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


Market Drivers for Enterprise Small Cells


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


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


•  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


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


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


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)


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


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


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


Enterprise Small Cells - the business case

Technology

Transcript of Enterprise Small Cells - the business case