Engineering Analysis and Economic Evaluation

Int. J. Services, Economics and Management, Vol. 4, No.
1, 2012
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Engineering analysis and economic evaluation of broadband fixed wireless access in developing country: wireless city in Thailand Pichet Ritthisoonthorn* and Kazi M. Ahmed
School of Engineering and Technology, Asian Institute of Technology (AIT), P.O. Box 4, Klong Luang, Pathumthani 12120, Thailand Email: st100437@ait.ac.th Email: kahmed@ait.ac.th *Corresponding author
Donyaprueth Krairit
School of Management, Asian Institute of Technology (AIT), P.O. Box 4, Klong Luang, Pathumthani 12120, Thailand Email: donya@ait.ac.th
Abstract: The emergence of advanced broadband wireless access technologies has significantly increased choices, putting pressures on network operators to obtain the necessary information on which to base their investment decisions. This research focuses on the technological and economical assessments of WiMAX, in a specific developing telecommunications market. The study examines the economic feasibility, and presents a discussion of planning and characteristics of WiMAX technology. The study also explores a new engineering-economic analytical model for evaluating a WiMAX system in a prospective wireless city and demonstrates its real-world applicability using Bangkok as the case study. The results show that the service area, quality of network planning and amount of frequency bandwidth allocated to WiMAX technology strongly influence the networks economic merit, making investment decisions in BFWA network highly dependent on them. Keywords: wireless access network; engineering-economic analysis; BFWA; WiMAX; wireless city; Thailand. Reference to this paper should be made as follows: Ritthisoonthorn, P., Ahmed, K.M. and Krairit, D. (2012) Engineering analysis and economic evaluation of broadband fixed wireless access in developing country: wireless city in Thailand, Int. J. Services, Economics and Management, Vol. 4, No. 1, pp.4361. Biographical notes: Pichet Ritthisoonthorn is currently a doctoral student in the Telecommunication Program, School of Engineering and Technology, Asian Institute of Technology (AIT), Thailand. His current research interests include broadband access network, telecommunication policy and management.
Copyright 2012 Inderscience Enterprises Ltd.
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P. Ritthisoonthorn, K.M. Ahmed and D. Krairit

