Dimensioning and cost structure analysis of a Wide area data service network

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<ol><li> 1. Wireless Infrastructure Deployment and Economics Dimensioning and cost structure analysis of wide area data service network By: Ahmad Bazzari Introduction: In this paper, I will study the dimensioning and design a radio access network (mobile broadband), analyze the cost structure for different Radio Access Technologies (RATs) in little Belgium for an operator working in a specific area type over a period of 5 years. Inputs and assumptions: I will be starting from the following inputs, and later on other assumptions will be introduced. Country Little Belgium Operator Incumbent Network status Existing (GSM) Distance between sites 0.5 Km Cell radius r=d/sqrt (3) Available RATs WLAN, UMTS Micro, HSPA Micro Population density 2000 users/sqrt Km Type of area Urban Density of users 2000 per sqrt Km Coverage area 1000 Km2 Usage MBB as substitute Approach: The following analysis steps will be followed: 1. User demand calculation 2. Cost structure description 3. Coverage, capacity and cost model for the different available RATs 4. Estimation of network costs: CAPEX, OPEX, and NPV 5. Comparison and recommendation </li><li> 2. Analysis 1. User demand calculation Each year we have to cover 20% out of a total area of 1000Km2, which is 200 Km2. Then by using the assumption of a required penetration of 4% we can find the density of users, and then the total number of users to be covered as follows: 0.06 X 2000 X 200 = 24000 Now this figure represents year 1 of our study, by repeating the calculation for the 5 years, we get the following results: Year Area to be covered each year Penetration (% of population) total number of users to be covered 0 0% 0 Km2 4% 0 1 20% 200 Km2 6% 120000 2 40% 400 Km2 8% 160000 3 60% 600 Km2 10% 200000 4 80% 800 Km2 12% 240000 5 100% 1000 Km2 14% 280000 Table 1.1 Coverage in terms of area and users The next step will be calculating the usage and demand per user. In this scenario we assume that the usage of Mobile Broadband is as substitute according to the following yearly growth: Type of user Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 MBB as substitute 5 6 7 8 9 10 Table 1.2 Usage per user (GB/month) The target now is to find the user demand in Mbps. To do that, we simply perform the following calculation: [[(Usage per user in GB/month) X (Convert GB to MB)] / (convert month to second)] X (Convert Byte to bit) A few assumptions are made as follows: - Traffic figures are for 4 hrs/day and - The month is 30.5 days For year 1: [[( 6 X 1024)] / (30.5 X 4 X 60 X 60)] X 8 = 0.111912568 Mbps Then to find the total demand each year, we multiply by the corresponding total number of users, for year 1, this is 0.111912568 X 120000 = Mbps. Furthermore, by dividing this number by the area required to be covered, we can find out the required data rate per square kilometer. </li><li> 3. Year User demand (Mbps) Total demand for all users (Mbps) Total demand (Mbps per Km2) 1 0.111912568 13429.5082 67.14754098 2 0.130564663 20890.34608 52.22586521 3 0.149216758 29843.35155 49.73891925 4 0.167868852 40288.52459 50.36065574 5 0.186520947 52225.86521 52.22586521 Table 1.3 Capacity demand As an Incumbent operator having existing network, we find out the number of existing sites, using the provided inputs: - Cell radius = D/sqrt (3) =&gt; 500/sqrt (3) = 288.7 meters. - Assuming hexagonal cells, we can find the cell area ( = 3sqrt(3) r^2 / 2) = 0.2165 Km2, Now dividing by the total area, we get 1000/0.2165 = 4619 sites. As this study looks at an Incumbent operator, I assumed the whole 4619 sites are already deployed (despite the provided table of area to be covered, these figures will be used for capacity analysis) 