Alternative ownership and operations models: Hospitality
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Transcript of Alternative ownership and operations models: Hospitality
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181.09.01Alternative ownership and operations models:
February 2017
www.smallcellforum.orgscf.io
Hospitality
© Small Cell Forum Ltd 2017
Contents
• Why do we need new ownership and operations models?• Introduction to our approach • Application to key verticals
• Case 1: Hospitality• Key takeaways
© Small Cell Forum Ltd 2017
1. Why do we need new ownership models?
• The present operator-led model has, or will soon, hit its limits• While good indoor mobile coverage is now a business necessity, MNOs typically serve only a small
percentage of requests for indoor coverage• The development of alternative business models is critical to triggering the mass deployment of small
cell solutions as this will:• extend the value chain for indoor solutions to more parties;• distribute the upfront capex and risk across these partners;• introduce new opportunities for returns on small cell investment;• reduce financial risk by shifting some of the investment from capex to opex;• increase the size of the addressable market.
• No matter how small cells are acquired, there is a requirements for cohesive integration with the macro network, a range of backhaul options, multi-technology SON, and interoperability – at an affordable cost for the Enterprise to acquire and operate over their life.
Level of interest in small cells, and plans to deploy
Trave
l and
trans
port
Educ
ation
Health
care
Constr
uctio
n
Softw
are/te
ch
Finan
cial se
rvice
s
Hospit
ality
Profes
siona
l servi
ces
Retail
Manufa
cturin
g
Govern
ment
Utilitie
s
Logis
tics/d
istrub
ution
012345678
020406080
7.25 7.11 7.08 7.06 7.03 7.02 7 6.75 6.69 6.63 6.38 6.255.3
Interest level Adopted or planning small cells
Scal
e 1-
10
% o
f ent
erpr
ises
94% said poor indoor service has an impact on business, 42% serious (>7) 63% would pay more for improved service
Nemertes Research enterprise survey March 2016
© Small Cell Forum Ltd 2017
94% said poor indoor service has an impact on business, 42% serious (>7) 63% would pay more for improved service
Reasons for interest in small cells cites by more than 25%
0204060
% o
f res
pond
ents
Nemertes Research enterprise survey March 2016
© Small Cell Forum Ltd 2017
Top reasons to deploy small cells in public venues
Make the venue a more desirable destination for customers
Support mobile commerce
Support socal media engagement
Added-value service
Many visitors don't know or want to sign on to Wi-Fi
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0%
42.0%
38.3%
35.8%
33.7%
27.2%
94% said poor indoor service has an impact on business, 42% serious (>7) 63% would pay more for improved service
Nemertes Research enterprise survey March 2016
© Small Cell Forum Ltd 2017
United States enterprise market
2012 USA enterprise census data• Assume
• 500+ employee enterprise minimum• Manage costs with MNO contract(s)
• Total market size• 1.2 million enterprises• 59.9 million employees
• 30% market need is• 360,000 enterprises• 18 million employees• Unknown quantity of sites
© Small Cell Forum Ltd 2017
FIPS Code
Geographic area description
Enterprise employment size
Number of establishments Employment
00 United States 1: Total 6,692,235 115,919,945
00 United States 2: 1-4 2,844,581 5,901,921
00 United States 3: 5-9 1,004,118 6,523,859
00 United States 4: 10-19 629,856 7,970,161
00 United States 5: 20-99 684,038 19,382,785
00 United States 6: 100-499 356,516 16,265,644
00 United States 7: <500 5,519,109 56,044,370
00 United States 8: 500+ 1,173,126 59,875,575
For definitions, see http://www.census.gov/programs-surveys/susb/about/glossary.html.