Kazi M. Ahmed is currently a Professor of Telecommunication Program at the School of Engineering and Technology, AIT, Thailand. He received the MSc Eng degree in Electrical Engineering from Institute of Communications, Leningrad, Russia (1978). He has completed his PhD at the University of Newcastle, NSW, Australia (1983). His current research interests include propagation and channel modelling in mobile communications, satellite communications and radar problems, antenna array processing, tropospheric and ionospheric propagation studies for microwave VHF-UHF communications, and frequency spectrum management. Donyaprueth Krairit is currently an Associate Professor of Technology Management Program at the School of Management, AIT, Thailand. She received the MS (Telecommunications) from University of Colorado at Boulder, Boulder, CO (1994). She has completed her PhD at Massachusetts Institute of Technology (MIT), Cambridge, MA (2001). Her current research interests include telecommunications strategy, policy planning and analysis.
Introduction
The internet is a global source of information to modern societies. It also gives opportunities to communities in remote areas to access, e.g., agricultural information, distant leaning and healthcare service. Access to the internet, however, is very difficult in developing countries since the construction of physical cable plant requires massive cost of investment. As such, most operators have less incentive to install cable in remote and sparse population areas because these areas are uneconomical investment. The unfeasibility of investment in these areas creates the gap between the urban and the rural area. This gap is a primary barrier to remote communities access to the information from internet. Until recently, the emergence of advanced digital technologies and the availability of low-cost communications technologies have significantly increased choice on network operators to obtain low-cost wireless access network. Currently, many network operators are attempting to overcome cost constraints found in the wired access network by using wireless access. In other words, wireless access can effectively be implemented for broadband connectivity, and is revolutionising the Fixed Wireless Access (FWA) system. This revolution, in turn, significantly opens opportunity to developing countries in the provisioning of broadband internet access to their populations, especially in remote areas which are lacking in broadband access. The FWA system is defined by ITU as a wireless access application in which the location of the end-user terminal and the network access point are fixed (ITU, 2009). Unfortunately, ITU did not designate any specific technology for the FWA system. Lately, the emergence of a new broadband wireless technology, WiMAX, has presented a possible standard technology for the FWA system. WiMAX is short for Worldwide Interoperability for Microwave Access, as defined by the WiMAX forum. The IEEE 802.16 standard was established in 1999 (Eklund et al., 2002) and the WiMAX standard was updated to 802.16a in 2003. The update 802.16d emerged in 2004 and became known as fixed WiMAX. Fixed WiMAX offers the benefits of available commercial products and implementations optimised for broadband FWA (BFWA) networks. The BFWA network with WiMAX has gained popularity as a wireless standard for broadband internet access.
Engineering analysis and economic evaluation
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The wireless city is an effort to provide broadband wireless access to every resident of the city. At present, providing broadband wireless access to all residents has become a reality in many cities around the world from the USA to Europe and as far as Asia (Ballon et al., 2007). Currently, wireless infrastructures in cities are deployed using the Wi-Fi technology as a hotspot access since it has small coverage area. The emergence of WiMAX, however, has stimulated the demand for wireless access with higher bandwidth and wider coverage area. As a result, the wireless infrastructure in many cities is shifting towards WiMAX technology. Though, this shift is not easy since WiMAXs strategic deployment significantly differs from Wi-Fi. Wi-Fi technology, operates in an unlicensed band, has no associated spectrum cost and less technical control during deployment. This is not the case of WiMAX technology. WiMAX requires complex engineering tasks since it is an advanced wireless technology operating in a licensed band. This causes the deployment of WiMAX requiring both complex network engineering and high upfront from spectrum cost. Consequently, it is advisable that the investment of WiMAX as BFWA network undergoes engineering and economic evaluation before any actual investments are committed. Several research works involving the economic issues of WiMAX have been carried out in developed countries. Examples are Wanichkorn and Sirbu (2002), Wang (2004), Smura (2004) and Lannoo et al. (2007). However, there has hardly been any work which investigated both the economic and engineering issues of WiMAX as a BFWA in a developing country. It is interesting to know how WiMAX as a BFWA technology fares against engineering-economic analyses. This paper focuses on and attempts to answer the following research questions: What is the best design for a cost-effective BFWA network with WiMAX? What is the economic performance of WiMAX as a BFWA network? A related research question is whether WiMAX can succeed as a technology standard for a wireless city, especially in a developing country. To answer these research questions, we have developed an engineering-economic analysis model and use it as a tool to investigate the economic feasibility of using WiMAX technology as a BFWA network. We apply results to Bangkok, the capital of Thailand, as a real case study of a wireless city project. Following this introductory section, Section 2 briefly reviews the status of ICT development and policy in Thailand. Section 3 presents the engineering-economic model including network architecture diagrams. Section 4 describes the key model components and formulae associated with network engineering. Section 5 evaluates the economic viability of a wireless city project and discusses the technical and policy implications of the results. Finally, discussion and conclusion are presented in Section 6, accompanied by some remarks.
The Thailand ICT development: status and policy
2.1 Telecommunication infrastructure development

Thailand is situated in the centre of the peninsula that forms part of Southeast Asia. The Thai government has recognised the role of the telecommunication industry as one of the key sectors for the nations economic, social and cultural development. In 2006, Thailands telecommunication industry was liberalised and entered the free market.
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The telecommunications infrastructure in Thailand is overseen by the TOT Public Company Limited (formerly Telephone Organization of Thailand), the telecommunication state enterprise. The penetration rate of the telephone line has gradually fluctuated over the past three years from 10.69% in 2005 to 10.46% in 2008. As of the end of 2008, the total number of basic telephone lines was 7.1 million divided into 3.5 million in Bangkok and 3.6 million in the rest of the provinces. The growth of mobile market is expected to increase significantly over the past three years. During 2005 to 2008 the average growth is about 6.1% per quarter. At the end of 2008, the penetration rate had reached as high as 102% with the total number of mobile subscribers 61.85 million. The internet user in Thailand is 13.4 million and increase as 483.3% compare to the year 2000. The growth of internet users in Thailand is steadily increasing, especially for broadband users, as shown in Figure 1. The total number of broadband internet user is 1,770,520 with the penetration rate of 2.79% and expected to be 17.3% in 2013 (NTC, 2008a).
Figure 1 Number of registered broadband and narrowband internet user in Thailand (NTC, 2008a) (see online version for colours)
2.2 National ICT policy

