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Broadband Wireless

Broadband Wireless. The Business Case for High Capacity Presented by: Paul S. Bachow. pbachow@bachow.com 610-660-4900. February 20, 2001 . Full Disclosure FD. I have investments in the following wireless assets: 39Ghz Licenses 31 cities 35 million covered pops Public company equity

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Broadband Wireless

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  1. Broadband Wireless The Business Case for High Capacity Presented by: Paul S. Bachow pbachow@bachow.com 610-660-4900 February 20, 2001

  2. Full Disclosure FD • I have investments in the following wireless assets: • 39Ghz Licenses • 31 cities • 35 million covered pops • Public company equity • Private company equity

  3. DSL vs. Fiber • DSL and Fiber serve different: • Markets • Parts of the network • Fiber has a transparent path to: • Increasing capacity at ever falling costs • Highest deliverable customer bandwidth

  4. Re-define Fixed Wireless • There are two types of fixed wireless • High capacity • Fiber like • Metro networks • Licensed • Low capacity • DSL like • Unlicensed • Point to Multi-point

  5. High Capacity Wireless • Wave Division Multiplex (WDM & DWDM) technology has drastically increased the capacity of fiber • Without a WDM type technology wireless cannot compete with fiber • YIG (Yttrium-Iron-Garnet) technology from companies like Verticom enable WDM type wireless capacity increases

  6. YIG Technology • High capacity was: • 16 T-1’s 2 years ago • DS-3 1 1 year ago • OC-3 2 months ago • OC-6 now • OC-12 9 months from now • OC-24 2 years from now

  7. DSL is a failing business case • 2.3 truck rolls per install • $1,300 per residential sub of up front costs w/o sales commissions • Will take years to reduce this cost • Average residential rate $39.95 • RBOCs can’t reach break even at $39.95 • 5.5 year payback assuming 50% gross margin

  8. DSL vs High Capacity • High capacity competes with fiber, not DSL • Low capacity wireless competes with DSL, not fiber • Due to limited time the balance of this presentation will only focus on high capacity wireless

  9. The Wireless Business Case • The marketplace is more competitive than ever • Only all IP service business plans work • 1700 competitors and each is focused on time to market • Service prices are falling • Winners will have the lowest cost structure

  10. How to Win Temporally • Differentiate • Unique services • Broadest offering • Fastest provisioning • Is this a sustainable game plan?

  11. How to Win Permanently • Become the low cost provider • Simplifies your offering and network • Allows you to compete on price • Easier initial sales • You can match competitors’ offers which reduces churn • Allows you to remain in business

  12. Becoming a Lowest Cost Carrier • Does not mean you charge the lowest prices • Customers in a small office building not served by others should pay more • You have less customers to spread your installation and equipment costs over • You still need a business case to determine rates • Let others take the losing deals

  13. Becoming a Lowest Cost Carrier • Requires: • a simple product offering • a lean organization • flexible equipment • integrated equipment • the lowest cost structure in the following 5 areas:

  14. Lowest Cost of: • Equipment (on a cost per MBIT basis) • Example: OC-3 links loaded • Native IP • Installation • One install serving multiple customers • Simple network design requires licensed freq. • Operation • All on net

  15. Lowest Cost of: • Sales per add • Use outside sales organizations already selling to your potential customer • See what ARTT is doing with ISP’s, ASP’s and web hosting companies • Back office • Self provisioning of bandwidth increases • Web based bill review

  16. Fiduciary Duty • Requires most efficient use of capital • Success based deployments, not field of dreams • Payback analysis before all expenditures • Flexible network, lowest chance of stranded costs • Cash flow is the goal, not market share

  17. FCC has proposed partial spectrum leases • A license holder will be able to lease part of their 39 Ghz spectrum • Will enable multiple carriers without spectrum to day to incorporate licensed wireless in their network • Should standardize the use of high capacity wireless in all domestic networks

  18. High Capacity 39 Ghz, a sustainable advantage • Success based deployments • Ability to re-deploy lower capacity equipment to new installs • Easy to engineer, no coordination with others • Low installation costs, simple to upgrade • An end to end network increases gross margins and manageability

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