Next generation mobile communications for blue light users - - - PowerPoint PPT Presentation

Next generation mobile communications for blue light users

• state-owned versus commercial network solutions

Analysys Mason – Amund Kvalbein, Jon Ivar Kroken, Harald Wium Lie

Background and objectives

▪ MSB has been asked by the Swedish government to produce more detailed

cost estimates for building a dedicated network for PPDR users. The public debate around the next-generation communications solution for PPDR users will be more enlightened if comparable cost estimates for a solution based

• n commercial networks is available.

▪ The objective of the project is to develop and present a time and cost

estimate for a separate (“dedicated”) state-owned blue light network and compare this to the cost of building a solution based on a commercial network.

▪ Analysys Mason has advised Norwegian and Danish authorities regarding

the economics of future blue light network operating models. In both projects, the main alternatives were a new, dedicated blue light network and a blue light network based on commercial LTE networks. The Norwegian project also included an analysis of "non-priced effects" such as network security, robustness, capacity and functionality.

▪ The cost model presented in this analysis is based on the models developed

for Norway and Denmark and adjusted to Swedish conditions. In the Swedish model we have also included additional investment for extra high robustness and security levels

2 PPDR Cost model

3

Denmark Will likely auction available frequencies to commercial networks and go for commercial model Norway Has chosen commercial model, and started work on contract model Finland Has auctioned available frequencies, and will go for commercial model Sweden Holmgren report has recommended state-

• wned blue light

network USA Implements FirstNet in collaboration with commercial network provider AT&T UK Implements Emergency Services Network based on commercial mobile network provider EE

Countries around the world are preparing the next generation blue light networks

• Blue light users need robust and

secure high-bandwidth mobile services

• Current narrow-band (TETRA)

solutions can not deliver

• 4G is the preferred technology for

next-generation blue light networks

• Comparable countries will implement

next-generation blue light networks based on commercial mobile networks

Analysys Mason has advised the Norwegian and Danish governments on this issue

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Links: https://www.nkom.no/aktuelt/nyheter/samfunns%C3%B8konomisk-analyse-av-700-mhz-b%C3%A5ndet https://ens.dk/sites/ens.dk/files/Tele/analysys_mason_-_final_report_on_ppdr.pdf

Norway

Economic assessment of use of 700 MHz frequency band for Nkom Based on established principles for cost- benefit analysis Includes analysis of different models for PPDR communications Conclusion: commercial solution is better and more cost efficient

Denmark

Analysis of spectrum awards for PPDR use for Energistyrelsen Analysis of different options for spectrum assignment Conclusion: dedicated network is more expensive than using a commercial mobile network

2010473-471 | Commercial in confidence

Award of 700MHz, 900MHz and 2.3GHz spectrum in Denmark – spectrum for PPDR use

Final report for the Danish Energy Agency Janette Stewart, Mark Colville, Audrey Bellis 8 November 2017

We recommend a communications solution for PPDR users based on commercial networks

5

1

A commercial solution can give PPDR users a solution of at least the same quality as a dedicated network

3

The lifetime cost of commercial solution is significantly lower

Robustness, security/control, coverage, capacity, functionality and usability can be well maintained in a commercial solution Commercial networks will evolve from 4G to 5G and beyond Further development of a dedicated state owned network is subject to budget processes

2

A commercial solution guarantees technological development and can be implemented faster

Building and operating a dedicated PPDR network is likely to be 3-5 times more expensive Estimated lifetime net cost: MSEK 35 400 (Dedicated) vs MSEK 13 100 (Commercial)

Comparison of user value

Coverage Capacity Priority Robustness Security/ control Functionality Future- proofing

Existing mobile solution without special blue light adjustments Standalone state-owned blue light network

+

• +

++ + ++

• Tailor-made blue light

services in existing commercial network

+ + ++ + ++ +

Expanded coverage compared to existing commercial

• networks. Dedicated solution

highly dependent on roaming for several years 2x10 MHz in 700 MHz-band limits the available capacity in a dedicated solution. Commercial solution can use all available frequency bands 4G priority mechanisms gives same resource availability in commercial network as in dedicated network Robust access network design in dedicated network vs roaming and RAN hardening in commercial solution Limited and controlled access to systems and user data. Varied spectrum gives resistance against jamming in commercial solution PPDR functionality available in 3GPP Releases 13-15. Growing ecosystem of specialized application providers Commercial networks will follow tecnological development, dedicated network dependent on uncertain reinvestments

High level economic assessment – principles & system scope

PPDR Cost model Terminals Base stations Access network Metro network Core network Service platform Planning Deployment Operations

Dedicated network Commercial network

• Two main alternatives
• State-owned, dedicated network
• Blue light network based on commercial

networks

• Cost-benefit analysis where we identify the

relevant extra costs and benefits for each alternative

• Lifetime cost (“TCO”) over 30 years with 3,5%

discount rate including

• Planning
• Rollout / deployment
• Operations / recurring costs
• Reinvestments
• High robustness and security level
• Additional SEKT 400 investment per new,

greenfield site

• Additional investment for leased and

existing sites (SEKT 300 / SEKT 400)

