crsm2010 nov22 gronsund_pal_businesscasesendora_v4
DESCRIPTION
A business case study for a cognitive radio system based on a wireless sensor network (SENDORA).TRANSCRIPT
![Page 1: Crsm2010 nov22 gronsund_pal_businesscasesendora_v4](https://reader035.vdocuments.us/reader035/viewer/2022062709/558dfdc81a28abba0d8b464b/html5/thumbnails/1.jpg)
A Business Case Study for a Cognitive Radio System based on a Wireless Sensor NetworkPål Grønsund, Ole Grøndalen, Markku Lähteenoja
CRSM 2010, IBBT-MIT Brussels, November 22nd, 2010
Spectrum owner 1
Spectrum owner 2
Spectrum owner N
Joint venturesystem operator
![Page 2: Crsm2010 nov22 gronsund_pal_businesscasesendora_v4](https://reader035.vdocuments.us/reader035/viewer/2022062709/558dfdc81a28abba0d8b464b/html5/thumbnails/2.jpg)
SEVENTH FRAMEWORK PROGRAMME
THEME ICT-2007-1.1 The Network of the Future
Project 216076
![Page 3: Crsm2010 nov22 gronsund_pal_businesscasesendora_v4](https://reader035.vdocuments.us/reader035/viewer/2022062709/558dfdc81a28abba0d8b464b/html5/thumbnails/3.jpg)
The SENDORA concept can be described as a "Sensor Network aided Cognitive Radio" technology
Primary Network
Cognitive Network
Wireless Sensor Network
queries on spectrum status
reports on spectrum status
![Page 4: Crsm2010 nov22 gronsund_pal_businesscasesendora_v4](https://reader035.vdocuments.us/reader035/viewer/2022062709/558dfdc81a28abba0d8b464b/html5/thumbnails/4.jpg)
The SENDORA system architecture has 3 main parts: sensor network, communication network and fusion centre
![Page 5: Crsm2010 nov22 gronsund_pal_businesscasesendora_v4](https://reader035.vdocuments.us/reader035/viewer/2022062709/558dfdc81a28abba0d8b464b/html5/thumbnails/5.jpg)
The remainder of this presentation will focus on an example of a SENDORA business case for a “Joint Venture”
Cash Flow
Customers
Revenue
OPEX
Cost
CAPEX
Sensors and fusion centre
Cognitive functionalities
New sites
Customer acquisition
Operation & maintenance
Site rental
Overview of the business case for a “Joint Venture”
Introduction to Cash Flow analysis and business case assumptions
Cash Flow results and sensitivity analysis
![Page 6: Crsm2010 nov22 gronsund_pal_businesscasesendora_v4](https://reader035.vdocuments.us/reader035/viewer/2022062709/558dfdc81a28abba0d8b464b/html5/thumbnails/6.jpg)
A set of spectrum owners establishes a “Joint Venture” that gets the right to use its owners unused spectrum
Spectrum owner 1
Spectrum owner 2
Spectrum owner N
Joint ventureSENDORA system operator
At least one of the owners is an operator having a cellular infrastructure in the area
![Page 7: Crsm2010 nov22 gronsund_pal_businesscasesendora_v4](https://reader035.vdocuments.us/reader035/viewer/2022062709/558dfdc81a28abba0d8b464b/html5/thumbnails/7.jpg)
Easy to implement from a regulatory point of view since only the joint venture owners’ own spectrum are used
Rationale for the “Joint Venture” scenario
The joint venture can be composed in a way that makes it very probable that:
• at least some unused spectrum is available at all times
• little new cognitive radio access infrastructure is required
The scenario is an example of spectrum sharing, which can be seen as a natural extension of infrastructure sharing
• The joint venture is a good way to share the expenses and incomes between the companies
![Page 8: Crsm2010 nov22 gronsund_pal_businesscasesendora_v4](https://reader035.vdocuments.us/reader035/viewer/2022062709/558dfdc81a28abba0d8b464b/html5/thumbnails/8.jpg)
In the business case scenario, the joint venture will
• Deploy the system in a hypothetical European city:
o 1 million inhabitants
o covering an area of 200 km2,
downtown area is 50 km2
• Study period: 2015 – 2020
![Page 9: Crsm2010 nov22 gronsund_pal_businesscasesendora_v4](https://reader035.vdocuments.us/reader035/viewer/2022062709/558dfdc81a28abba0d8b464b/html5/thumbnails/9.jpg)
NOTE!SENDORA is an innovative concept and much research and development remains before commercial realizations will appear
=> the input data for the business case is uncertain
=> the results give indications, not definite answers or strong conclusions
![Page 10: Crsm2010 nov22 gronsund_pal_businesscasesendora_v4](https://reader035.vdocuments.us/reader035/viewer/2022062709/558dfdc81a28abba0d8b464b/html5/thumbnails/10.jpg)
Cash Flow
Customers
Revenue
OPEX
Cost
CAPEX
Sensors and fusion centre
Cognitive functionalities
New sites
Customer acquisition
Operation & maintenance
Site rental
Traditional cash flow analysis is used to get an indication of the profitability, enhanced with sensitivity analysis
Discount rate: 10%
![Page 11: Crsm2010 nov22 gronsund_pal_businesscasesendora_v4](https://reader035.vdocuments.us/reader035/viewer/2022062709/558dfdc81a28abba0d8b464b/html5/thumbnails/11.jpg)
Revenue assumptions
• ARPU (Average revenue per user) per month for nomadic broadband user:
o 20 € (2015) decreasing to 18,1 € (2020)
• Number of nomadic broadband subscribers for the joint venture
o 10 000 (2015) increasing to 100 000 (2020)
Number of users
0
20 000
40 000
60 000
80 000
100 000
120 000
2014 2015 2016 2017 2018 2019 2020 2021
Year
