STEM help / Training

2.3.19 Detailed description of the modelling context

The example of a business case for WiMAX vs. DSL in rural areas is used to tell a typical story of how business models must evolve across technology, geography and economics, and how business-modelling tools have developed functionality to meet these requirements.

2000 homes are connected over conventional copper to a local exchange. Some homes are a significant distance from the exchange, and only 60% are within reach of the available DSL technology. Revenue from the separate DSL and WiMAX access platforms is modelled, as well as from individual Voice and Internet services. Base-station sites are initially rolled out for coverage, while the remaining network elements and upgrades are dimensioned according to the number of subscribers and associated traffic levels. An optional IPTV service impacts on revenues and required network elements.

The model generates results on a quarterly basis and considers scenarios for each technology in isolation, and also both running in parallel. A scenario structure is applied to the market models driving each technology so that three consistent sets of results can be generated from the same base data. A second dimension explores extremes for penetration of the, as-yet untested, IPTV business model.

When specific market size and penetration data are available on a per-site level, the site-level model elements are grouped as a template, and the relevant inputs presented in a table. The varying values are entered per site without repeating the entire model structure, ensuring consistency of calculation and results across all sites.

The business model is stress tested to check for unforeseen issues. A tornado chart for 2015 demonstrates that changing the market size has the most impact on the NPV. The same chart for 2010 demonstrates greater sensitivity to the infrastructure costs because the network utilisation is lower at this stage of the business evolution.


© Implied Logic Limited