In 1996, the Thai government initiated the first national IT master plan, IT2000. IT2000 put forward the countrys vision to properly exploit IT with the purpose of achieving economic prosperity and social equity. Shortly thereafter, the rapid change in global ICT and its widespread adoption in all sectors of the economy led to emergence of the new version of the IT master plan, IT2010, which was subsequently approved by the government as a policy framework for Thailands ICT development in 2002 (Thuvasethakul and Koanantakool, 2002). In November 2008, the Ministry of Information and Communication Technology (MICT) developed the new national ICT master plan, called IT2020. The IT2020 seeks to ensure continuity within the policy framework of previous IT2010 master plan by continuing to emphasise the development and application of ICT for e-commerce, e-education, e-society and eventually e-government. The key principle of IT2020s formulation is building the country capability by using ICT technology (MICT, 2009).
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2.3 WiMAX trial, benefits and status

The trial of WiMAX in Thailand was initiated in 2000 by NTC (the National Telecommunication Commission). In 2007, NTC has temporarily allocated 2.33.5 GHz spectrum range for trial of WiMAX. There were 18 companies who participated in the trial (NTC, 2008b). In December 2008, NTC officially granted the 2.5 GHz to four Universal Service Obligation (USO) projects in Thailand. The first project was partnered between NTC and Ministry of Public Health providing a telemedicine service from a central hospital to surrounding Primary Care Units (PCUs) in remote areas. The project helped the staffs in remote PCUs consulting to the doctor and treatment to their clients using fast interactive image monitoring. The rest of the projects were joined between NTC, TOT Pcl., and two universities in north-eastern part of Thailand. These projects were long-distant learning related, i.e. knowledge and teaching medias were real time distributed from universities to the primary schools in remote areas (TOT Pcl., 2009). It demonstrates that WiMAX technology has feasibility for broadband wireless access. It is signed that WiMAX in Thailand is more progressing even though commercially is yet to be available. USO projects show that using WiMAX as a BFWA can bring benefit to the Thai societies and narrow the digital divide to remote communities. Local communities in remote areas are directly gaining benefits from health improvement and easy access to the knowledge centres. The economic viability of WiMAX, however, is not established since all USO projects are fully subsidised by the government. At present, there is no licence of WiMAX issued to any provider in Thailand. The commercial deployment of WiMAX in Thailand has to wait until the licensing process by NTC is completed.
2.4 Bangkok and the wireless city ambition

Bangkok is situated in the central part of the country. The city is administrated by the local government called Bangkok Metropolitan Administration (BMA). The city has population close to 10 million, a good portion of which are daily commuters. The breakdown of land use is as follows: 44.6% urban, 23.3% residential, 24.1% agricultural, and the rest are for commercial and government use (BMA, 2008). A comparison in numbers of socioeconomic information between the city and the entire Kingdom is shown in Table 1 (NSO, 2007).
Table 1 Geographic and socioeconomic information of Bangkok (NSO, 2007) Unit Km2 Million Million USD per month USD per month Per 100 inhabitants Per 100 inhabitants Per 100 inhabitants Per 100 inhabitants Per 100 inhabitants Bangkok 1568.73 6.3 1.7 1093.8 737.7 55.5 110 5.8 40.2 29.9 Whole Kingdom 513,119.50 60.6 15.7 570.4 437.1 11.7 102 1.4 26.8 15.5 Information Area Population Household (million) Income level Expense Basic telephone Mobile phone Facsimile Personal computer Internet connection
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Telecommunications services such as basic telephones, mobile phones, and internet access are available within the city. Presently, over 1000 Wi-Fi hotspots are available. Wireless access service is planned to be installed in the prime areas of the city, particularly high-rise buildings, apartments and campuses (Charmonman, 2007). The city has yet to announce its wireless city strategy, but with an increasing number of internet users, Bangkok will sooner or later become one.
An engineering-economic evaluation model: network architecture and diagram
3.1 Network architecture

