IBCN, INTEC Broadband Communication Networks • www.ibcn.intec.ugent.be INTEC, Department of Information Technology • Gaston Crommenlaan 8 bus 201, 9050 Gent, Belgium

Reducing the Uncertainty of Techno-Economic Evaluationsin the Telecom Sector

Erik Vanhauwaert, Sofie Verbrugge, Mario PickavetErik.Vanhauwaert@intec.ugent.be • www.ibcn.intec.ugent.be/te

1. Market penetration over timeTypically an S-curve (e.g. Rogers, Bass, …)

• What about competition effects?• What in case of failed launch?

2. Initial prices of relevant componentsEstimated using list prices of (similar) equipment, but

• B2B prices often unknown to outsiders• What about equipment that is not yet available?

3. Price erosionAssumed to follow the Extended Learning Curve principle

• Real price modifications occur in jumps• Can Telecom equipment be classified in more detail?

Important Input Parameters

Network Operator LinkyWinky wants to launch a mobile video service for its customers.

• Critical input assumptions• Number of customers• Cost of mobile network equipment• …

• Technical solution• New network required (e.g. LTE)• Video streaming servers• …

• Techno-economic evaluation• Bill of Material for network infrastructure• Operational costs (wages, energy,…)• Revenues• …

LinkyWinky knows better what to expect:

• Why?• Telecom projects = huge budgets & rapidly changing environment

High stakes

• Garbage In, Garbage Out-syndrome

• How to improve (use of) existing models?• Use historic data for

• Model fitting & selection• Parameter classification system• Identification of influencing factors

• Investigate post-launch corrections of the model• This can be used pre-launch for Real Options

Techno-Economic Evaluations

Example: Mobile Video

Reducing the Uncertainty of Techno-Economic Evaluations

ModelingE.g. Network dimensioning

EvaluationE.g. Net Present Value

2.

3.

Assumptions

InputsE.g. Number of users

1.

Costs & Revenues

Implementation

or ?

Techno-economic Model

Goal:

Improve the