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Total cost of ownership and time to breakeven of last mile data transport for MNOs and ISPs

Total cost of ownership and time to breakeven of last mile data transport for MNOs and ISPs
01 June 2016

Overview

An independent study from Real Wireless into the total cost of ownership and time to breakeven of last mile data transport for MNOs and ISPs

Real Wireless executive summary

The last few years has seen significant innovation in data transport technologies, driven by MNOs’ needs to densify backhaul networks as well as ISPs’ needs to deliver better broadband services to cloud enabled enterprises.

There is now a range of solutions to choose from, and this paper aims to help MNOs and ISPs understand the cost implications of that choice.

Last mile transport technologies considered: 

  • Managed fibre
  • V-band (57-66GHz) point to point (PTP)
  • E-band (71-86GHz) PTP
  • Microwave (26-42GHz) PTP and point to multipoint (PMP) 
  • Sub 6GHz unlicensed PTP and PMP

An analysis of total cost of ownership (TCO) per link finds site rental and rates dominate, accounting for around half of the five year TCO.

Operation and maintenance is around a quarter and equipment capex, a fifth.

These proportions reveal that TCO is much more sensitive to site related costs than equipment pricing.

Comparing technologies, we find: 

  • Managed fibre has significantly higher TCO than the wireless solutions in our global figures, although we do note there are regional variations. 
  • Through savings in capex and opex, PMP can have as little as 50% TCO of PTP in high density deployments carrying bursty traffic with lower mean bit rates. 
  • PTP has lower TCO than PMP for low density deployments carrying constant bit rate type traffic – typical of ‘middle mile’ transport.

To illustrate the impact of TCO we develop a case study of an ISP building-out a network to supply carrier grade connectivity to enterprise premises.

We consider the rate at which the ISP can deploy revenue generating links to their customers, the cost of building out and operating the infrastructure and the resulting return on investment over time.

We find: 

  • Sub 6GHz and microwave PMP solutions result in the fastest time to break even of around 13 months for this case study, relative to 16-19 months for other solutions. 
  • For the same investment over a five year period, PMP enabled the ISP to connect 67% more customers and generate 1.8x higher return on investment than PTP. 
  • The higher revenue per link possible with the licensed band ‘gold’ service generated a 30% higher return on investment than its unlicensed equivalent.

Overall, we identify the key factors which dominate TCO and return on investment for MNOs and ISPs selecting transport technologies, and identify the scenarios where certain technologies are a better choice than others.

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