By: Farzin S. Yazdani

Key considerations in the operator owned model, of Neutral Host Distributed Antenna Systems.Recently I was asked my opinion about the key considerations when funding the operator owned model, of Neutral Host Distributed Antenna Systems (NH-DAS). His questions were fantastic so I had to make a Q&A out of it; here is the unedited letter.

----Hello Farzin and thanks for accepting my invitation.

I have read your post about Top 3 Ownership Models for Neutral Host Distributed Antenna Systems.

I would like know your opinion about what I should consider in formula for The Operator Ownership Model to base the decision on whether or not to fund a project. (I guess equipment investment as more relevant) What is the rental percentage that I can offer to venue and what I should to have from carriers? I know that all depends on the each case but there are any model from this type of negotiations?

Are you suggest me post or web sites with this information?

Thanks for your help.

Regards.Daniel----

Daniels question requires more information for me to answer properly. Information like: What will the system ultimately cost?

o Depends on size, services, performance, and the time it takes to plan, and roll out infrastructure

How much carrier and venue funding will be committed upfront?o Depends on funding model negotiated and adopted.

What are the monthly income potential vs cost projections?

One thing I like to do is break a question down into smaller parts to make it easier to answer. This helps me give definition to a problem; stay focused on the question at hand, and provides a more accurate response.

Key considerations of an operator owned model: “I would like know your opinion about what I should consider in formula for The Operator Ownership Model to base the decision on whether or not to fund a project.”Q1: In your opinion what are the key considerations when funding the operator owned model, of a NH- DAS

Prerequisite: Obtain exclusive rights to provide network services at a “marquee location”. A marquee location is a venue that carriers believe is a fantastic revenue opportunity and will pay to participate. You may either partner with the venue or with the carrier with a predetermined understanding of the parameters of any agreement.

Venue partnership: Lock a venue into a contract to provide services and then negotiate on their behalf to bring carriers to the table to support and fund the network.

Carrier partnership: Alternatively operators can partner with the Carrier(s) to go after mutually beneficial opportunities together. This avenue is only open to an operator with a proven business, with venue contracts, and a proven, verifiable, and reliable track record of infrastructure operation at other venues.

Venue Funding: Venue funding is necessary to get the show on the road and the project off the ground. There is always a time and resource allocation cost associated with harmonizing internal stakeholders, issuing RFPs, inspecting service and product deliverables, supporting, coordinating, and managing the rollout, and working with the various stakeholders to make sure the venues needs are represented. Carrier Funding: Execute an Anchor tenant or Consortium level carrier participation model. Carriers absolutely must express interest and be willing to put up a majority percent of the initial rollout costs. In the anchor tenant model the lead Carrier(s) agrees to cover more of the upfront costs in return for the first right of refusal in all matters of system optimization and a portion of the system entry “signup” fee that subsequent carriers pay to participate.

Infrastructure Cost: This depends on size, services, performance, and the time it takes to roll out the infrastructure. Venue and Carrier requirements drive the baseline form and function of a NH-DAS, and the operator’s expertise should be future proofing the infrastructure for maximum profitability.

Monthly Costs: (equipment depreciation + venue rent + system performance management)

Monthly Income: (participation fee * # of carriers * nodes) + signup fee

Contract life: I define this as how long in years can ownership be retained without replacing the infrastructure.

What revenue sharing options are out there today, for NH-DAS? “What is the rental percentage that I can offer to venue and what I should to have from carriers? I know that all depends on the each case but are there any models from this type of negotiations?”Q2: How much should I offer the venue? How much should I charge the Carriers? What revenue sharing options are out there today, for NH-DAS? When it comes to funding or investing in a project I immediately think about the profit formula. The profit formula is a classic metric to evaluate opportunity cost.

Profit = (Revenue – Cost)/Time

Venue revenue models How much rent you pay a venue can be based by on how much revenue the system

generating or just a riskless consistent negotiated monthly or quarterly payment How much rent a venue receives can be adjusted by factors like if venue is also a

customer of system resources like public safety and/or Wi-Fi?

Carrier income models Carrier Income = (Participation fee * # of Carriers * # of Nodes) Initial Carrier Funding (multicarrier or single anchor tenant?) Signup Fee to buy-into system

Q3: Could you please suggest a post or web sites with more information?For additional analysis I would suggest researching everything that pertains to the business model of successful operators like Crown Castle, American Tower, Extenet, and Boingo. I also recommend you hire expert. When it comes to making sure you get the best deal, the money you spend on an expert will pay back in spades.