The IEEE WiMob 2014 Workshop on Emergency Networks for Public Protection and Disaster Relief

Business models and multi-domain analysis

for acquiring broadband PPDR systems

Henryk Gierszal Karina Pawlina, Piotr Tyczka,

Adam Mickiewicz University Krzysztof Romanowski
Poznan, Poland ITTI Sp. z o.o.
Poznan, Poland

Damien Lavaux Christos Katsigiannis

Thales Communications & Security S.A.S EXUS S.A.
Gennevilliers, France Athens, Greece

Abstract—Availability of modern, reliable and offering a wide The needs and requirements for PPDR communication are
range of services wireless communication systems is crucial for growing as new challenges and threats emerge. The services
the effective operation of Public Protection and Disaster Relief needed by PPDR agencies and organizations include not only
(PPDR) agencies during the emergency situations. This paper voice and narrowband data transmission but also broadband
presents the elements of the financial-economic analysis for data and video transmission. Moreover, there is increasing
acquiring and operating PPDR communication systems by the demand for better integration and cooperation of PPDR
interested entities. It deals with business model possible scenarios services at national, European and international levels that
and discusses main financial and economic factors in acquiring translates into necessity of interoperability of communication
PPDR systems. A software tool for multi-domain analysis of
networks used by them and/or migration towards new
business efficiency in procuring PPDR systems, developed within
broadband PPDR communication architectures.
the PPDR-TC EU project, and some example results obtained
with it are also presented in the paper. In this paper we deal with financial-economic analysis for
acquiring and operating PPDR communication systems. This
Keywords—PPDR systems, business models, finance and kind of analysis is important for decision makers (authorities,
economic analysis, business-oriented application, LTE, WiMAX PPDR organizations, etc.) to set PPDR system up. In Section II
we discuss the business models and respective sub-models for
I. INTRODUCTION acquiring and maintaining the PPDR systems. Section III
Public protection and disaster relief (PPDR) is the general presents a business-oriented application for multi-domain
designation given to a range of public safety services. Secure analysis that was developed within the PPDR-TC EU project.
and reliable wireless communication among personnel of The tool is described in terms of its capabilities and financial,
PPDR agencies is a vital element of their successful operation, economic and efficiency indicators that are the output results.
both in routine and emergency situations. The formal A case study of acquiring a PPDR network with the use of the
definitions of the PPDR radio communication are given in tool for obtaining financial analysis results for various business
Report ITU-R M.2033 [1]. According to it: sub-models is also given and discussed in Section III. Finally,
Section IV contains concluding remarks.
• Public Protection (PP) radio communication is radio
communications used by responsible agencies and
organisations dealing with maintenance of law and II. BUSINESS MODELS FOR PPDR SYSTEM ACQUISITION AND
order, protection of life and property, and emergency OPERATION
situations. The need for broadband services and interoperability
• Disaster Relief (DR) radio communication is radio among various communication systems being expressed by
communications used by agencies and organisations PPDR organizations in Europe and worldwide, as well as the
dealing with a serious disruption of the functioning of significance of the effective operation of public safety services
society, posing a significant, widespread threat to commonly recognized in the countries, open perspectives for
human life, health, property or the environment, near future investments in the area of Public Safety
whether caused by accident, nature or human activity, Communications (PSC). The decisions on the procuring or
and whether developing suddenly or as a result of upgrading the PPDR systems will be based not only on the
complex, long-term processes. technological features but also on financial, economical and
This work was supported by European Union in the framework of the FP7- organizational analysis. Regarding this, several business
SEC-2012.5.2-1 program – project "Public Protection and Disaster Relief – models with relevant submodels can be identified.
Transformation Center – PPDR-TC" (contract no. 313015).

