1.75 trillion in 2013 [8]. • Move from bespoke to cellular due to:
• Reduced costs of COTS • Increased funcLonality • Shorter procurement cycles
• More hi-‐tech banlespace needs bener wireless support • SituaLonal awareness • LogisLcs and operaLonal communicaLons • Remote control of vehicles and remote devices
18/03/2015 8 © Real Wireless Ltd. 2015
Military
• In US in 2013 alone $9.7 billion spent on public assistance [9]. • 155,000 LTE public safety basestaLons forecast globally by 2020 with 4 million subs [10]. • Big transiLon to cellular driven by:
• Drive for bener interoperability • Reduced costs and increased funcLonality of COTS • Emergency responses becoming more hi-‐tech as in military but also open GSM cells to locate
survivors and public relying on cellular in incidents more
Public safety
R&R markets need mobile and are big areas • Between 2000 and 2009 2.2 billion people impacted by 4,484 natural disasters [11] • Increasing problem due to global warming and unplanned urbanisaLon [12]. • Growing recogniLon that wireless is key in operaLons with groups like Vodafone
FoundaLon and Télécoms Sans FronLères. • SituaLonal awareness via video and images and open cell features to locate survivors
in addiLon to voice aiding operaLons. • Increased reliance on mobile by survivors • Increased internaLonal awareness of management of relief efforts.
18/03/2015 9 © Real Wireless Ltd. 2015
Disaster recovery
• London 2012 was esLmated to anract nine million spectators and 300,000 athletes, officials, media and workforce [13].
• Increasing operaLonal communicaLons requirements: • CCTV • Wireless payment systems • Public safety networks
• Spectators expecLng connecLvity to: • Give live feedback on events and share experiences • Review event related staLsLcs and info.
Special events
R&R markets need mobile and are big markets • Move from PMR to cellular in this area. • Forecast that by 2015 $8 billion will be spent on oil and gas mobile applicaLons [14]. • Mobile is the 2nd highest priority for CIOs in this area aRer cyber security [14]. • Drivers include:
• Improving operaLonal efficiencies via remote working and situaLonal assessment • Improving staff retenLon • Being high value, hi-‐tech environments
18/03/2015 10 © Real Wireless Ltd. 2015
Remote industrial
• Key common drivers • Higher expectaLons from consumers and workers of
connecLvity everywhere • Working environments becoming more hi-‐tech • Increasing interest in cellular from specialist usersg more hi-‐tech as in
military but also open GSM cells to locate survivors and public relying on cellular in incidents more
Why don’t operators serve these needs be\er? • Operators perceive that:
• Deployment challenges make them complex to address and not cost effecLve with macrocells
• The ecosystems are unfamiliar to operators with a closed set of players who know the market needs well
• But our analysis and stakeholder feedback suggest these applicaLon areas could be very interesLng to operators: • CapLve markets with good brand and differenLaLon opportuniLes. • Some high value lucraLve applicaLon areas with extra subscriber recruitment
opportuniLes in specialist environments. • Opportunity to generate significant social and economic value • Opportunity to leverage exisLng investments in small cells • Knock on operaLonal benefits of network resilience and responding to network
outages 18/03/2015 11 © Real Wireless Ltd. 2015
Small cells fit these common requirements excep6onally well technically • Small cells have special characterisLcs
of: • Being low cost, low power and small
form factor soluLons • Providing support for a range of
backhaul and power opLons • Providing targeted local coverage • Providing dedicated capacity • Delivering cellular services and COTS
standards based equipment • Providing easy installaLon and retrofit • SupporLng rapid deployment and self-‐
organising features
18/03/2015 12 © Real Wireless Ltd. 2015
Small cells using a range of backhaul solu6ons – Vodafone open SureSignal uses premise’s broadband (leb), Altobridge/iDirect using Satcom backhaul and Airspan 4G outdoor picocell with integrated point to mul6 point backhaul (right)
