Planning Profitable Broadband Networks
Every telecommunications salesperson’s dream is to land a new broadband business customer. However, sometimes a salesperson’s big opportunity creates a complex challenge for network planners.
In the best-case scenario, the customer is already in a fiber-lit building or near an existing access point, which will require only a low-cost fiber extension to connect service. But in the case where the customer is far from the existing network, high construction costs for an extension may overwhelm the revenue opportunity. In a highly competitive market where the shift from narrowband to broadband services is a foregone conclusion, a service provider’s decision to delay a network extension until sufficient customer requests can justify the cost will probably result in the initial customer signing on with the competition.
Planners need a better approach than waiting for more customers in order to justify capital expenses. It would help if planners could identify all the revenue opportunities along proposed routes, but manually assessing multiple scenarios and identifying an optimal solution are complex and time consuming. Planners need a solution that helps them accurately model complex scenarios and quickly evaluate alternatives.
Geographic information system (GIS) technology can automate the revenue evaluation process using a model that provides repeatable evaluations and easily adapts to changing scenarios. For example, in comparing a GIS-automated modeling method with a manual selection process, it was revealed that the GIS found an optimal route that identified revenue opportunities 54 percent higher than the manual method and an average revenue per business that was 59 percent greater.
Here’s how it works. If planners only consider the revenue from a single customer, they can evaluate several routes, with the primary variable being construction cost. Assuming revenue is fixed, planners would select the least-cost route. However, to maximize return on investment, consideration should be given to additional revenue opportunities as well. This increases the number of possible routes for evaluation and the complexity of the analysis. Finding the optimal route involves two variables, cost and revenue. Evaluating the trade-off between these two variables requires a complex series of repetitive data manipulation tasks that can be diagrammed in a workflow. In a GIS, these data manipulation tasks are called geoprocessing. The workflows can be modeled in the GIS and executed as an automated routine.
Esri’s ArcGIS solution includes a module called ModelBuilder, a flexible technology for integrating complex analytic operations and workflows into a model that replicates existing business processes. Network planners can automate the execution of the model to evaluate multiple network extension scenarios. The model makes it easy to change datasets, define and modify the influence of each dataset on the model, perform complex analysis functions, and generate maps that illustrate the results. Most importantly, the model lets planners evaluate multiple what-if scenarios by rerunning it with different data. Relevant data might range from street maps and imagery to lists of building tenants with estimates of their telecom spending to costs to build. Processes might include buffering, converting, overlaying, or selecting data.
Esri’s ArcGIS modeling solution is also capable of integrating information from asset management, customer care, billing, marketing, and other systems to create a more realistic and complete model of the network and market combined. As a result, ArcGIS and the ModelBuilder module give planners critical information for integrating revenue opportunities and alternate routes into the planning process to deliver an optimal solution.
Figure 1: Location of Existing Fiber Routes and Access Points
GIS technology provides an excellent platform to display the location of fiber routes and access points in a service area (figure 1). Understanding the location of the network and access points is the critical first step in determining the options for meeting customer service requests.
Figure 2: Image of Customer Location and Surrounding Area
The customer's address can be geocoded and the location placed on a map (figure 2). Photographic imagery can be used to increase understanding of the surrounding environment and the building-to-road offset.
Additional information using a street layer and other land features can help identify factors that will impact construction. For example, figure 3 shows how far a customer is from network access points and potential construction obstacles such as streams, parks, and major highway interchanges.
Figure 3: Nearest Fiber Access Points (in Blue) and Construction Obstacles (in Red)
The GIS makes it easy to visualize potential access routes in relation to obstacles. The planner can then sketch a new fiber route (figure 4) to the nearest fiber access point while circumventing major construction barriers.
Figure 4: Proposed Fiber Route
Adding a buffer around the planned fiber route identifies additional businesses that could be served through the new planned network (figure 5). Information on size and type of businesses, as well as number of employees, can be used to estimate additional service revenue potential. Detailed business data, such as estimates on use of information technology or telecommunications spending, available from companies such as GeoResults, can be integrated into the planning and analysis process. All this information helps the planner understand the revenue opportunities and can be used to support the project cost.
Figure 5: Businesses along Proposed Fiber Route
Up to this point, with the exception of integrating business information along the route into the revenue forecast, the GIS helped execute manual work processes. The customer was located on the map, the access points were identified, and a route that circumvented known obstacles was proposed.
However, using ArcGIS ModelBuilder, these manual work processes can be incorporated into an automated workflow and executed to identify the optimal solution. To visualize how this process works, the GIS was used to create the heat map shown in figure 6. The color depicts the revenue potential in a given area. Areas shown in red are areas of high revenue potential, while blue areas represent less revenue opportunity. The revenue opportunity was calculated using information on the type and size of the business. Larger companies and those with a higher propensity to purchase and use telecommunication services are ranked higher. Demand for telecom services was then used to calculate potential service revenue.
Figure 6: Heat Map to Identify Business Opportunities
The GIS can perform complex analysis using the heat map information as a basis for evaluating fiber routes based on revenue potential. The system model is built to favor high-revenue routes and avoid areas where construction problems exist, such as the streams, parks, and highway interchanges previously identified. Using the analysis and modeling tools available in the GIS, it selects a fiber route (figure 7) that optimizes the revenue opportunities.
Figure 7: Automated Route Selection
A comparison of the two methods of route selection (table 1) shows that the manually selected route was shorter by 1,077 feet, or 3 percent, and provided access to more businesses: 723 versus 701. This might be the typical choice if a planner manually selected a route. However, the route that was selected using the ArcGIS ModelBuilder solution has greater revenue potential.
Table 1: Route and Revenue Comparison
The total revenue potential using the automated selection process is 54 percent higher, and the average expected revenue per business is 59 percent higher. Manual route selection does work, and using a GIS can enhance the process. However, manual selection might overlook less obvious opportunities. This is especially true when trying to incorporate marketing data into the decision process. The demand for and price point of services are dynamic. Expected demand also varies based on type and size of the business. Asking a planner to evaluate all these parameters and incorporate them into a manual route selection process is unrealistic. If companies want to maximize their capital investments and deliver an optimal solution, they need to use a tool such as ModelBuilder, which is just one of many tools included in Esri's ArcGIS.
Randy Frantz, telecommunications and location-based service (LBS) solutions manager for Esri, has more than 27 years of global telecommunications management experience. For more information on Esri and GIS-based telecommunications solutions, visit www.esri.com/osp.