Next generation mobile communications for blue light users - state-owned versus commercial network solutions Analysys Mason – Amund Kvalbein, Jon Ivar Kroken, Harald Wium Lie
PPDR Cost model 2 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 on 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
3 Countries around the world are preparing the next generation blue light networks • Blue light users need robust and Norway secure high-bandwidth mobile Finland Has chosen Has auctioned services commercial model, available frequencies, and started work on • Current narrow-band (TETRA) and will go for contract model solutions can not deliver commercial model • 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 Sweden Holmgren report has recommended state- owned blue light Denmark network USA UK Will likely auction available Implements FirstNet in Implements Emergency frequencies to commercial collaboration with commercial Services Network based on networks and go for network provider AT&T commercial mobile network commercial model provider EE
4 Analysys Mason has advised the Norwegian and Danish governments on this issue Norway Economic assessment of use of 700 MHz frequency band for Nkom Based on established principles for cost- benefit analysis Final report for the Danish Energy Agency Award of 700MHz, 900MHz and 2.3GHz spectrum in Denmark – spectrum for PPDR use Includes analysis of different models for 8 November 2017 Janette Stewart, Mark Colville, Audrey Bellis PPDR communications Conclusion: commercial solution is 2010473-471 | Commercial in confidence Denmark better and more cost efficient 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 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
5 We recommend a communications solution for PPDR users based on commercial networks A commercial solution guarantees technological development and can be implemented faster 1 Commercial networks will evolve from 4G to 5G and beyond Further development of a dedicated state owned network is subject to budget processes A commercial solution can give PPDR users a solution of at least the same quality as a dedicated network 2 Robustness, security/control, coverage, capacity, functionality and usability can be well maintained in a commercial solution The lifetime cost of commercial solution is significantly lower 3 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 Security/ Future- Coverage Capacity Priority Robustness Functionality control proofing Existing mobile solution 0 0 0 0 0 0 0 without special blue light adjustments Standalone state-owned + - + ++ + ++ -- blue light network Tailor-made blue light + 0 + ++ + ++ + services in existing commercial network Limited and controlled Expanded coverage compared 4G priority mechanisms Commercial networks will access to systems and to existing commercial gives same resource follow tecnological user data. Varied networks. Dedicated solution availability in development, dedicated spectrum gives resistance highly dependent on roaming commercial network as network dependent on for several years against jamming in in dedicated network uncertain reinvestments commercial solution 2x10 MHz in 700 MHz-band Robust access network limits the available capacity design in dedicated PPDR functionality available in in a dedicated solution. 3GPP Releases 13-15. Growing network vs roaming and Commercial solution can RAN hardening in ecosystem of specialized use all available frequency application providers commercial solution bands
PPDR Cost model High level economic assessment – principles & system scope • Two main alternatives Access • State-owned, dedicated network Terminals Base stations Metro network Core network Service platform 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 Planning Deployment Operations • SEKB 4,4 (Dedicated) • SEKB 6,8 (Commercial) Dedicated network Commercial network
PPDR Cost model 8 Base case comparison Estimated lifetime net cost: MSEK 35 400 (Dedicated) vs MSEK 13 100 (Commercial) Estimated lifetime costs/benefits over 30 years Estimated yearly costs* * Discounted MSEK, excluding auction revenue
PPDR Cost model 9 Notable differences in the network models – main cost drivers Project organization Radio Sites Access network Permanent FTEs (man-years) + SEK 335,000 Dedicated 7,250 per site sites Existing 8000 8,250 Commercial Purchasing sites power + SEK 400,000 per site
PPDR Cost model 10 A commercial solution has significantly lower net costs in all variations we have looked at Lifetime costs/benefits in various scenarios Base case including high Robustness & Security 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
11 Tack så mycket! Dr. Amund Kvalbein Manchester Boston Tel: +44 (0)161 877 7808 Tel: +1 202 331 3080 Principal manchester@analysysmason.com boston@analysysmason.com amund.kvalbein@analysysmason.com Cambridge Milan Tel: +44 (0)1223 460600 Tel: +39 02 76 31 88 34 Mobile: +47 957 79 674 cambridge@analysysmason.com milan@analysysmason.com Dubai New Delhi Harald Wium Lie Tel: +971 (0)4 446 7473 Tel: +91 124 4501860 dubai@analysysmason.com newdelhi@analysysmason.com Partner Dublin Oslo harald.wium.lie@analysysmason.com Tel: +353 (0)1 602 4755 Tel: +47 920 49 000 Mobile: +47 922 90 420 dublin@analysysmason.com oslo@analysysmason.com Hong Kong Paris Tel: +852 3669 7090 Tel: +33 (0)1 72 71 96 96 hongkong@analysysmason.com paris@analysysmason.com London Singapore Tel: +44 (0)20 7395 9000 Tel: +65 6493 6038 london@analysysmason.com singapore@analysysmason.com Madrid Stockholm Tel: +34 91 399 5016 Tel: +46 709 211 719 madrid@analysysmason.com stockholm@analysysmason.com @AnalysysMason linkedin.com/company/analysys-mason youtube.com/AnalysysMason analysysmason.com/RSS
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