Leased Line replacement network
the business case for
replacing a Leased Line network
with VectaStar
Introduction
VectaStar offers the lowest
per-E1 OPEX cost of any of the available backhaul
technologies.
Operators using Leased Line backhaul networks
with their inherent high year-on-year OPEX costs are deploying VectaStar
networks and experiencing savings of 80% of their OPEX costs.
NPV of VectaStar saving
Leased lines normally have a fixed connection fee for each site (CAPEX) regardless of the number of E1s required. For a cell site requiring 8 E1s this would equate to slightly less CAPEX than a VectaStar network on a per-link-per-E1 basis.
However, the main disadvantage of Leased Lines is the high OPEX cost per E1, which re-occurs every year and can form a significant portion (30% to 40%) of an operator’s overall Network Operations Costs. This model does not scale well with the long term bandwidth increase as networks migrate from being voice driven to being data driven.
For a network with 8 E1s per cell site, a VectaStar network would save 80% of the OPEX per E1 and these OPEX savings would pay for the VectaStar CAPEX in year one of a business model.
Leased line replacement business case
Consider a network operator using leased lines for cellular backhaul with a rapidly expanding bandwidth requirement driven by a higher percentage of revenues coming from data services.
In year one, 1200 links are to be cut over from Leased Lines to a PMP network. As these are replacement lines, there will be CAPEX associated with new PMP infrastructure, which must be funded solely by savings in OPEX (the difference between the old LL OPEX and the new PMP OPEX). There are also 600 new sites to connect in Year one and a steady growth of 400 sites per year to cover new HSPA sites and network expansion.
The business case for a PMP backhaul network is so strong that payback for all the initial PMP infrastructure would occur in year one, entirely funded from the large reduction in OPEX as a result of switching from Leased Lines.
OPEX and CAPEX comparison
| Annual parameters | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Replacement links | 1200 | 0 | 0 | 0 | 0 |
| New links | 600 | 400 | 400 | 400 | 400 |
| Total links | 1800 | 2200 | 2600 | 3000 | 3400 |
| VectaStar CAPEX ($M) | 32.1 | 7.1 | 7.1 | 7.1 | 7.1 |
| Lease Line CAPEX ($M) | 9.6 | 6.4 | 6.4 | 6.4 | 6.4 |
| VectaStar OPEX ($M) | 9.5 | 11.6 | 13.6 | 15.7 | 17.8 |
| Lease Line OPEX ($M) | 50.4 | 61.6 | 72.8 | 84.0 | 95.2 |
| Saving using VectaStar ($M) | 18.6 | 49.3 | 58.4 | 67.5 | 76.6 |
| Saving using VectaStar (pv $M) | 18.5 | 44.1 | 46.5 | 48.0 | 48.75 |
| Saving using VectaStar (npv) | $M 10 | $M 63 | $M 109 | $M 157 | $M 205 |
Notes
pv: present value
npv: net present value (cumulative)
- Where next
- Business case
- PTP replacement
- Leased Line replacement