978-1-4799-5041-6/14/$31.00 ©2014 IEEE 334

 The IEEE WiMob 2014 Workshop on Emergency Networks for Public Protection and Disaster Relief

The notion of a business model is mostly used in the C. Hybrid solutions with partly dedicated and partly
context of an abstract company and its revenue [2]. However, commercial network infrastructure.
the focus here is on analyzing technologies and architectures
rather than an enterprise, and thus the main addressee of In the following subsections we will briefly characterize the
recommendations is the PPDR community with stakeholders of above mentioned three acquiring models with appropriate sub-
various roles. The elements used to construct business models models.
reflect the broad range of options analyzed by the PPDR-TC
consortium, including a range of actors as well as value and A. Dedicated Network Infrastructure for PPDR
cash flows, though the dominant view is supposed to be that of In this model, a dedicated PPDR mobile broadband
a PPDR service organization. The key types of elements for the network is specifically designed to meet PPDR service
proposed business models are products or services, actors or requirements. Such a network is expected to be designed
entities, resources and capabilities, and finances [3]. Other similarly to current TETRA (TErrestrial Trunked Radio) and
analyzed aspects include geographical scope and future trends. TETRAPOL networks in Europe. In this design, the use of the
commercial mobile phone network infrastructure is limited.
In our approach, we consider three general business models There can be two sub-models of such an acquiring model based
suggested in [4] for implementation of critical communications on dedicated network:
broadband services. They can be identified as:
1.1. Mobile broadband network planned, built, run and
1. User Owned – User Operated (UO-UO): Building, owned by the authority
ownership and operation of the network(s) by the end-
user agency (or agencies) themselves. This sub-model is related to the generic UO-UO model. It
means that the authority sets the technical requirements to the
2. User Owned – Commercial Operator (UO-CO): network infrastructure with respect to PPDR services
Building and ownership of the network(s) by the end- requirements, finances the equipment and supporting
user agency (or agencies). Operation of the network(s) infrastructure, the operation and maintenance support systems
by a commercial provider of outsourced managed and pays the running cost (lease cost, operation and
network services. maintenance cost and spare parts). An authority project like
3. Commercial Owner – Commercial Operator (CO- this might also include end-user radio terminals and the public
CO): User agencies subscribe for services provided by safety agencies control room equipment.
a commercial network owner / operator. 1.2. Mobile broadband service provided through service
Table I presents the simplistic relative cost levels to PPDR offering
agencies of each of these three business model options in This sub-model is related to the generic UO-CO model. In
CAPital EXpenditures (CAPEX) and OPerational this acquiring model, the authority buys the mobile broadband
EXpenditures (OPEX) terms. services from a commercial company according to technical
requirements set to the services offered with respect to service
TABLE I. RELATIVE CAPEX AND OPEX COSTS FOR THE BUSINESS requirements. In this model the prerequisite is that the service
MODELS OF PPDR SYSTEMS offered is delivered through a dedicated mobile broadband
Business Model CAPEX OPEX network.
UO-UO High Low
UO-CO High/Medium Medium
1.3. Mobile broadband network planned, built, run and
CO-CO Low High owned by the PPDR agency but broadband service meets less
tight requirements

The business models presented above will impact the This sub-model is related to the generic UO-UO model. It
financial options to be considered. The investment financing is similar to sub-model 1.1, but requirements for system
strategy may generally come from: functionalities in the domain of broadband transmission are
less strict. This model corresponds to systems currently used
• public-private partnership (PPP), by PPDR agencies in most countries in Europe since typically
they deploy rather wideband systems.
• own funds to build the network,
• leasing, B. Commercial Network(s) Infrastructure Providing
Broadband Services to PPDR Users
• credit.
In this acquiring model, the authority buys mobile
Regarding implementation options, we follow acquiring broadband services from a commercial mobile network
models reported by CEPT ECC FM49 Radio Spectrum for operator. The PPDR services are delivered through the
PPDR working group [5]. The general implementation options commercial mobile network operator’s public network and no
can be stated as: dedicated network infrastructure is involved in the service
A. Dedicated network infrastructure for PPDR, delivery to the public safety users. There exist two variants of
broadband deliveries to PPDR users from a commercial
B. Commercial network(s) infrastructure providing network.
broadband services to PPDR users,