And a view of the EU market
92%
7%1%
29%
20%17%
34%
21%
18%
18%
43%
13 2
1
32
Enterprises numberEmployees numberValue added
EU27 enterprises contribution by category
MicroSmallMediumLarge
Company category
Employees Turnover or Balance sheet
Micro < 10 < €2 million < €2 millionSmall < 50 < €10 million < €10 millionMedium-sized < 250 < €50 million < €43 million
© Small Cell Forum Ltd 2017
And a view of the EU market
Figure 1: Number of enterprises by sector and size EU-27, 2012
Perc
enta
ge sh
are
of se
ctor
en
terp
rises
by
size
Num
ber o
f ent
erpr
ises,
Milli
ons
Micro Small Medium Large Total enterprises in the sector
B Mining and quarrying C ManufacturingD Electricity, gas, steam and air
condition supply
E Water supply, sewerage, waste management and remediation activities
F Construction
G Wholesale and retail trade; repair of motor vehicles and motorcycles
H Transportation and storage
I Accommodation and food services
J Information and communication L Real estate activities
M Professional, scientific and technical activities
N Administrative and support services
© Small Cell Forum Ltd 2017
© Small Cell Forum Ltd 2017
What is our objective?
• Understand the challenges of the current models• Derive new models to overcome these• Provide enterprise with new channels & approaches to resolve their indoor coverage
needs• Provide MNO with new models and partners to help them address a broader market
while minimising increased CAPEX investment• Address more of the market:
• Improving the mobile service available to businesses and consumers• Presenting growth opportunities for equipment vendors, service businesses and
MNO• Build on high quality indoor mobile coverage to create new application and service
opportunities for businesses and their customers
2. Introduction to our approach
© Small Cell Forum Ltd 2017
The building blocks for our models:
Sales and marketing On-premise deployment Operations and maintenance
Supporting mobile infrastructure
• Marketing and sales to Enterprise
• Small cell equipment purchase
• Project management• Planning and design• Connectivity• Installation and
commissioning• Acceptance testing• Optimization
• System monitoring• User/enterprise tech
support• System upgrades and
expansions
• Spectrum ownership• Mobile core network• WAN backhaul
2. Introduction to our approach
A few simplified definitions of key players as used in our eco-system models :• Mobile network operator (MNO): Provides mobile voice and data service to businesses and consumers. Typically the owner
of spectrum licenses and the mobile core network. Mobile service can be offered to direct subscribers or via intermediaries such as neutral host service providers or MVNO.
• Neutral host (service provider) (NH): Provides a managed indoor service to the enterprise via a neutral host network and acts as an intermediary between the MNOs and the enterprise . This is particularly important when indoor mobile coverage from multiple MNO is required by the enterprise. The NH could offer a fully managed service themselves or integrate part of the service from other specialist application partners. The small cell solution for a neutral host network could be a single multi-operator solution or multiple single operator solutions from each of the MNOs which are then integrated by the NH.
• Systems integrator (SI): Acts as the prime contractor to manage the design and build of the indoor small cell solution for the enterprise. The SI will use a combination of in-house experts and specialist application partners. Unlike the NH the SI will not be responsible be the intermediary with the MNO or provide an ongoing managed service of the small cell network
• Enterprise: The company occupying the building and seeking to provide mobile coverage to its customers, visitors and employees or the building owner offering this service to its business tenants
• Small cell vendor: The provider of the primary small cell equipment used in the indoor network
© Small Cell Forum Ltd 2017
© Small Cell Forum Ltd 2017
New models can expand the market by broadening ecosystem participation
Examples to illustrate the shift in operational responsibilities with different ownership modelsCategory or stage Function Current MNO-Led Neutral host Enterprise purchase
Sales and marketingSmall cell equipment purchase Mobile operator Neutral host EnterpriseMarketing and sales to enterprise Mobile operator Neutral host Small cell vendor
On-premise deployment
Project management Mobile operator Neutral host System integratorPlanning and design Mobile operator System integrator System integratorConnectivity Mobile operator Neutral host EnterpriseInstallation and commissioning Mobile operator System integrator System integratorAcceptance testing Mobile operator System integrator System integratorOptimization Mobile operator System integrator System integrator
Operations and maintenanceSystem monitoring Mobile operator Neutral host Mobile operatorUser/Enterprise tech support Mobile operator Neutral host Mobile operatorSystem upgrades and expansions Mobile operator Neutral host System integrator
Supporting mobile infrastructure
Spectrum ownership Mobile operator Mobile operator Mobile operatorMobile core network Mobile operator Mobile operator Mobile operatorWAN backhaul Mobile operator Neutral host Enterprise
Summary risk and reward for key partners
© Small Cell Forum Ltd 2017
Mobile operator Neutral host Systems integrator EnterpriseRisks as they move from total control to a federated model; especially with regard to security and QoE.Reward as other entities provide capital and enable acceleration of construction delivering improved network KPIs.Able to satisfy key safety services such 911.
