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”
Simon Saunders
Real Wireless for Small Cell Forum
“Poor indoor mobile
coverage and
capacity affects 39
percent of large
businesses in Britain”
“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.”
About Real Wireless
•
•
•
•
Independent Wireless Experts, bridging the gap •
between the wireless industry and wireless
users
The pre-eminent specialist independent expert
advisor in wireless technology, strategy &
regulation
•
UK-based but working internationally
Real Wireless delivers independent, informed
and innovative strategic technical and business
consultancy based on a deep understanding of
the physics and engineering implications
associated with wireless technologies, coupled
with real-world planning and deployment
experience
Clients include
•
•
•
•
Enterprises
Operators
Regulators
Vendors
Experience
•
•
•
•
•
UK 4G Spectrum Auction technical policy
Wireless strategy for landlords and enterprises
Founded Small Cell Forum (Femto Forum)
Ofcom Spectrum Advisory Board
UK Spectrum Policy Forum
© Real Wireless Ltd. 2014. All rights reserved.
Introduction
• Real Wireless has conducted an analysis of the
business case for enterprise small cells
• This work was commissioned by Small Cell
Forum, but was conducted independently by
Real Wireless
• The full report is available from scf.io
© Real Wireless Ltd. 2014
What do we mean by ‘Enterprise’?
• 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:
Enterprise Types
•
The needs of these environments are very diverse and
any solution needs to be tailored closely to those
needs.
•
In common however they are:
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
Premises-based
Generally indoors
Needing consistent, high-quality coverage
Differences emerge when considering their needs for
specific services and analytics
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:
Hotels / Convention Centres
Underground facilities
© Real Wireless Ltd. 2014
Market Drivers for enterprise small cells
• 39%-61% of offices have noticeably poor inbuilding coverage1
• Yet over 80% of total mobile data traffic is
indoors2
1 YouGov research, Feb 2013, figures for UK and US respectively
2 Paolini M. “Mobile data moves indoors”, September 2011
• 87%3 of businesses would switch
provider to guarantee coverage
• 72%3 of businesses are interested in
small cells to improve cellular
performance
3 Alcatel Lucent, Feb 2013
Voice coverage
Data Services
Analytics
• Building construction
• Phone performance
• “Mobile first”
enterprises
• PBX/Centrex
integration
• Enterprise applications
• Operational efficiencies
• Retail footfall
• Task schedule
• Access to records
© Real Wireless Ltd. 2014
Most businesses are small-to-medium
Yet existing solutions are tailored to the very largest
50
45
40
% Employees
35
30
25
20
15
10
5
0
% employed
% employed
% employed
Japan
UK
USA
≤9
10 ≤ 19
20 ≤ 49
50 ≤ 249
Cumulative % buildings as enterprises increase in
size
100%
% employees in different sized enterprises in
selected countries
98%
96%
94%
92%
90%
88%
86%
84%
82%
80%
Micro
Business
>250
© Real Wireless Ltd. 2014
Small
Business
Medium
Business
Large
Businesses
Public
Buildings
Operator-driven or enterprise-driven?
• Achieving scale may
require significant
change in operator
processes
• Benefits in customer
attraction and
retention – and
offsetting costs
Operator-driven
Enterprise-driven
© Real Wireless Ltd. 2014
Case Studies
• The work includes in-depth case studies of the value of small cells in a wide
range of Enterprise environments
Large Enterprise offices in the US
Medium-sized Enterprise
office in the UK
Small Enterprise office
in Norway
© Real Wireless Ltd. 2014
Hospital in
the UK
Convention Centre
with Hotel in Japan
Retail Chain
in Greece
Modelling Approach
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)
Financial model
•
© Real Wireless Ltd. 2014
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
© Real Wireless Ltd. 2014
First Year Costs
Total Costs in First Year: GBP
• 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
9,000
8,000
Local management
7,000
Enhanced Services
6,000
Core functionality
5,000
Backhaul - Medium
4,000
System Integration
3,000
Local Controller
2,000
LAN Port
1,000
Access Point Standard
0
Total Initial Capex
Source: Real Wireless
Total Initial Opex
© Real Wireless Ltd. 2014
Operator Business Case: Medium Enterprise
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
300,000
Customer Lifetime Values - Operator: GBP
•
•
•
1058% return on investment
250,000
31,901
200,000
81,153
271,434
190,281
55,640
150,000
19,737
100,000
33,312
64,800
50,000
(15,109)
0
Start value Operator Incr. voice Network Reduced Lower Total value Enhanced Total value
SC Costs
& data
cost
churn retention
basic
services enhanced
savings
cost
100%
Source: Real Wireless
Basic case
Enhanced case
© Real Wireless Ltd. 2014
294%
419%
Enterprise Business Case: Medium Enterprise
• Enterprise benefits arise from both direct operational cost savings and from
benefits to their own business growth and profitability
Customer Lifetime Values - Enterprise: GBP
160,000
140,000
35,284
61% return on investment
120,000
70,568
100,000
80,000
65,003
28,227
60,000
40,000
(81,153)
40,305
37,544
(25,467)
20,000
0
Inc voice &
Device
Enterprise Total value PBX savings Desktop
Enhanced Total value
data benefit managem't SC Costs
basic
hardware service costs enhanced
savings
savings
Source: Real Wireless
© Real Wireless Ltd. 2014
Other case studies
Case
Situation
Outcome
Large enterprise in 6000 employees and multiple
the US
premises
Operator CLV up 232% -308%
Enterprise value up $7.1m $8.9m
Small enterprise in 15 person office, single cell
Norway
Operator CLV up 163%-289%
Hospitality centre
in Japan
Hotel visitors and conference
delegates
Operator CLV up by 434%
YEN184.7million new revenue for
hotel
Hospital in the UK
Patient and staff access
Challenging base case, but scope
for 138% with enhanced services
© Real Wireless Ltd. 2014
Sensitivities
• Deployment model: Enterprise-led deployment improves CLV by
approximately 8% -but also provides scaleability
• Deployment with Wi-Fi: Shared costs improve business case by around 6%
• Access point cost: Quadrupling the AP cost only has a -0.6% CLV impact. .
• Building size: Small cell benefits scale from smallest to largest enterprise but
need variety of product capabilities to suit
• Added value: e.g. Japan conference centre base case 177% increase in CLV.
Roaming revenue increases that to +301%
• Demand stimulation: Small cells may stimulate demand, which offsets offload
but we found that traffic would have to rise ten-fold to offset a 10% increase
in revenue.
© Real Wireless Ltd. 2014
Small Cells vs DAS
• Still a role for DAS in large multi-operator applications
3 operator DAS : small cell comparison
250,000
200,000
150,000
100,000
DAS
50,000
Small cell
-
PV Small cell & DAS costs: GBP
PV Small cell & DAS costs: GBP
Single operator DAS : small cell comparison
450,000
400,000
350,000
300,000
250,000
200,000
DAS
Small cell
150,000
100,000
50,000
-
Building size (m2)
Building size (m2)
© Real Wireless Ltd. 2014
Summary
• Enterprises are demanding solutions to improve coverage and mobilise their
business
• 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
• Very positive business case with benefits which scale to all types of enterprise
• Significant shift in deployment style needed from operators to meet demand
but agile operators who provide such solutions can produce massive benefits
in satisfying their customers
© Real Wireless Ltd. 2014
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© Real Wireless Ltd. 2014
Annex: Detailed results
© Real Wireless Ltd. 2014
© Real Wireless Ltd. 2014
© Real Wireless Ltd. 2014