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2.1. Same mobile broadband services to PPDR as for public will satisfy the non-mission critical data transmission needs of
customers the PPDR users within the area covered by the commercial
network(s) used even without any additional resilience, priority
In this scenario the PPDR users will get the same service as or other specific functionality to treat PPDR users differently
the public, i.e. the other users of the network. No special from other users. In Fig. 1 a model overview for PPDR system
requirements to the service offering or to priority of service acquisition is depicted. Orange labels in this figure illustrate to
exist, with the exception of potential national roaming if that which general business model each acquiring sub-model
has been agreed. belongs to.
2.2. Mobile broadband services to PPDR with special
requirements Dedicated network(s) Commercial network(s) Hybrid
infrastructure infrastructure partly dedicated and partly
In this sub-model the authority will buy mobile broadband commercial network(s)
infrastructure
services to PPDR users from one or several commercial mobile
network operators. The idea is that the mobile broadband
services are delivered by the same network infrastructure as the Mobile broadband Same mobile Geographical split
network planned, broadband services between dedicated
commercial operator uses to deliver services to the public, built run and owned to PPDR as for and commercial
however, the authority have special requirements to both by the PPDR agency public customers network(s)
infrastructure
services delivered and Quality of Service (QoS). This means UO-UO CO-CO CO-CO
that the commercial operator has to support special services, Mobile broadband Mobile broadband MVNO:
services to PPDR
e.g. group calls, potentially extra security facilities and service provided
through service agency but with
PPDR users and
public users share
increased levels of availability through increased robustness in offering by tenders special requirements RAN
the network design (that will be to the advantages to all the UO-CO CO-CO CO-CO
operators’ customers) and priority to the PPDR users. Mobile broadband MVNO:
network planned, partly dedicated /
built, run and owned partly shared RAN
C. Hybrid Solutions with Partly Dedicated and Partly by the PPDR agency network(s)
but with less tight
Commercial Network Infrastructure requirements CO-CO

The idea behind the hybrid solutions is to jointly exploit the UO-UO Extended MVNO:
PPDR agency has
commercial mobile broadband network infrastructure and dedicated core and
satisfy the need the PPDR users have for availability and dedicated carriers in
commercial
capacity in daily operation as well as in periods of disaster operator’s RAN
and/or big planned and unplanned events when commercial CO-CO
networks often fail to deliver and/or are overloaded. A shared
infrastructure solution is regarded as a viable option to deliver Fig. 1. Model overview for PPDR system acquisition
mobile broadband PPDR services in the future. It is known that
nowadays the cost of building dedicated mobile broadband
solutions for PPDR in low populated areas may be regarded to III. BUSINESS-ORIENTED TOOL AND EXAMPLE RESULTS
be too expensive. One way to overcome this for PPDR users is
to utilise commercial mobile broadband network infrastructure A. Business Model
and existing coverage in those areas. There are several In the PPDR-TC project a business-oriented tool based on a
substantially different ways how the mobile broadband spreadsheet workbook has been developed to support end-user
network infrastructure sharing can be done. These sub-models and first responder agencies to proceed a process of acquiring a
are the following: broadband PPDR system. The tool makes cross-domain
analysis in order to give a trade-off between end-user’s
3.1. Geographical split between dedicated and commercial requirements and available funds. It allows providing a series
network infrastructure. of efficiency indices that can be used to compare different
3.2. Mobile Virtual Network Operator (MVNO) model scenarios of deploying a PPDR system taking into account
where PPDR users share Radio Access Network (RAN) with provided services and functions, as well as capital and
the public users. operating expenditures. The analysis that can be done in this
tool is carried out at four levels:
3.3. MVNO model with partly dedicated / partly shared
RAN network. • technical — by identification of functionalities and the
dimension of a communication system,
3.4. Extended MVNO model where PPDR have dedicated
core and service nodes and dedicated carriers in the radio • financial — through financial analysis including
transmitters / receivers in the RAN part of the commercial CAPEX and OPEX,
mobile broadband network.
• economic — by estimation of different economic
It is not known yet whether hybrid solutions could be used benefits that an end-user can gain due to acquiring a
with confidence for mission critical communications because new system,
the commercial part of the system may not meet the same
stringent PPDR requirements as the dedicated one. However, it • organizational — through the allocation of investments
seems a reasonable assumption that the commercial solution and operating/managing/maintaining costs associated