Risks as they move from well understood technology and business models.Adapting to meet specific regulatory/security requirements of certain enterprises.Reward as they can address buildings and venues that could not meet business case in the past.
Risks as projects move from expensive long duration to short fast moving.Reward as they take on increased project volume and expand their services business.
Risks as they take on responsibility for cellular “last mile”.Reward as they satisfy demand for seamless cellular operation while also delivering key safety services such 911 as well as other business and consumer oriented services such as mobile check-in.
© Small Cell Forum Ltd 2017
Mobile network operators – risk and reward
Risk• Brand perception
• Poorly performing Enterprise installed infrastructure harms reputation
• Operations• The party that is building and operating small cells
must have necessary skills and tools• Operators without well developed
methodology/automation to federate their operations with enterprises and neutral host providers may face challenges
Reward• Customer satisfaction
• Mobile devices just work without intervention• Public safety
• Emergency services dispatch accuracy helps first responders get to scene of emergency
• Regulatory compliance for indoor dispatch • ROI improvements
• Creative financial approaches to providing small cells to enterprises can satisfy their needs
• Small cells Capex can be transferred to other eco-system partners who would purchase elements and have ROI attached to them
• Enabling dark spectrum in a building that an operator bought from government increases ROI
• Opportunity to add further value added services such as smart buildings
© Small Cell Forum Ltd 2017
Neutral host provider – risk and reward
Risk• Competitors
• If NH does not embrace small cells, their small cell enabled competition could displace them
• Model development • Well understood models for technology and
business must be adapted to insure customer satisfaction and profitability
• Small cell systems need to support NH visibility to support value creation capabilities
• ROI• Not all opportunities will be accessible to NH
providers
Reward• Scaling up operations
• Fixed investments in NOCs, OSS/BSS, and services by NH providers are spread across more properties
• More revenue from more sites that failed business case in prior models
• Future business• Building owners who benefit in leasing by
superior mobile coverage could want more of their properties included
• Other mobile operators join NH to enable their spectrum in NH managed buildings
© Small Cell Forum Ltd 2017
Systems integrator – risk and reward
Risk• Operator relationship
• Installations resulting in poor KPI’s can damage reputation.
Reward• Enterprise market
• Market opening once Enterprises are allowed to acquire small cells without operator funding.
• Subcontracting to traditional enterprise SI’s who don’t have skills/relationships to handle cellular
• Services revenue• Lifecycle support, break-fix, and
maintenance contracts enable SI’s to support enterprise small cells for any of the possible buyers.
© Small Cell Forum Ltd 2017
Enterprise – risk and reward
Risk• Operator relationship
• Ideally, risk is reduced when mobility is managed by IT and not Procurement.
• Operations• Enterprise may not be able to support end
user “cellular last mile” adequately.• Operator may not have a well developed
methodology/automation to federate their operations with enterprise.
Reward• Employee satisfaction
• It’s a big win for IT when mobile devices just work without intervention.
• Public safety• Emergency services dispatch accuracy
helps first responders get to scene of emergency.