2. Cost structure description In this scenario three different Radio Access Technologies are to be studied and compared. WLAN, UMTS Micro, and HSPA Micro. The cost structure analysis includes: CAPEX - Investments such as radio and transmission equipment, sites and installation. OPEX - Running costs such as site leases, fees for leased lines and O&amp;M. NPV - The net present value measures the profitability of a project by looking at the cash moving in and out of it, in a given period. Our assumption here is 10% All individual costs are given as inputs; The price erosion of all equipment is 5% 3. Coverage, capacity and cost models 4. Estimation of CAPEX, OPEX, and NPV </li><li> 4. A. WLAN: As we calculated, we have already 4619 sites with a radius of 0.289 Km. Now, for the WLAN with a radius of 0.03 Km, we clearly need more sites for coverage, then we can check the capacity. Year area to be covered each year New cell area Existing sites (924 can be utilized yearly) Total sites needed New required sites 0 0% 0 Km2 0 4619 0 0 1 20% 200 Km2 0.00234 924 85470 84546 2 40% 200 Km2 0.00234 86394 85470 84546 3 60% 200 Km2 0.00234 171864 85470 84546 4 80% 200 Km2 0.00234 257334 85470 84546 5 100% 200 Km2 0.00234 342804 85470 84546 Table 3.1 Coverage demand for WLAN Year Total demand (Mbps per Km2) Total demand per new site (Mbps) WLAN AP Capacity (Mbps) *assumtion 1 67.14754098 0.157125246 10 2 52.22586521 0.122208525 10 3 49.73891925 0.116389071 10 4 50.36065574 0.117843934 10 5 52.22586521 0.122208525 10 Table 3.2 Capacity demand for WLAN sites A we can notice, in this case the coverage is the issue and the factor which will determine the new sites to be deployed. Now the financial aspects are discussed to deploy WLAN. - CAPEX: Year Sites Number of sites Equipment Installation and buildout Total CAPEX Year 1 New 84546 85470 253638 339108 Year 2 New 84546 81196.5 253638 334834.5 Year 3 New 84546 77136.675 253638 330774.675 Year 4 New 84546 73279.84125 253638 326917.8413 Year 5 New 84546 69615.84919 253638 323253.8492 Total (Keuro)= 1,654,888.87 Table 4.1 CAPEX analysis for WLAN </li><li> 5. - OPEX: Year O&amp;M Site lease Backbone data Electricity Total cumulative OPEX Year 1 33910.8 84546 85470 1709.4 205636.2 Year 2 33483.45 84546 85470 1709.4 410845.05 Year 3 33077.4675 84546 85470 1709.4 615647.9175 Year 4 32691.78413 84546 85470 1709.4 820065.1016 Year 5 32325.38492 84546 85470 1709.4 1024115.887 Total (Keuro)= 3,076,310.16 Table 4.2 OPEX analysis for WLAN - NPV: Table 4.3 net present value for WLAN Year 1 2 3 4 5 Total payments 544744.2 745679.55 946422.5925 1146982.943 1347369.736 Discount rate 10% 10% 10% 10% 10% New value 495222 616264.0909 711061.3017 783404.7831 836610.599 -3442562.775NPV= </li><li> 6. B. HSPA Micro: As we calculated before, we have already 4619 sites with a radius of 0.289 Km. Now, for HSPA with a radius of 0.1 Km we clearly need to deploy more site in order to maintain a 100% coverage. Year area to be covered each year New cell area Existing sites (924 can be utilized yearly) Total sites needed New sites required 0 0% 0 0 4619 0 0 1 20% 200 Km2 0.02598 Km2 924 7698 6774 2 40% 200 Km2 0.02598 Km2 8622 7698 6774 3 60% 200 Km2 0.02598 Km2 16320 7698 6774 4 80% 200 Km2 0.02598 Km2 24018 7698 6774 5 100% 200 Km2 0.02598 Km2 31716 7698 6774 Table 3.3 coverage demand for HSPA micro Before we deploy these sites, we check the capacity demand: Year Total demand (Mbps per Km2) Total demand per new site (Mbps) HSPA Capality (Mbps) *assumtion 1 67.14754098 1.744493115 3 2 52.22586521 1.356827978 3 3 49.73891925 1.292217122 3 4 50.36065574 1.308369836 3 5 52.22586521 1.356827978 3 Table 3.4 Capacity demand for HSPA micro sites As we can see, Coverage is the only issue here, the deployed sites are enough to provide the required capacity. Now