• Extra security and robustness costs
• SEKB 4,4 (Dedicated)
• SEKB 6,8 (Commercial)

Base case comparison

Estimated lifetime net cost: MSEK 35 400 (Dedicated) vs MSEK 13 100 (Commercial)

8

Estimated lifetime costs/benefits over 30 years

PPDR Cost model

Estimated yearly costs*

* Discounted MSEK, excluding auction revenue

Notable differences in the network models – main cost drivers

9 PPDR Cost model

7,250 sites 8,250 sites

Existing 8000

Radio Sites Access network

+ SEK 335,000 per site + SEK 400,000 per site

Project organization

(man-years)

Permanent FTEs

Dedicated Commercial

Purchasing power

A commercial solution has significantly lower net costs in all variations we have looked at

10

Lifetime costs/benefits in various scenarios

PPDR Cost model

Mountains: Additional 1000 mountain sites in both alternatives Margins: Included 30% EBITDA operator margin Tax Loss: Included 30% deadweight tax loss 20 years: 20 years operation (instead of 30 years in Base Case) Base Case excluding High Robustness & Security

• Reduced SEKT 400 investment per new, greenfield site:
• Less power backup
• Less access link redundancy
• Reduced investment for leased and existing sites
• SEKT 300 investment for dedicated operator
• SEKT 400 investment for commercial operator
• Both alternatives: Reduced SEKM 50 initial Capex and 10 FTEs

for security uplift Base case including high Robustness & Security

Oslo Tel: +47 920 49 000

• slo@analysysmason.com

Tack så mycket!

11

New Delhi Tel: +91 124 4501860 newdelhi@analysysmason.com Milan Tel: +39 02 76 31 88 34 milan@analysysmason.com Manchester Tel: +44 (0)161 877 7808 manchester@analysysmason.com Cambridge Tel: +44 (0)1223 460600 cambridge@analysysmason.com Dubai Tel: +971 (0)4 446 7473 dubai@analysysmason.com Dublin Tel: +353 (0)1 602 4755 dublin@analysysmason.com Madrid Tel: +34 91 399 5016 madrid@analysysmason.com Paris Tel: +33 (0)1 72 71 96 96 paris@analysysmason.com Singapore Tel: +65 6493 6038 singapore@analysysmason.com Boston Tel: +1 202 331 3080 boston@analysysmason.com Hong Kong Tel: +852 3669 7090 hongkong@analysysmason.com London Tel: +44 (0)20 7395 9000 london@analysysmason.com Stockholm Tel: +46 709 211 719 stockholm@analysysmason.com @AnalysysMason linkedin.com/company/analysys-mason youtube.com/AnalysysMason analysysmason.com/RSS

• Dr. Amund Kvalbein

Principal amund.kvalbein@analysysmason.com Mobile: +47 957 79 674

Harald Wium Lie

Partner harald.wium.lie@analysysmason.com Mobile: +47 922 90 420

Appendix - Important model variables – Base Case

12 PPDR Cost model

* In a dedicated network, we estimate that ~78% of leased and existing sites will need to upgrade the hut, mast, battery or power supply due to installation of the additional LTE

• equipment. A commercial network will already have the necessary LTE equipment in place, but

will need a robustness upgrade. ** In “No civil upgrade except robustness”, the dedicated network will incur costs for LTE radio, antennas, planning and installation. In the commercial network, we have allocated SEK 400 000 per site for robustness upgrades. Alternative Dedicated Commercial Base Stations (eNode B) No of sites # sites 7,250 8,250 New, greenfield sites # sites 2,650 250 Greenfield with mast # sites 1,250 50 Rooftop # sites 1,250 50 Specific objects # sites 150 150 Existing sites # sites 1,600 8,000 New, leased sites # sites 3,000

• Capex per site (incl. robustness uplift)

New sites Greenfield with mast SEK initial 1,785,000 1,750,000 Rooftop SEK initial 1,085,000 1,050,000 Specific objects SEK initial 1,435,000 1,400,000 Leased / existing sites Civil + robustness upgrade needed* SEK initial 854,000 NA No civil upgrade except robustness** SEK initial 717,500 400,000 Reinvestment % of intital per year 10% 10% Opex per site New, Greenfield sites SEK / year 100,000 100,000 Existing sites SEK / year 5,000 5,000 New, leased sites SEK / year 50,000 50,000 Access network No of accesses per site # 1.1 1 Share rented accesses Share of total 50% 99% Rental cost per month SEK per month 3,500.00 78.41 Initial cost - own accesses SEK initial 200,000 200,000

Alternative Dedicated Commercial Metro Network No of nodes # 1,450 825 Cost per node SEK initial 200,000 4,480 Core Network SEKM initial 82.50 75.00 Project organization Manyears 380 200 Operations & management FTEs 80 40 Share consultants % 16% 3% Auction - MHz available MHz 40.00 60.00 Roaming costs SEKM NPV 510.00 70.00 Years from launch to full deployment 8.00 2.00 Security uplifft Additional security (SOC) SEKM initial 50 50 Additional security FTEs FTEs 10 10