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with a communication system into entities of three maximum expenses. This type of analysis consists in
roles: owner, operator or user. modification of parameters introduced in the bottom-up
analysis in order to tune and optimize the overall result
In fact the end-user gets a tool that allows tuning different obtained for a given configuration of the business model. One
opposing dimensions. One can select preferable dimensions can select parameter(s) for which a search for an optimum
that decrease overall cost or increase QoS agreed in SLA. The solution is carried out using a solver tool of Microsoft Excel.
SLA is expressed by e.g. coverage area or by redundancy of The following parameter(s) can be set:
deployed base stations and affects the monthly fee of leasing.
• number of both types of terminals,
Several steps can be identified to create a business
scenarios in the workbook. They comprise specification of • number of base stations,
end-user requirements, selection of system technologies that
are used to provide services, specification of parameters that • dimension of each network component; it is expressed
configure the resulting network, and benchmark of results by a number of all types of terminals and a number of
obtained for each scenario. The communication technologies base stations,
are represented in the business model by several parameters: • number of years of operating the system starting from
services that can be delivered by them, typical cell radius, the first year when the system as a whole has been
buying expenditures for infrastructure components, and power acquired.
consumption of a base station in a typical configuration. These
characteristics allow calculating several elements of CAPEX The report that summarizes the multi-domain analysis of
and OPEX. the PPDR system contains the following information:
In the first step the end-user specifies functionalities of the • configuration characteristic of each network
system that is planned to be acquired. The end-user can select component of the system (dimensions of each network,
from 31 functionalities classified into 6 groups: voice, resulting functionalities, etc.),
narrowband data transmission (up to 384 kbps), broadband data • financial data and efficiency indicators presented in an
transmission (above 384 kbps), video (data transmission with aggregated or break-down form (e.g. Total Cost of
tighter latency), transversal services (extension of voice and Ownership (TCO), CAPEX and OPEX, Net Present
data capabilities and performance), and challenging services Value (NPV), Internal Rate of Return (IRR)),
(services enabled by the next generation of technologies) [6].
• economic data and efficiency indicators presented in
Then in the second step, up to three system technologies an aggregated or break-down form (Economic NPV,
can be selected for each scenario. The resulting PPDR system Economic IRR, Benefit-Cost ratio (B/C), Dynamic
is a superposition of these sub-system components. The Generation Cost (DGC)),
services provided to the end-users are inherent functionalities • organizational analysis,
of these technologies, but the service availability can be limited
• Strength, Weakness, Opportunity, Threat (SWOT)
to a coverage of each system component. It means that the
analysis.
resulting PPDR network can have national coverage for voice
services but only metropolitan coverage for video services. These results are shown in the form of a table that allows
comparing different system configurations, and therefore
In the third step the end-user specifies parameters for each
producing a benchmark how the PPDR system can be acquired.
network component. These parameters allow determining a
The majority of results can also be presented as charts.
dimension of each component. Some parameters are calculated
automatically on the basis of data input by the end-user but It is worth mentioning that DGC is considered as a good
they can always be modified manually to fit to the network measure of cost-effectiveness because it takes into account
project. These parameters are: area where network coverage expenditures and quantitative data for whole period of the
has to be available, a number of handheld terminals and other project duration and it is expressed in a fee per service [7].
ones (e.g. in-vehicle, Machine-to-Machine or fixed ones), a DGC is equal to a price which ensures a balance between
number of base stations, a number of management centers discounted effects and discounted expenditures. This index
(national Network Operation Centers (NOCs), regional NOCs, manifests an amount of a technical expenditure that is borne in
and dispatcher centers), a number of switches, a number of order to obtain a unit of targeted effect(s). This efficiency
interoperability gateways needed to connect external systems, index is a ratio between discounted costs and discounted
dimension of WAN (backhaul sub-network and backbone one benefits and is calculated as
expressed by a length of fiber optics or a number of
n
radiolinks), and a number of masts (existing, to be built and to KI t + KEt
be leased) for base stations. ∑ (1 + r )t (1)
DGC = t = 0n
The workbook implements bottom-up and top-down EEt
analysis. Bottom-up analysis provides a set of financial-
∑t = 0 (1 + r )
t

economic factors to assess the business efficiency of a

scenario. Top-down analysis adjusts the value of parameters where KIt is investment expenditures in year t, KEt —
(e.g. dimension of a system, a number of terminals, a number operation, management and maintain costs in year t, EEt — a
of base stations, a number of years of investment) for assumed

