Fixed Wireless EconomicsFixed Wireless Economics

Personal Background:SkyPilot – outdoor WiFi meshCovad – DSL / VoIP Genuity – nationwide IP access Hughes – satellite dataATT/Intel – future RBOC network

Personal Background:SkyPilot – outdoor WiFi meshCovad – DSL / VoIP Genuity – nationwide IP access Hughes – satellite dataATT/Intel – future RBOC network

Duncan M. Davidsondd@vpvp.com

Duncan M. Davidsondd@vpvp.com

Selected VPVP Investments:Metricom – Ricochet NetworkDSL.Net – DSL / VoIP Aerie – nationwide IP accessBroadstorm – OFDM FWBCBeyond – VoIP for SME

Selected VPVP Investments:Metricom – Ricochet NetworkDSL.Net – DSL / VoIP Aerie – nationwide IP accessBroadstorm – OFDM FWBCBeyond – VoIP for SME

The Promise: Wireless is *Much* CheaperThe Promise: Wireless is *Much* Cheaper

Fiber to home $200billion ($1,256/home)

FTTN / All IP Cable $ 20 billion ($200/home)

WiMAX/WiFi Cloud$ 2 billion ($20K/sq mile)

Customer Mesh $ 0.2 billion ($2/home)

Nationwide Buildout Cost(Order of Magnitude)

Operator EconomicsOperator Economics

Five DriversFive Drivers

network new subs sites subs services

B/SB/S

POPPOP

BHBH

MktgMktg

CPECPE

RentRent

T3T3Cust CareCust Care

VoIPVoIP

DataData

Depreciated over useful life

Amortized over lifetime (1/churn rate)

FieldField

Site costs grow by ^2Site costs grow by ^2

No CPE is the new goal No CPE is the new goal

Equipment getting cheapSites & spectrum priceyEquipment getting cheapSites & spectrum pricey

Nothing special hereNothing special here

VoIP is a cheap revenue kicker!VoIP is a cheap revenue kicker!SpectrumSpectrumSpectrumSpectrum

MetricomMetricom

Technology:

2.4 GHz mesh backhaul

900 MHz fronthaul

28.8 kbps 128 kbps

Proprietary CPE

Economics:

7 16 sq mi

$33k /sq mi + CPE

Technology:

2.4 GHz mesh backhaul

900 MHz fronthaul

28.8 kbps 128 kbps

Proprietary CPE

Economics:

7 16 sq mi

$33k /sq mi + CPE

¼ mile radius¼ mile radius

2 Radio Poletop2 Radio Poletop

Metro WiFiMetro WiFi

Technology:

2.4 5.8 GHz mesh backhaul

2.4 GHz fronthaul

CPE required for 75% of users

330 Kbps / user

Economics:

Cheaper radio BUT smaller radius

16 25 /sq mi

$20k $30K/sq mi + 75% CPE

Technology:

2.4 5.8 GHz mesh backhaul

2.4 GHz fronthaul

CPE required for 75% of users

330 Kbps / user

Economics:

Cheaper radio BUT smaller radius

16 25 /sq mi

$20k $30K/sq mi + 75% CPE

< ¼ mile radius< ¼ mile radius

1 Radio Poletop1 Radio Poletop

3G WiFi3G WiFi

Technology:

2.4 GHz mesh backhaul

2.4 GHz fronthaul

330 kbps / user

No CPE required

Economics:

Multi-radio units with directional antennas

25 40 /sq mi

$50K $200K /sq mi

Technology:

2.4 GHz mesh backhaul

2.4 GHz fronthaul

330 kbps / user

No CPE required

Economics:

Multi-radio units with directional antennas

25 40 /sq mi

$50K $200K /sq mi

Engineer for Engineer for 85%+ coverage85%+ coverage

Star GridStar Grid

WiMAXWiMAX

Technology:

5.8 GHz backhaul

2.5/3.5/5.8 GHz fronthaul

384 Kbps /user

Mixed CPE model

Economics:

Multi-radio B/S with cheap CPE

½ to 1 B/S / sq mi

$125K /sq mi + 80% CPE

Technology:

5.8 GHz backhaul

2.5/3.5/5.8 GHz fronthaul

384 Kbps /user

Mixed CPE model

Economics:

Multi-radio B/S with cheap CPE

½ to 1 B/S / sq mi

$125K /sq mi + 80% CPE

CellularCellular

* Source: joint Intel / ArrayComm analysis of interference-limited 802.16 networks

¼ Mile: ¼ Mile: No CPENo CPE

½ Mile: ½ Mile: Inside CPE*Inside CPE*

1 Mile: 1 Mile: Mounted CPEMounted CPE

Source: WiMAX Forum. Note that B/S cost include backhaul, site planning and other network gear, and doubles for SME

WiMAX Mesh(or mutant WIFi MAC)WiMAX Mesh(or mutant WIFi MAC)

Technology:

5.8 GHz (WiMAX*) mesh backhaul

2.4 GHz (WiFi) fronthaul

1 3 Mbps /user

Timed CPE Model (as mesh builds, CPE goes away)

Economics:

Start thin, grow to no CPE

5 25 /sq mi

$10K + CPE $20K /sq mi

Technology:

5.8 GHz (WiMAX*) mesh backhaul

2.4 GHz (WiFi) fronthaul

1 3 Mbps /user

Timed CPE Model (as mesh builds, CPE goes away)

Economics:

Start thin, grow to no CPE

5 25 /sq mi

$10K + CPE $20K /sq mi

Grows organically Grows organically to 100% coverageto 100% coverage

Sectorized MeshSectorized Mesh

* Or Mutant WiFi MAC

Customer MeshCustomer Mesh

Technology:

5.8 GHz (WiMAX*) mesh backhaul

2.4 GHz (WiFi) fronthaul

1 3 Mbps /user

Timed CPE Model (as mesh builds, CPE goes away)

Economics:

Start thin, grow to no CPE

5 25 /sq mi

$5K $2K /sq mi

Technology:

5.8 GHz (WiMAX*) mesh backhaul

2.4 GHz (WiFi) fronthaul

1 3 Mbps /user

Timed CPE Model (as mesh builds, CPE goes away)

Economics:

Start thin, grow to no CPE

5 25 /sq mi

$5K $2K /sq mi

Customers Customers areare the infrastructurethe infrastructure

Sectorized MeshSectorized Mesh

* Or Mutant WiFi MAC