The Mobile Internet Report Key Themes*

Breaking Down OPEX and Capex Myths - New Technologies Should
Easily Handle Demand w/o a Surge in OPEX and CAPEX
2009E 2010E 2011E 2012E 2013E
Estimated Demand at Cell Site (Mbps) 25 50 100 300 600
OPEX - Backhaul
T1s Needed to Meet Demand (1 T1 = 1.5 Mbps) 17 33 67 200 400
Monthly Expense (1 T1 = $150) $2,500 $5,000 $10,000 $30,000 $60,000
Fiber-based Ethernet Needed (1 Fiber Scalable 1,00 2 2 2 2 2
Monthly Expense (1 Fiber = $2,500) $5,000 $5,000 $5,000 $5,000 $5,000
Microwave (1 Dish Scalable to 400 Mbps) 2 2 2 2 2
Monthly Expense (1 Dish = $400) $800 $800 $800 $800 $800
Capex for Technology (3G to 4G) per Cell Site
Initial 3G Deployment (HSPA 3.6) $100,000 $97,000 $94,090 $91,267 $88,529
Upgrade to HSPA 7.2 = 2x Capacity $25,000 $24,750 $24,503 $24,257 $24,015
Upgrade to HSPA 21.1 = 5x Capacity $80,000 $77,600 $75,272 $73,014 $70,823
Upgrade to LTE = +10x Capacity $85,000 $83,300 $81,634 $80,001 $78,401
Need two for
redundancy
• Based on our estimated demand forecasts, the economics of using T1s, an operating
expenditure (OPEX), are becoming less desirable. Technologies such as fiber-based
Ethernet and microwave, which offer more capacity, have now become the technology
of choice to meet the rising data demands without having to incur greater OPEX.
• Furthermore, carriers likely will be able to leverage existing infrastructure from when
3G technologies were initially deployed. For instance, to double capacity to HSPA 7.2
(which is a software upgrade), a carrier needs to spend less than 25% of what it cost to
initially deploy HSPA 3.6.
Source: Simon Flannery, Morgan Stanley Research. 488