Over the past decade, several engineering-economic analytical models had been implemented by a series of telecommunications projects in developed countries. For example, the work of Olsen et al. (1996) initiated the engineering-economic model for evaluating the economic feasibility of wired access networks, which was utilised in the study of broadband FTTx access networks by Monath et al. (2003). Park and Chang (2004) developed a model to investigate the economic aspect of the evolution of mobile networks toward 3G in Korea. Recently, Olsen et al. (2006) carried out an engineeringeconomic evaluation of wired and wireless access network competitiveness in Europe. The engineering-economic model proposed in this paper aims to answer similar questions with access networks. The key components of model, however, are significantly different since this study deals with the application of WiMAX technology in a developing country while the models in previous works dealt with the planning of ADSL, FTTx and WCDMA technology in developed countries. With the specific area, unique market characteristics and the specific technology used in this study, no previous engineering-economic models could directly answer questions posed by this research. We, therefore, develop our specific model for evaluating the economic merits of WiMAX technology in a specific, real case study of a potential wireless city, Bangkok. When developing an engineering-economic model, network architecture plays a key role because the cost efficiency of a BFWA network is influenced by this factor. At present, the network architecture of the Bangkok wireless city project has not yet been finalised. The architectures that were used in the trials of WiMAX are varied in according to the existing infrastructure of each operator. However, TOT is one of the incumbent participating in the trial of WiMAX by selecting Pattaya beach as a field of trial. The trial used three base stations with coverage area of 9 sq. km, and 22 CPEs. The trial has covered four tests: coverage, service, modulation, and subscriber satisfaction. The range for indoor usage is about 13 km at 5.6/0.7 Mbps (download/upload) while outdoor has the maximum range of 9.1 km at 5.2/1.2 Mbps. VoIP has been simultaneously tested with ftp (file transfer protocol) and no failure to both call and file transfer was noticed. IP multicast is another service under the test and it shows that the sending of streaming did not degrade during video playing. For adaptive modulation test, it was found that the CPE has automatically adopted the modulation scheme from 64-QAM to 16-QAM when the received signal is deteriorated. The customer satisfaction test has been done using direct interview to user. It is found that all customers have well perceived the benefit of WiMAX technology especially the speed of data transmission and convenience of usage (TOT Plc., 2008).
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The network architecture under the trial has slightly been different from architecture under this study, i.e. the base station controller is not included in the trial. The architecture of the trial directly connected the group of base station to the centre office without base station controller. The trial also includes the mobility of usage. With aforementioned, this study uses a generic architecture of WiMAX networks, shown in Figure 2, as a typical architecture for designing the BFWA network.
Figure 2 BFWA network architecture: ST (Subscriber Terminal), BS (Base Station), BSC (Base Station Controller), and BRAS (Broadband Remote Access Server) (see online version for colours)
3.2 Data and information

Another critical issue when developing an analytical model pertains to data and information analysis. The engineering-economic analysis of BFWA network requires specific local information such as traffic per user, number of users, growth of demand, environmental, demographic data, land use, population and household, services charging and fees. These data are derived from TOTs database and have specific values rather than arbitrary assumptions. We take these data into consideration during the formulation of the engineering-economic analysis model. Compared with other automatic planning tools used by Smura (2004), Wang (2004), and Zhang and Wolff (2004), the network designs were generalised without referring to specific designs but instead were based on assumptions. Given the network architecture in Figure 2 along with local data, information from the case study and the principles of engineering-economic analysis provided by Blank and Tarquin (2002), and Sullivan et al. (2003), we formulated our own engineering-economic analysis model for evaluating the economic aspects of WiMAX technology.
3.3 Model formulation