Femtocells illustra6ng the small form factor of small cell products
Even though drivers for mobile differ there are common solu6on requirements
18/03/2015 13 © Real Wireless Ltd. 2015
Key Requirement Rural town / villages
Transport Military Public safety Humanitarian / disaster recovery
Special events Remote industrial
Low cost ü ü ü
Support for a range of backhaul
ü ü ü ü ü ü ü
Targeted local coverage
ü ü ü ü ü ü ü
Low power ü
ü ü ü
Small form factor ü ü ü ü
ü
Delivers cellular services
ü ü ü
COTS standards based equipment
ü ü ü
Easy installa6on and retrofit
ü ü ü ü ü ü
Rapid deployment ü ü ü ü
Self-‐organising ü ü ü ü
Dedicated capacity ü ü ü ü ü
Rugged form factor ü ü ü ü ü
Many common requirements suit small
cells well
• Small form factor • Low power • Dedicated capacity • Dedicated coverage in small areas
• Easy install and self organising features • Wide range of backhaul
But various levels of customisa6on are s6ll needed
18/03/2015 14 © Real Wireless Ltd. 2015
Rural Remote Temporary Dedicated Moving
Feature Op6ons
Backhaul Satellite, residenLal broadband, fibre, microwave, NLOS
Power supply Solar panels, banery, vehicle power supply, generator, mains
Cell size Village, plane, ship, disaster area, special event venue
Regulatory Emission levels, spectrum, antenna height
Add standard R&R product features for the categories of characterisLcs that target market exhibits
Start with exisLng outdoor small cell products
Core small cell offering
Customise for final market segment
• Branding • Ruggedize • Packaging
• Integrate with other systems • Sector safety standards and
regulaLons
• Integrate with bespoke services and applicaLons
• EncrypLon and security
Special events Rural villages Transport – Mari6me, avia6on and trains Military First
responder Disaster recovery Humanitarian
Remote industrial
The path to
success
Small cells have proven themselves already in these areas
18/03/2015 15 © Real Wireless Ltd. 2015
• Some example case studies given here but many more in the report
Example social and economic benefits from small cells in R&R markets
• Rural developing naLons [3]: • Mobile advisory services increased farmers’ incomes by 50% • Mobile has saved one million lives in sub-‐Saharan Africa • Enables novel services like mobile money and Azuri pay as
you go solar power
• Disaster relief, humanitarian and public safety • Mobile in-‐field communicaLons saves lives • Locals clearly benefit in immediate and on-‐going recovery • Importance demonstrated by one Vodafone FoundaLon
Instant Network carrying 264,104 calls over 47 days when deployed to support Red Cross in Kenya [16].
• Remote industrial • PotenLal economic impact of mobile and internet via oil,
metal and mineral extracLon industries expected to exceed $100 billion annually by 2025 [17].
18/03/2015 16 © Real Wireless Ltd. 2015
Lower, more granular deployment costs
18/03/2015 17 © Real Wireless Ltd. 2015
Illustra6ons of the small form factor of some small cells that ease deployment barriers – Alcatel Lucent small cell in a Virgin Media trial in Newcastle, UK (top right) – Altobridge/iDirect deployments in remote communi6es in Malaysia (leb) and to remote enterprises (bo\om right)
• Small cells ease deployment costs by: • Reducing the iniLal CAPEX investment
to enter a new market or area • Opening up more backhaul opLons in
remote areas • Reducing on-‐going OPEX in remote
areas • TargeLng small concentrated pockets
of users
Comparing costs
• Small cells are: • 5% – 10% of macrocell capex • 10%-‐25% of macrocell opex
18/03/2015 18 © Real Wireless Ltd. 2015
Small cells challenge macrocells even on cost per km2
18/03/2015 19 © Real Wireless Ltd. 2015
• Cost benefits of small cells are further strengthened if users are concentrated in clusters such as villages. • Here the cost per subscriber benefit with small cells will be greater than in this cost per km2 comparison. • This makes mobile more affordable for low ARPU levels and low populaLon densiLes. • For current ARPU levels our analysis indicates the following break even populaLon densiLes for the above
assumed small cell costs: • 4.1 to 8.7 subscribers per km2 for developing naLons • 1.2 to 2.5 subscribers per km2 for developed naLons.