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measure of the resulting effects in year t, r — a discount rate, • a number of dispatchers centers: 380
and n — a lifetime of the project. • a number of mobile switches: 17
DGC is a very good approximation of a long run average • a number of interoperability gateways: 3
cost. If the value is great, a decision maker can either accept • a number of radiolinks: 1 814
high costs (because there are no alternatives or important
resulting (economic) effects exist) or reject the system project. • a length of the backbone network: 39 700 km
• a number of masts: existing — 20%, to be built —
In the workbook there are four types of worksheets: 50%, and to be leased — 30%.
• general information about model, worksheets, Note that the last three assumptions are exploited only in sub-
configuration parameters, and result templates, models 1.1, 1.3, and 3.1.
• configuration parameters that define assumptions and
constraints, TABLE II. MODELS AND SUB-MODELS FOR NEXT GENERATION PPDR
NETWORKS THAT ARE ANALYZED WITH THE TOOL
• calculation formulas for the model to resolve finance,
economic, and organizational results, Acquiring
A B C
model
• results presented as tables and charts to make a 1. Dedicated 2. Commercial 3. Hybrid
benchmark. Network network(s) solutions with
infrastructure infrastructure partly dedicated
B. Case Study for PPDR providing and partly
broadband services commercial
Let us consider the following example of building a PPDR to PPDR users network
network. A national PPDR agency is going to acquire a mobile infrastructure
network that meets a whole range of PSC requirements related 1.1. Mobile 2.1. Same mobile 3.1. Geographical
to, e.g., European critical infrastructure as well as PPDR broadband broadband services split between
activities for day-to-day and crisis use. It is assumed that only Sub- network to PPDR as for dedicated and
model planned, built, public customers commercial
legacy radio systems exist in that country. They are mainly 1 run and owned network
based on analogue systems and provide only voice service. by the infrastructure
authority
The objective of the project led by that PPDR agency is to 1.2. Mobile 2.2. Mobile 3.2. MVNO
acquire a nationwide broadband network that can be based on a broadband broadband services where PPDR
mix of mature TETRA standards and broadband LTE or Sub-
service to PPDR with share RAN with
model
WiMAX ones. The PPDR agency starts in almost “green field” 2
provided special the public users
conditions but it has plenty of own masts and many radiolinks through service requirements
to them. offering
1.3. Mobile 3.3. MVNO with
The new network can be built by the PPDR agency or this broadband partly dedicated /
PPDR agency can lease needed services from one or many network partly shared
planned, built, RAN network
network operators. The operating/managing/maintaining costs Sub-
run and owned
can be borne by the PPDR agency that does it with own model
by the PPDR
3
personnel or such tasks can be outsourced to external but broadband
company (-ies) with which PPDR agency commits an Service service meets
Level Agreement (SLA). less tight
requirements
The ways how this new network can be acquired and Sub- 3.4. Extended
evolved are presented in Section II where 9 sub-models model 4 MVNO
clustered into three groups were identified. They are
summarized in Table II. The results obtained with the
workbook tool for the considered case are presented and C. Results
discussed in Section III.C They were obtained for the All nine analyzed systems consist of two technologies. The
following assumptions: main technology is TETRA, the second one is LTE (eight sub-
• discount rate for cash flow: 8% models) or WiMAX (sub-model 1.3). The TETRA network
provides specific services required by the PPDR agencies for
• a lifetime of the project: 15 years PSC use. The second technology — LTE or WiMAX —
• investment period: 4 years complements the system providing broadband services. Only
• warranty period for the equipment: 2 years sub-model 1.3 does not offer a group of challenging services
• yearly increase in a number of terminals: 1% (services enabled by the next generation of technologies, e.g.
• coverage area of the system: 312 000 km2 proximity services and augmented reality) due to limited
• a number of handheld terminals: 100 000 maximum throughput of the radio interface.
• a number of other types of terminals: 1 000 TETRA Results of financial analysis are summarized in Table III
and 10 000 LTE or WiMAX where TCO, NPV, and ENPV values are reported for each of
• a number of national NOCs: 1 the sub-models. In Fig. 2 CAPEX and OPEX are shown.
• a number of regional NOCs: 16 Yearly TCO per user and DGC are depicted in Fig. 3.

