Enterprise Small Cells - the business case
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Transcript of Enterprise Small Cells - the business case
Enterprise Small Cells: The Business Case
“Distributed Antenna
System (DAS), is often not
economical for many
enterprises or operators that serve
small to large enterprise customers”
“Dissatisfaction with in-building coverage was highest in the US, where 61% of enterprises complained of problems, while half of German firms, 43% in Spain and 39% in the UK had similar issues.”
“Poor indoor mobile coverage and capacity affects 39 percent of large businesses in Britain”
Gordon Mansfield, Chairman, Small Cell Forum Lisa Garza, Marketing Chair, Small Cell Forum
• Small Cell Forum’s forthcoming Release 2 will focus on the opportunity and deployment issues for small cells deployed in Enterprise environments
• This presentation provides a ‘sneak preview’ of a small part of our work in this area, focusing on: • The Market Drivers for Enterprise small cells • The Business Case for Enterprise small cells
Introduction
Small Cell Forum PUBLIC
The opportunity for small cells extends well beyond Enterprise offices. We see a great opportunity for the technology to address the needs of a wide range of business environments, including the following:
What do we mean by ‘Enterprise’?
Enterprise Types
-Small business / SoHo
-Medium Enterprises / Mid-sized office buildings
-Large Enterprise / corporate campuses
-Multi dwelling units
-Retail shops
-Shopping malls
-Medical facilities and hospitals
-Government and municipal buildings
-Hotels / Convention Centres
-Underground facilities
The needs of these environments are very diverse and any solution needs to be tailored closely to those needs. In common however they are: • Premises-based • Generally indoors • Needing consistent, high-
quality coverage
Differences emerge when considering their needs for specific services and analytics
Small Cell Forum PUBLIC
Market Drivers for Enterprise Small Cells
Small Cell Forum PUBLIC
Situation
• 39%-61% of offices have noticeably poor in-building coverage1
• Yet over 80% of total mobile data traffic is indoors2
• Serving in-building traffic from outdoors places a heavy load on Operator spectrum, reducing potential efficiency3
• DAS plays a useful role in public buildings and the very largest offices, but costs are often prohibitive for smaller Enterprises - which are in the majority
1 YouGov research, Feb 2013, figures for UK and US respectively 2 Paolini M. “Mobile data moves indoors”, September 2011 3 Signals Research Group: “Valuable Licensed Spectrum is a Largely Under-Utilized Asset Indoors”, Feb 2013
Key Drivers
Small Cell Forum PUBLIC
For Enterprises • Essential coverage that their business needs
• Opportunity for value-added services
For Operators • Can deploy small cells like Wi-Fi (may need to re-engineer business processes)
• Establish good relationship by providing services in demand
• Huge opportunity for those who move quickly to gain market share
For Small Cell Vendors • High quality voice is tablestakes
• Opportunity for value-added data services
Voice is Essential and May Be a Competitive Opportunity
• Voice coverage is variable • 39%-61% of offices have noticeably poor in-building
coverage1
• In the past, Enterprises have accepted this… • ... but are now less willing to do so
• Ubiquitous high-quality voice increasingly seen as essential (“hygiene factor”)
• Enterprises demanding coverage & will switch • 87%2 of businesses would switch provider to guarantee
coverage • 72%2 of businesses are interested in small cells to
improve cellular performance
1 YouGov research, Feb 2013, figures for UK and US respectively 2 Alcatel Lucent, Feb 2013 Small Cell Forum PUBLIC
Data & Services Are Additional Upsides
• Data offload represents an important opportunity for Operators to reduce and contain costs
• There are real synergies for a combination of small cells and Wi-Fi (see the Forum’s work on Integrated Small-Cell/Wi-Fi Networks)
• At the same time, small cells will actually stimulate and enable additional usage
• Value-added services are still nascent but offer opportunities • Monetising voice • Location - which is especially important in retail environments • Higher value services in Corporations (PBX features, on-net
calling) • This could be $100 Billion opportunity1 for carriers
1 Exact Ventures: “Rethinking In-building Wireless: The ‘Consumerization’ of IT and the Emergence of the Mobile Enterprise Enabled by Mobile Operator Managed Services and the Emergence of Enterprise Small Cells” Oct 2012
The Business Case for Enterprise Small Cells
Small Cell Forum PUBLIC