• Financial benefits• Zero rating of domestic consumption while
on the enterprise’s small cell network rewards Enterprise procurement.
© Small Cell Forum Ltd 2017
New models can create value for partners in the ecosystem
• Extending the ecosystem extends the market• Mobile service is improved for businesses and consumers• New deployment service opportunities are established
Consumer
Enterprise
MNO
SC vendor
Consumer
Enterprise
MNO
SC vendor
NH
SI
App developers
Advertising
Investors
Consumer
Enterprise
MNO
SC vendor
NH
SI
‘A growing pie has more slices for all’
© Small Cell Forum Ltd 2017
3. Applying our thinking to key verticals
Verticals to be assessed:1. Hospitality2. Healthcare3. Commercial Property4. Stadiums/ event locations5. Shopping malls6. Corporate office
© Small Cell Forum Ltd 2017
A rapidly growing sector…– with increasing sensitivity to social media
• The global hotel industry revenue is predicted to reach $550 billion US dollars in 2016• An increase in revenue of almost $100 billion US dollars in five years
Source: The Global Hotel Industry and Trends for 2016Killarney Hotels 2015
The power of TripAdvisor is legendary, so good hotels don’t want to get review headlines like these: “Wi-Fi and mobile coverage is poor so be prepared.”
“All very good – but poor mobile signal coverage.”
”Almost no mobile connection. Hotel is fantastic in every way: rooms, staff, view, surroundings. But, if you need to be available through mobile, this is not the place to stay.”
© Small Cell Forum Ltd 2017
Hotels.com Mobile Travel TrackerA global study of 9,200 travellers across 31 countries. May 2016
The Hotels.com™ Mobile Travel Tracker uncovers the true impact mobiles are having on our booking and travel behaviours. It reveals that as mobile usage continues to grow and smartphones keep getting smarter, they’re shaping our travel mind-sets more than ever before, with almost a third of people admitting they book more trips than ever thanks to mobile.
Current behaviors:• 42% of people globally have booked a hotel on mobile;
rising to 53% for the under 30s.• 76% of travelers named the mobile device their number
one travel accessory• 42% of people have made a same day hotel booking
thanks to mobile, with 14% even booking their hotel in the airport departure lounge
• 47% of people say their mobile device is their primary information source for finding interesting spots, events and restaurants whilst away
Future expectations:• 35% would use their mobile to book a restaurant or taxi
whilst travelling • A third would be happy using their mobile at a self
check-in kiosk at a hotel.• Travelers also said they would like to have a more two-
way conversation with hotels via mobile during their stay. • 31% would happily instant message a hotel• 30% would order room service on mobile• 32% would welcome push notifications with
destination information from the hotel.
© Small Cell Forum Ltd 2017
SCF Hospitality deployment stories
© Small Cell Forum Ltd 2017
SCF Hospitality deployment stories
© Small Cell Forum Ltd 2017
Drivers for using this model:• Poor macro coverage from certain operator(s)• Specific MNO agreement(s) at Company level• Limited in-house technical expertise• Simple and reliable MNO managed service
Category or stage Function Current MNO-Led
Sales and marketingSmall cell equipment purchase Mobile operator
Marketing and sales to enterprise Mobile operator
On-premise deployment
Project management Mobile operatorPlanning and design Mobile operatorConnectivity Mobile operatorInstallation and commissioning Mobile operator
Acceptance testing Mobile operatorOptimization Mobile operator
Operations and maintenance
System monitoring Mobile operatorUser/Enterprise tech support Mobile operator
System upgrades and expansions Mobile operator
Supporting mobile infrastructure
Spectrum ownership Mobile operatorMobile core network Mobile operatorWAN backhaul Mobile operator
MNORisk:• Limited market addressed –
unsatisfied business and consumer customers
• Only able to serve a percentage of the customers in the hotel reducing ROI
Reward:• Fully managed service fee
HotelRisk:• May require multiple MNO• Expected to cover
system costReward:• Full MNO managed service
Models for the Hospitality sector1. MNO led
© Small Cell Forum Ltd 2017
Models for the Hospitality sector2. Hotel purchases directly
