Before developing any STEM model, it is important to understand the network, services or business to be modelled and particularly the issues to be investigated.
The purpose of this example is to model the costs and revenues associated with the evaluation of an investment in wireless in the local loop.
The figure below illustrates the general structure of such a fixed access radio network.
The model represents a new wireless local loop operator, deploying a network over a city with potential for 100000 residential lines and some 30000 business lines. To cover the entire city would require a minimum of 25 base station sites.
The households are fairly evenly spread across the city, but the businesses tend to be congregated in the central district. The operator can target the business areas first by appropriate positioning of the first five base station sites. Each of these sites brings 2000 potential business lines into the coverage area, whereas the subsequent sites each bring only 1000 businesses into coverage.
Structure of a fixed access radio network
The operator’s Chief Executive Officer is facing a decision regarding the speed of network deployment. A fast roll-out would require more borrowing, but would the additional exposure give sufficient returns? A slow roll-out would mean that much of the development could be financed from early customer revenues. The following questions need to be answered:
- What is the borrowing requirement for a fast roll-out versus a slow roll-out?
- What type of roll-out strategy will give the highest net present value (NPV) over 15 years?