Customers
Revenue
![Page 12: Crsm2010 nov22 gronsund_pal_businesscasesendora_v4](https://reader035.vdocuments.us/reader035/viewer/2022062709/558dfdc81a28abba0d8b464b/html5/thumbnails/12.jpg)
Fixed sensors
• Density: 65 sensors per km2
• Roll-out
o 2015: 50 km2 (most dense areas of the city)
o 2016 and 2017: 75 km2 for each year
• Sensor price 300 € (2015) decreasing to 177 € (2020)
• Installation 40 € (2015) decreasing to 35 € (2020)
Integrated sensors
• 50% of the cognitive terminals have an integrated sensor
CAPEX (CApital EXPenditure) assumptionsCost
CAPEX
Sensors and fusion centre
Cognitive functionalities
New sites
Fusion centre
• One fusion centre for the city
• One time CAPEX 150 000 € in 2015 and10 000 € for installation
![Page 13: Crsm2010 nov22 gronsund_pal_businesscasesendora_v4](https://reader035.vdocuments.us/reader035/viewer/2022062709/558dfdc81a28abba0d8b464b/html5/thumbnails/13.jpg)
Cognitive functionalities
• Starting from 50 “cognitive” base stations in 2015 and increasing to 450 in 2020
• CAPEX for updating a base station is 5000 € (2015) decreasing to 2953 € (2020)
• Cognitive functionality in the terminals is assumed to be a part of the normal terminal development
New sites
• 60 000 € per new site establishment
CAPEX (CApital EXPenditure) assumptionsCost
CAPEX
Sensors and fusion centre
Cognitive functionalities
New sites
![Page 14: Crsm2010 nov22 gronsund_pal_businesscasesendora_v4](https://reader035.vdocuments.us/reader035/viewer/2022062709/558dfdc81a28abba0d8b464b/html5/thumbnails/14.jpg)
OPEX for fixed sensor network
• Power supply, maintenance visits
• 15 € (2015) per sensor per month decreasing to 13,6 € (2020)
OPEX for base stations
• Maintenance, backhaul rental and site rental
• 1000 € (2015) per base station per month decreasing to 904 € (2020)
OPEX (OPerational EXPenditure) assumptions
OPEX
Cost
Customer acquisition
Operation & maintenance
Site rental
General OPEX
• Customer acquisition, operation of the company
• 8 € (2015) per user per month decreasing to 5,6 € (2020)
![Page 15: Crsm2010 nov22 gronsund_pal_businesscasesendora_v4](https://reader035.vdocuments.us/reader035/viewer/2022062709/558dfdc81a28abba0d8b464b/html5/thumbnails/15.jpg)
• Net Present Value (NPV): 1,36 million € (2015-2020)
• Internal Rate of Return (IRR): 16%
• Pay-back period about 5 years
Cash flow results with assumptions presented above show that there is a potential for profitability
![Page 16: Crsm2010 nov22 gronsund_pal_businesscasesendora_v4](https://reader035.vdocuments.us/reader035/viewer/2022062709/558dfdc81a28abba0d8b464b/html5/thumbnails/16.jpg)
Required fixed sensor density might be reduced by e.g.:
• Improved sensing technology
• More terminals with integrated sensors
It will be a challenge to produce sufficiently cheap fixed sensors:
• Includes inter-sensor communication
• Outdoor environment
Fixed sensorsper km2
NPV [million Euro]
10 11.4430 7.7765 1.36 Base case72 0
120 -8.72
Fixed sensor price [Euro]
NPV [million Euro]
50 3.98150 2.93300 1.36 Base case430 0500 -0.74700 -2.841000 -5.99
Sensitivity analysis show that sensor performance and costs are critical parameters
![Page 17: Crsm2010 nov22 gronsund_pal_businesscasesendora_v4](https://reader035.vdocuments.us/reader035/viewer/2022062709/558dfdc81a28abba0d8b464b/html5/thumbnails/17.jpg)
Fixed sensors must be very power efficient and robust:
• Power consumption must be low
• High number of sensors => MTBF must be very low for each
New sites should be avoided:
• Will favour joint ventures of operators with “complementary” base station sites
Fixed sensor OPEX [€/month/sensor]
NPV [million Euro]
5.0 6.8210.0 4.0915.0 1.36 Base case17.5 020.0 -1.3725.0 -4.10
Share of new sites
NPV [million Euro]
0 % 1.36 Base case6 % 0.0010 % -0.8920 % -3.0330 % -5.2840 % -7.4350 % -9,67
Sensitivity analysis show that sensor OPEX and share of new sites are critical parameters
![Page 18: Crsm2010 nov22 gronsund_pal_businesscasesendora_v4](https://reader035.vdocuments.us/reader035/viewer/2022062709/558dfdc81a28abba0d8b464b/html5/thumbnails/18.jpg)
This business case is probably one of the best cases for SENDORA, because it is based on the “joint venture” idea
• Free access to frequency resources from the mother companies
• Good possibilities for re-using existing infrastructure
• Exploit detailed knowledge of the primary systems
The accumulated cash flow is quite similar to many other infrastructure projects in telecommunication
• The joint venture must be patient with financial strength to wait a longer period for the ROI. But there is a potential for a long term profitability.
In summary and conclusion
The main value of this business case calculation is to identify the critical aspects for SENDORA profitability, so that the technical R&D work can focus on them. Examples of those are:
• Sensor network planning (density of sensors and coordination between fixed and integrated sensors)
• Sensor design to minimize CAPEX and OPEX
• Solutions that allow re-use of existing infrastructure and require few new sites
Questions?Pål Grønsund (http://palgronsund.com/about)