Worst case needs only 46 people in the small cell area to break even
Deployment costs for real popula6on distribu6ons
18/03/2015 20 © Real Wireless Ltd. 2015
• We have analysed real populaLon distribuLons at a resoluLon of populaLon data commensurate with small cell range.
• We apply a macrocell and small cell placement algorithm to this populaLon database to obtain cost comparisons for different mobile extension strategies.
• Example graph for Germany on right compares the total cost of extending mobile coverage from 60% to the level indicated on the x axis for:
• A macrocell only strategy • A small cell strategy with small cells at varying cost
levels compared with macrocells
• This shows with small cells: • 95% of the populaLon could be covered for half the
total cost of ownership • Or for the same Int$2 billion investment an extra 3% of
coverage could be gained.
• But Germany is a densely populated medium sized country so does this benefit translate to other countries?
95% coverage achieved at ½ the cost with small cells at today’s prices
Total cost of ownership (20 year NPV) to extend coverage for Germany
Every country in our analysis benefits from small cells
18/03/2015 21 © Real Wireless Ltd. 2015
• Have analysed for rural populaLons in countries across: • Europe • Africa • LaLn America • The US • South East Asia
• Placed small cells at ‘best’ locaLons to increase mobile broadband populaLon coverage from current levels towards 100%
• Within this we have : • Analysed 215 countries and US states • Considered 2.86 billion people • Spent 7,500 hours of simulaLons
• Regional maps shows the addiLonal coverage achieved for the same investment via small cells over macrocells i.e. the benefit of small cells.
• We conservaLvely assume small cells at 15% of macrocell costs in line with today’s prices
Every country analysed benefits although the extent varies with distribu6on of gaps rela6ve to popula6on
Benefit of small cells – increase in popula6on coverage for same investment
Every country in our analysis benefits from small cells
18/03/2015 22 © Real Wireless Ltd. 2015
Benefit of small cells – increase in coverage for same investment
Small cells have a huge poten6al impact globally • We extrapolate our results for
the countries analysed to a worldwide result for the benefit of small cells.
• 650 million addi6onal people poten6ally benefiHng from mobile via small cells worldwide.
• This 9% increase in coverage equates to $1 trillion increase in GDP worldwide.
• Number of people benefixng increases sharply as small cell costs fall.
18/03/2015 23 © Real Wireless Ltd. 2015
Popula6on benefi6ng from small cells globally for different small cell cost levels
650 million people benefiHng worldwide
Key Findings • Rural and remote users increasingly need mobile • MoLvaLons for mobile differ but there are
common mobile soluLon requirements • Small cells fit these common requirements
excepLonally well technically • Operators can tap into capLve, previously
untapped markets via: • Lower, more granular deployment costs • Enabling more flexible ecosystems with varying
levels of operator involvement
• Small cells challenge the assumpLon that there is necessary divide between urban users and rural and remote users
• The economic and social benefits from serving this market segment are compelling too
A trillion dollar opportunity! 18/03/2015 24 © Real Wireless Ltd. 2015
Users
Market drivers
Requirements
Ecosystems
Users
Market drivers
Requirements
Ecosystems
…
Sector customisaLons
Sector customisaLons
Core small cell capabiliLes
Small cell ecosystem
Mobile industry
Small cells are the “glue” across apparently disparate rural and remote applica6ons
Rural villages Transport Remote industrial
Special events
Public safety
Disaster recovery / humanitarian Military
Contact Real Wireless PO Box 2218 Pulborough West Sussex RH20 4XB United Kingdom
realwireless.biz
Tel: +44 (0) 207 117 8514 Web: www.realwireless.biz Blog: realwireless.biz/blog Email: info@realwireless.biz Twiner: twiner.com/real_wireless
18/03/2015 25 © Real Wireless Ltd. 2015
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