Calculating bit density in wireless broadband deployment

Tom Nolle, CIMI Corp
15 Sep 2008

Technology debates are almost universally viewed as debates about products or standards. So does that mean wireless broadband is a battle between 3G and WiMAX or maybe between CSMA and GSM? Actually the future of wireless broadband is probably best expressed as the battle of the densities. And the most important tool in the wireless strategist's toolbox may be an old-fashioned compass to draw circles.

Any market geography has a really simple and interesting metric called 'demand density ' which is a measure of the average revenue per user (ARPU) available per unit of geographic area. You can visualize it as something measured in dollars per square mile or Euros per square kilometer but however it's measured it's the opportunity that can be accessed in a given geography. High demand density is a good thing; lots of money is on the table for the market planner.

Low demand density is clearly not good because it means a market area is unlikely to generate a lot of total revenue for the investment a service provider makes to serve it. Demand density tells us a lot about the overall economic quality of a market area. In fact differences in demand density explain why some countries (Japan and Korea for example) can offer customers 50 Mbps DSL or FTTH and why in the U.S. Verizon has one strategy (FTTH/FiOS) and AT&T has another (DSL/IPTV).

Demand density skips specific service requirements

One thing the raw number doesn't take into account is that every possible service doesn't draw on the total potential ARPU. For example if you decided to offer a customer something like the old ISDN service with 128 kbps of full-duplex data capacity it's pretty clear that high-definition (HD) video is not on the table as a revenue source. Most planners don't fall into that trap. But a surprising number fail to consider service-specific revenue opportunities when it comes to wireless and that can lead to a major problem down the road. The reason is a second kind of density -- bit density -- and how it relates to demand density. Any wireless broadband service tends to have a simple hub/circle topology.

The wireless cell is fed from a central antenna point by some wireline technology. From that point radio frequency (RF) access is projected in a roughly circular pattern for as many feet or kilometers as the particular technology allows. The circle you get by setting your compass to the service radius of the technology (we could use 10 20 or 40 miles for WiMAX for example) is the area we want to use to compare densities.Here's a simple example. If we assume a provider is going to stick a wireless antenna on a pole and use WiFi to reach a community of homes we could set our compass at 100 feet (being generous) and describe a circle around the pole.

Using high-school math the area of that circle is about 31 000 square feet which is about a thousandth of a square mile. If we draw that circle in an urban area it would intersect about 32 households. In the suburbs it would cover between one and five households and in rural areas there's about a 10% chance that it would hit any households at all. For any given assumption on ARPU at a household level it's pretty clear that WiFi in rural areas isn't a natural winner.

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