• We commissioned an independent analysis of the business case for Enterprise small cells from Real Wireless, a leading UK-based wireless advisory firm
• This includes qualitative and quantitative analysis of a wide range of Enterprise environments
• The business case is examined from both the Enterprise and Operator viewpoints – it is essential that both see clear value
Business Case Analysis
Small Cell Forum PUBLIC
The work includes in-depth case studies of the value of small cells in a wide range of Enterprise environments
Case Studies
Large Enterprise offices in the US
Small Enterprise office in Norway
Hospital in the UK
Medium-sized Enterprise office in the UK
Convention Centre with Hotel in Japan
Retail Chain in Greece
Small Cell Forum PUBLIC
Parameters for the case studies were carefully arrived at based on feedback from members and Real Wireless’ own research However they also varied key parameters to understand how the business case varies based on these sensitivities:
Sensitivity Analysis
Operator led vs. Enterprise led deployment
Trade-offs for small cells & DAS as building size varies
Operator offer to the Enterprise beyond coverage
Synergies from deployment alongside Enterprise Wi-Fi
Solution cost – varying deployment & system costs
Regional impacts on offload benefits
Building size
Small cell role in stimulating demand
Small Cell Forum PUBLIC
Modelling Approach
Finan
cial
model
The modelling considers the costs and benefits, and divides these between the Operator and the Enterprise depending on the deployment approach (Operator-led or Enterprise-led)
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Example: Medium Enterprise in UK
The challenge: • 180 users • 3 floors • 2700 m2 • Need full managed service • Want Operator to handle entire
deployment
The solution: • 4 small cells, remotely configurable • Dedicated backhaul functionality • Centrex capabilities to replace
existing PBX • Cloud-based management, enabled
by Operator but allowing user configuration by Enterprise
The outcome: • 25% increase in voice
traffic • 50% increase in data
traffic • 10% increase in voice
and data ARPU • Reduced spend for
Enterprise on PBX and management
Small Cell Forum PUBLIC
First Year Costs
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
Total Initial Capex Total Initial Opex
To
tal C
ost
s in
Fir
st Y
ear:
GB
P
Local management
Enhanced Services
Core functionality
Backhaul - Medium
System Integration
Local Controller
LAN Port
Access Point Standard
• Costs are dominated by operational expenditure (OpEx) even in the first year • Hence total cost insensitive to hardware cost • Local management costs indicate a need for high efficiency and automation
Small Cell Forum PUBLIC Source: Real Wireless
• Shows lifetime value of customer to the Operator, including impact of all CapEx and OpEx • Shows major value enhancement, even with conservative assumptions • Even if only a single one of the benefits was realised in practice, business case is still positive
Operator Business Case: Medium Enterprise
64,800
(19,832)
33,312
24,093
55,640
27,115 185,128
81,153 266,280
0
50,000
100,000
150,000
200,000
250,000
300,000
Start value OperatorSC Costs
Incr. voice& data
Networkcost
savings
Reducedchurn
Lowerretention
cost
Total valuebasic
Enhancedservices
Total valueenhanced
Custom
er Lifetim
e Va
lues -‐O
perator: GBP
100% 286% 411%
Basic case
Enhanced case
Source: Real Wireless
780% return on investment
Small Cell Forum PUBLIC
Enterprise Business Case: Medium Enterprise
37,544
28,227
(25,467)
40,305
70,568
35,284
(81,153)
65,003
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
Inc voice &data benefit
Devicemanagem'tsavings
EnterpriseSC Costs
Total valuebasic
PBX savings Desktophardwaresavings
Enhancedservice costs
Total valueenhanced
Custom
er Life
time Va
lues -‐Enterprise: GBP
• Enterprise benefits arise from both direct operational cost savings and from benefits to their own business growth and profitability
61% return on investment
Source: Real Wireless Small Cell Forum PUBLIC
• The advent of Enterprise small cells builds on the established technology, standards and learnings of residential femtocells
• Operators can provide solutions to Enterprises which were previously not accessible at a reasonable cost
• Enterprises are demanding solutions, and agile Operators who provide such solutions can produce massive benefits in satisfying their customers
• Independent studies show a very strong business case for both the Enterprise and the Operator, provided the deployment approach is tailored to Enterprise needs
• Small Cell Forum’s Release Two will provide an ‘all you need to know’ guide to how to achieve these benefits
Summary
Small Cell Forum PUBLIC