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Analyzing the results in Table III it is seen that in all sub- personnel and centers, expressed by the DGC indicator, is in
models NPV values are less than zero. It is because PPDR the range of 252 to 1 222 € per person-month. In terms of
agencies are public organizations without any incomes due to economic benefits one can conclude that the most promising
security needs and political reasons to be independent. ENPV scenarios are 1.3 and 3.1-3.4. It is in line with conclusions
are positive at the end of a project. It means that all sub-models drawn from Fig. 2.
are profitable for public PPDR agencies. The best result of
financial (TCO and NPV) and economic analysis (ENPV) was
obtained for sub-model 1.3 where there is a mix of TETRA and
WiMAX networks but the latter provides broadband services
of lower performance as compared to a sub-system based on
LTE.

TABLE III. RESULTS OF FINANCIAL ANALYSIS

ENPV [last
Sub- TCO [for 15 NPV [last year of
year of the
model years] the analysis]
analysis]
1.1 972 859 588 € - 627 265 442 € 783 217 065 €
1.2 2 441 820 758 € - 1 314 319 550 € 96 162 958 €
1.3 403 037 171 € - 250 919 912 € 1 068 572 279 €
2.1 1 884 828 038 € - 1 017 116 795 € 393 365 713 €
2.2 2 070 492 278 € - 1 116 184 380 € 294 298 128 €
3.1 542 769 531 € - 326 399 227 € 1 084 083 281 €
3.2 500 925 231 € - 304 070 963 € 1 106 411 545 €
3.3 569 408 031 € - 340 612 387 € 1 069 870 121 €
3.4 533 968 590 € - 327 975 582 € 1 082 506 926 €

Fig. 3. Yearly TCO per user and DCG.

IV. CONCLUSIONS
In this paper we have presented some aspects of the
financial-economic analysis for acquiring broadband
communication systems for PPDR services. In particular, we
have described three general business models and a number of
relevant sub-models related to financing strategies and
implementation options for setting up future PPDR networks.
To support end-users and decision-makers in a process of
acquiring a broadband PPDR system, a business-oriented tool
has been developed. The tool allows a multi-domain analysis
taking into account technical, financial, economic, and
organizational aspects of the investment project. The
Fig. 2. CAPEX and OPEX comparison. capabilities and methodology used in the tool have been
illuminated in the paper.
Sub-models 1.1 and 1.3 are based mainly on CAPEX We have also presented an example case study of acquiring
whereas sub-models 1.2, 2.1, and 2.2 − on OPEX. Other sub- a PPDR network showing the use of the tool for obtaining
models (3.1, 3.2, 3.3, and 3.4) are mixed variants of capital and financial analysis results for various business sub-models. The
cost expenditures. As can be seen from Fig. 2, for the results obtained for the example case in Section III have shown
investigated use-case the CAPEX-based models give better that the most attractive scenario for PPDR agencies is 1.3.
results, i.e. lower overall costs. The reason for that is a large They acquire mature systems for voice, messaging and
number of terminals which are very expensive in OPEX-based broadband transmission. The only disadvantage is that
sub-models where monthly fee is paid. If a less number of broadband transmission is limited in the capacity as compared
users is considered, OPEX-based models may be more to up-to-date technologies, e.g. LTE-Advanced. Nevertheless
profitable. narrowband transmission is always available using TETRA
The results presented in Fig. 3 show that for this example sub-network. Leasing the network (scenario 1.2) or the services
study the values of TCO range from 220 to 1 334 € yearly per (scenarios 2.1-2.2) is the most expensive option. Scenarios
user and depend on the business sub-model chosen. In turn, a 3.1-3.4 also seem to be attractive approaches to acquiring a
discounted cost of increasing the work efficiency due to the PPDR network. An additional advantage of the latter ones is
improvement of the level of communication between field

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that the responsibility for the network is split between PPDR ACKNOWLEDGMENT
entity and commercial operator(s). We would like to thank James Jackson from Rinicom Ltd.
The efficient indices of the project how a PPDR system can for his contribution to finance calculations of the business
be acquired depend on many factors. The needed coverage and model. We also express acknowledgment to Mirosław
a number of end-user terminals are the most important Derengowski, Maciej Skoraszewski, Stefan Wieczorek, Marek
parameters. In the scenarios where any commercial operator is Winczura, Marek Magiera, and Henryk Paluszkiewicz from the
involved, co-operation costs expressed by SLA have appeared Polish energy sector for their support in creating the model.
to be the most significant ones. It is also a time consuming
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