The analytical model consists of three main modules: the input module, the engineeringeconomic module and the output module. The input module is related to technology architecture, demand and area. The engineering-economic module comprises two sub-
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modules: engineering and economic. The functionality of engineering sub-module is radio network planning. The primary output from the engineering sub-module is the number of network components. The economic sub-module translates the outputs from the engineering sub-module into global economic merits. Inputs of sub-module include costs, revenues, service charge and fee. The function of output module is to calculate economic merits using standard economic measures such as Net Present Value (NPV), Interest Rate of Return (IRR) and Payback period (PB). In fact, the engineering-economic analytical model of BFWA networks was initially proposed by Ritthisoonthorn et al. (2006). A revised and more comprehensive version is shown in Figure 3. We use the bottom-up approach for constructing the engineeringeconomic analytical model where the numbers of network element are derived from technical requirements rather than accounting requirements.
Figure 3 Engineering-economic model and flow diagram
Engineering sub-module Technology Frequency planning Coverage planning Capacity planning Area
Service
Traffic & Demand
Logistic model Economic sub-module Design Alternatives
Cost & Revenue Data Finances & Tax Data
Cash flow development Costs and Revenues Economic measures Calculate results
Useful life time
NPV
IRR Initial Cost Break even point Cash Flow
Payback Period
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Model components, formulae and assumptions
4.1 Cost estimation

Engineering-economic model deals with a vast number of network elements. We apply a learning curve as a method of cost prediction which is given by Olsen et al. (2006):
1 1 2 ln 9 t ln nr ( 0 ) 1 1 t Pn ( t ) = nr ( 0 ) 1 + e log 2 K
Pn ( 0 )
where Pn(0) is the production cost in the reference year 0, nr(0) is the relative accumulated volume in year 0, t is the time for the accumulated volume to grow from 10% to 90%, and K is the learning curve coefficient.
4.2 Market forecasting

This study uses the logistic curve as a method for predicting future demand. This method requires the series of historic demands in the previous year for estimating the forecasting parameters. The forecasting parameters are then used to predict the demand in future reference years. The logistic curve is given by Monath et al. (2003) as
n (t ) = M 1 + e( a + b.t )
where M is the saturation level at which growth stops, a is the location parameter which shifts the curve in time, b is the growth rate, is the stepwise parameter and t is time.
4.3 Economic evaluation

Engineering-economic analysis involves the basic question of whether a proposed investment costs and its associated expenditures can be recovered by revenue over time. The Discount Cash Flow (DCF) is the preferred method for answering the question of investment. We apply the procedure of the DCF calculation, stated by Blank and Tarquin (2002) and Sullivan et al. (2003), which is given by
DCF = Ft (1 + i )
t =0 N t
where Ft is the cash flow of each year, i is the discount rate per year and N is the number of discounting period (years).
4.4 Network dimensioning

