Dollars & Sense:
Making the "Fixed" Wireless Business Case
March 14, 2006: 9:30 AM
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The other day, I read somewhere that
there are currently 3,000+ independent facilities-based
broadband wireless operators across the US servicing 3+
million subscribers with a combination of licensed &
license-exempt pre-WiMAX (broadband wireless)
technology.
This statistic, in
my opinion, proves that broadband wireless access
technology has progressed beyond the realm of the
"science experiment," and with the advent of WiMAX, is
not becoming a mainstream access method. With this
in mind, I decided to sit down and put together a few
numbers based on my "in-the-trench" experience as an
operator.
With these numbers, it turned out that
to run a residential play selling services at a $40-60 /
month ARPU, approximately $600k in initial investment
(debt financing, internal operations, leasing changes
the whole equation though) is required to "make the
business work."
Brief
Financial Analysis
The operation turns EBITDA positive in
Year 2
The operation becomes cash-flow positive
in Year 3
The operations returns positive ROI in
Year 4
The operations returns positive IRR in
Year 5
Given a technology lifespan of 3 years,
this "empirical" analysis shows that this play is doomed
from the start -- however, the 3,000+ successful and
profitable US operators (including myself) prove that
there's something wrong with my logic and numbers.
Lets discuss this further and see if there's anything to learn...