the financial aspects are discussed: - CAPEX: Yea r Sites Number of sites Equipment Installation and buildout Data line installation Total CAPEX 1 New 7698 115470 270960 38490 424920 2 New 7698 109696.5 270960 38490 419146.5 3 New 7698 104211.675 270960 38490 413661.675 4 New 7698 99001.0912 5 270960 38490 408451.0913 5 New 7698 94051.0366 9 270960 38490 403501.0367 Total (KEuro)= 2,069,680.30 Table 4.4 CAPEX analysis for HSPA </li><li> 7. - OPEX: Year O&amp;M Site lease Backbone data Electricity Total cumulative OPEX 1 42492 30792 7698 1539.6 82521.6 2 41914.65 30792 7698 1539.6 164465.85 3 41366.1675 30792 7698 1539.6 245861.6175 4 40845.10913 30792 7698 1539.6 326736.3266 5 40350.10367 30792 7698 1539.6 407116.0303 Total (Keuro) = 1,226,701.42 Table 4.5 OPEX analysis for HSPA - NPV: Year 1 2 3 4 5 Total payments 507441.6 583612.35 659523.2925 735187.4179 810617.067 Discount rate 10% 10% 10% 10% 10% New value 461310.5455 482324.2562 495509.6112 502142.8986 503329.4217 NPV= -2,444,616.733 Table 4.6 net present value for HSPA </li><li> 8. C. UMTS Micro: As we calculated before, we have already 4619 sites with a radius of 0.289 Km. Now, for UMT micro with a radius of 0.15 Km we clearly need to deploy more site in order to maintain a 100% coverage. But the interesting thing is we wont need that from year 1. Year area to be covered each year New cell area Existing sites (924 can be utilized yearly) Total sites needed New sites required 0 0% 0 0 4619 0 0 1 20% 200 Km2 0.05846 924 3421 2497 2 40% 200 Km2 0.05846 4345 3421 2497 3 60% 200 Km2 0.05846 7766 3421 2497 4 80% 200 Km2 0.05846 11187 3421 2497 5 100% 200 Km2 0.05846 14608 3421 2497 Table 3.5 coverage demand for UMTS micro Before we deploy these sites, we check the capacity demand: Year Total demand (Mbps per Km2) Total demand per new site (Mbps) UMTS capacity (Mbps) *assumtion 1 67.14754098 3.925445246 1 2 52.22586521 3.05312408 1 3 49.73891925 2.907737219 1 4 50.36065574 2.944083935 1 5 52.22586521 3.05312408 1 Table 3.6 Capacity demand for UMTS micro sites As we can see here, After solving the coverage issue, we have now a capacity issue. The deployed sites are not enough for the capacity demand. Sectorizing and adding more carriers are the preferred options, only when that is not enough, adding new sites is introduced. Year Shortage in Capacity (Mbps) Solution 1 3 adding 2 secots (total 3) + adding one carrier to a sector 2 3 adding 2 secots (total 3) + adding one carrier to a sector 3 2 adding 2 secots (total 3) 4 2 adding 2 secots (total 3) 5 3 adding 2 secots (total 3) + adding one carrier to a sector Table 3.7 Solving the capacity issue Now lets look at the financial aspects (including additional sectors and carriers): </li><li> 9. - CAPEX: Year Sites # of sites Equipment I&amp;B* Sectors &amp; carriers Data line inst. Total CAPEX 1 New 3421 34210 99880 102630 17105 253825 2 New 3421 32499.5 99880 97498.5 17105 246983 3 New 3421 30874.525 99880 61749.05 17105 209608.575 4 New 3421 29330.79875 99880 87992.396 17105 234308.1948 5 New 3421 27864.25881 99880 83592.776 17105 228442.0348 Total (KEuro)= 1,173,166.80 Table 4.7 CAPEX analysis for UMTS *Installation and buildout - OPEX: Year O&amp;M Site lease Backbone data Electricity Total cumulative OPEX 1 25382.5 13684 6842 684.2 46592.7 2 24698.3 13684 6842 684.2 92501.2 3 20960.8575 13684 6842 684.2 134672.2575 4 23430.81948 13684 6842 684.2 179313.277 5 22844.20348 13684 6842 684.2 223367.6805 Total (KEuro)= 676,447.11 Table 4.8 OPEX analysis for UMTS - NPV: Year 1 2 3 4 5 Total payments 300417.7 339484.2 344280.8325 413621.4717 451809.72 Discount rate 10% 10% 10% 10% 10% New value 273107 280565.4545 258663.2851 282509.0306 280538.29 NPV= -1,375,383 Table 4.9 net present value for UMTS 5. Comparison and recommendation: The comparison will be shown