Drivers for using this model:• Unable to source system from MNO/reduce MNO service fee• May be closest to existing Wi-Fi model• Use in house technical experts or existing
MNORisk:• Reduced control of system
performance• SI approval process may be
requiredReward:• Address more of the market
HotelRisk:• Interaction with multiple
parties. May not secure all MNOReward:• Leverage in house technology /
existing SI partnerships
Category or stage Function Enterprise purchase
Sales and marketingSmall cell equipment purchase Enterprise
Marketing and sales to enterprise Small cell vendor
On-premise deployment
Project management System integratorPlanning and design System integratorConnectivity EnterpriseInstallation and commissioning System integrator
Acceptance testing System integratorOptimization System integrator
Operations and maintenance
System monitoring Mobile operatorUser/Enterprise tech support Mobile operator
System upgrades and expansions System integrator
Supporting mobile infrastructure
Spectrum ownership Mobile operatorMobile core network Mobile operatorWAN backhaul Enterprise
SIRisk:• Interaction with multiple
partiesReward:• New service opportunity
Small cell vendorRisk:• Interaction with multiple
partiesReward:• Address more of the market
© Small Cell Forum Ltd 2017
Models for the Hospitality sector3. Neutral host
Drivers for using this model:• Unable to source system from MNO/reduce MNO service fee• Limited in-house or SI experience in mobile• Multi-operator service required
MNORisk:• Reduced control of system
performance• NH approval process may be
requiredReward:• Address more of the market
HotelRisk:• Higher fees for fully managed
serviceReward:• Full NH managed service for all
MNO services
NHRisk:Reward:• New service opportunity
Small cell vendorRisk:• Interaction with multiple
partiesReward:• Address more of the market
Category or stage Function Neutral host
Sales and marketingSmall cell equipment purchase Neutral host
Marketing and sales to enterprise Neutral host
On-premise deployment
Project management Neutral hostPlanning and design Neutral hostConnectivity Neutral hostInstallation and commissioning Neutral host
Acceptance testing Neutral hostOptimization Neutral host
Operations and maintenance
System monitoring Neutral hostUser/Enterprise tech support Neutral host
System upgrades and expansions Neutral host
Supporting mobile infrastructure
Spectrum ownership Mobile operatorMobile core network Mobile operatorWAN backhaul Neutral host
© Small Cell Forum Ltd 2017
Points to consider for the Hospitality segment
• Good indoor mobile coverage is now a business necessity• Revenue from meetings, conferences etc can be lost due to poor mobile coverage
• The smartphone is now the essential travel item• Customers are demanding more and more mobile services• This creates an opportunity for hotels to streamline operations and upsell services• Increasing demand may necessitate enhancement of existing Wi-Fi, potentially with small cell
• Key factors in selecting the right model• Only large chain hotels are likely to see the MNO invest in the small cell system; most others will
need to seek and alternative models and cover the cost through capex or service charges• In many cases the hotel will require indoor service from multiple MNO• MNO may require that ’approved’ NH & SI partners deploy small cell systems
© Small Cell Forum Ltd 2017
4. Key takeaways and next steps
• Good indoor mobile coverage is now a business necessity. This is both a challenge and an opportunity• The operator led business model is throttling deployment of small cell solutions• Alternative ownership and operations models will increase the addressable market by:
• Extending the value chain for indoor solutions to more parties• Distributing the upfront capex and risk across these partners and shifting some of this to OPEX• Introducing new opportunities for returns on small cell investment
• In future updates to this presentation we shall:• Address additional vertical markets such as Healthcare and Commercial Property• Investigate how new apps and services can create further value for the ecosystem• Consider shared spectrum models, such as CBRS, which may be an alternative model to providing
service to all enterprise employees, customers and guests