using graphs. In terms of comparison are the number of sites, CAPEX, and OPEX: As we can see, we can exclude WLAN from consideration from the first glance. The number of sites required due to a very short coverage range make this option very unwise. Comparing the other two options, UMTS and HSPA, a UMTS site cost less to provide coverage to a certain area, even with the capacity requirements, adding more cells to the site in inevitable, but still due to less number of sites we require to fulfill both coverage and capacity demands the UMTS micro RAT would be the favorite choice. </li><li> 10. WLAN UMTS HSPA Number of sites 427350 17105 38490 0 50000 100000 150000 200000 250000 300000 350000 400000 450000 Total number of sites -4,000,000.00 -3,500,000.00 -3,000,000.00 -2,500,000.00 -2,000,000.00 -1,500,000.00 -1,000,000.00 -500,000.00 0.00 WLAN HSPA UMTS NPV [KEuro] NPV 0.00 500.00 1,000.00 1,500.00 2,000.00 2,500.00 3,000.00 3,500.00 4,000.00 4,500.00 5,000.00 WLAN HSPA UMTS Total commulative cost [in million Euro] OPEX CAPEX </li><li> 11. Appendix Below, there are some confusions, wrong assumptions, and mistakes that can appear in the process of tackling this assignment. 1. First confusion: Year User demand (Mbps) Total demand for all users (Mbps) Total demand (Mbps per Km2 ) 1 0.111912568 13429.5082 67.14754098 2 0.130564663 20890.34608 52.22586521 3 0.149216758 29843.35155 49.73891925 4 0.167868852 40288.52459 50.36065574 5 0.186520947 52225.86521 52.22586521 Table 1.3 Capacity demand One confusion might appear from the results of this table, the total demand (Mbps per km2 ) appears like this: The reason behind this behavior is that here we are talking about the total demand for all users at any given year per square kilometer. This is not supposed to increase exponentially, unlike the single user demand per year (Mbps per user), and the total demand for all users per year (Mbps per all users), which both of them are independent of the covered area. The user density (the number of users divided by the covered area) is decreasing, but not at a constant rate: Year # of users / covered area Rate (year x) / (year x+1) 1 600 1.5 2 400 1.2 3 333.3333333 1.11 4 300 1.07 5 280 NA 0 50 100 0 1 2 3 4 5 6 demand (Mbps per km2) </li><li> 12. Year Total demand for all users change (year x) / (year x+1) 1 1.285714286 2 1.05 3 0.987654321 4 0.964285714 5 NA Therefore, we can notice that while the absolute demand (Mbps) is increasing yearly, the demand per covered square kilometer is not. 2. Wrong assumption in the report was how to use existing sites, I decided to use them in year one, or if not all of them needed, to use the rest in the year 2. Now, I use them according to the covered area (year 1 20% must be covered, so I can utilize 20% of the existing sites), since I have an increment of 20% and 4619 existing sites, so yearly I have in my disposal 924 sites. This does not imply a change in the number of required sites, but only how many to be deployed yearly. 3. Another wrong assumption in the report was how to deal with year 0, In the report I added OPEX expenses for the existing sites, thinking that although the coverage demand will start at year 1, still as an operator there is a responsibility to run the existing network. 4. UMTS calculations were mistakenly using the HSPA number of sites (excel sheet mistake) 5. OPEX is calculated as a cumulative quantity (total opex of year 3 =year 3 opex plus the opex of year 2 and year 1, since we are responsible for the operation and maintenance of what we built up before) OPEX and CAPEX for each RAT over the years: UMTS: In year 3, we need less sectors than other years HSPA: 0 100 200 300 0 1 2 3 4 5 6 Million[Euro] Years CAPEX OPEX 0 100 200 300 400...</li></ol>

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