The main function of network planning is to estimate the number of network elements that are able to fulfil coverage and capacity requirements (Nawrocki et al., 2006; Graham et al., 2007). In this study, we develop a new method for planning the WiMAX network.
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The method of network planning for engineering purpose is slightly different compared with economic purpose because the main purpose of economic analysis is to approximate the number of network elements required for evaluation while engineering purpose is designed to meet its functionality. Nonetheless, the more details of parameters included for planning is, the more accurate is the result of the output. The method of network planning of this study differs from the previous works in two aspects: assumption of subscriber location and traffic estimation. We use modulation distribution to represent the location of subscriber to the base station. Traffic per subscriber is derived from the real traffic measurement of operating network. At the end of the process, the number of base stations (BS) will be known and satisfied according to the following equation:
N BS = max { N BS co , N BS ca }
where NBSco and NBS-ca denote the number of BSs acquired from coverage planning and capacity planning, respectively. Coverage planning of radio network requires the knowledge of the radio propagation model for predicting the path loss between the BS and the subscriber terminal (ST). Plitsis (2005), Garcia-Fragoso and Gavan-Tejada (2005) classified and characterised the radio propagation models into three categories: empirical, deterministic and stochastic. Among the mentioned models, empirical model is the most appropriate for dimensioning wireless network since it is simple and sufficiently accurate in the limited knowledge of environment data (Anderson, 2003). Abhayawardhana et al. (2005) has validated the three empirical models appropriate for WiMAX application: ECC-33, SUI-B and SUI-C. ECC-33 model was developed by Electronic Communication Committee and SUI model is the Stanford University Interim (SUI). SUI classifies terrain into three types: type A is associated with maximum path loss and appropriate for hilly terrain with moderate to heavy foliage densities. Type B is characterised with either mostly flat terrain or moderate to heavy tree densities. Type C terrain is associated with minimum path loss and applies to flat terrain with light tree densities. We select and apply these empirical path loss models to this study based on the experiment of Abhayawardhana et al. (2005). The ECC-33, SUI-B, SUI-C models are used for prediction the path loss in dense urban, urban and suburban, respectively. By applying a BS antenna height of 60 metres, a ST antenna height of 6 metres, and carrier frequency of 3.5 GHz, the closed forms for predicting the allowable path loss in dense urban, urban and suburban areas are given by:
LECC 33 = 132.64 + 29.83 + 4.78log ( d ) log ( d ) LSUI B = 121.22 + 41.67 log ( d ) LSUI C = 111.57 + 36.33log ( d )
where d is distance between the transmitter (BS) and the receiver (ST). We develop the link budget to estimate the maximum allowable path loss between BS and ST. At the end, the cell range is estimated by applying path loss models to convert the maximum allowable propagation loss (L) in dB into distance (d) in kilometres. The study uses the cell range for the downlink direction, which is expected to support much higher data rates than the uplink. By assuming the cell shape is hexagonal, the area
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covered by a single cell is given by Acell = 2.6d2. The result from radio coverage design was the number of BSs for a given service area, which is obtained from following equation:
N BS co = Aservice Acell
where Aservice is a given service area. In capacity planning, we need to estimate NBSca to handle the traffic demands from subscribers in a given service area. The maximum number of active STs depends on the channel throughput of the BS. Channel throughput (T) is defined as the aggregate cell payload, i.e. the peak useful data rate. The aggregate cell payload for WiMAX is given as (Ritthisoonthorn, 2008):
T= 6 q 2m Bc Rc 7 ( 2m + 1)
where q is the bits per symbol for the modulation being used, m is the cyclic prefix, m = {2,3,4,5}, Bc is the channel width of WiMAX, and Rc is the overall code rate for the modulation being used in ST. At the end of capacity planning, we obtain the required number of BSs by using the following equation:
R N BS ca = d N service T
where Rd is the peak traffic demand per user in kb/s and Nservice is the number of subscribers to be served.
4.5 Traffic estimation

A common method widely used to estimate traffic per user in a best-effort IP network is derived from arbitrary assumptions. Contradictory to other works, in this study the traffic per subscriber is derived by using a real traffic from measurement, which was carried out by Ritthisoonthorn et al. (2007).
4.6 Area definition

The definition of an area is used for describing the characteristics of an area under study. We use Bangkoks demography information such as population, number of households, and land use as the criteria for defining service area, as shown in Table 2.
Table 2 Area definitions Dense urban Urban 12,132.0 5903.4 4312.6 2147.7 178.5 554.1 Business area & high Middle density & lower density living area density living area Suburban 2021.4 714.7 836.2 Agriculture living area Parameters Population density (per sq. km) Household density (per sq. km) Area (sq. km) Land use
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4.7 Network configuration

The channel throughput of WiMAX strongly depends on the modulation type. In the principle of adaptive modulation, the modulation order depends on the Signal-to-Noise Ratio (SNR) at the receiver end. The SNR relates to the distance between transmitter and receiver. Normally, the main objective of an engineering design is to install the BS at the location where the number of subscribers is maximum. In real life, the subscribers are dispersed and cannot be covered by a single BS. We, therefore, need to assume the locations of subscribers relating to the BS. The criterion for the assumption is: if the subscribers who are close to the BS experience higher SNR, then the higher bit-persymbol modulation scheme is selected in the ST. As a result, STs being closer to the BS have different modulation schemes from the ones further away. Based on this criterion, we assume the locations of BS subscribers through the distribution of the modulation scheme being used in the ST. We estimate the distribution of modulation in terms of the configuration of BS. We define the configuration of WiMAX into three scenarios. The first scenario is the low capacity configuration, where the modulation scheme being used in the ST is dominated by BPSK. The second scenario is the medium capacity, where the modulation schemes are QPSK and 16-QAM. The last scenario is the high capacity configuration, where 64-QAM is the dominant modulation scheme in ST. Table 3 shows the network configuration in terms of modulation distribution in ST.
Table 3 BS configuration and assumption of modulation scheme Low capacity 80% 10% 5% 5% 100% Medium capacity 1% 48% 50% 1% 100% High capacity 1% 5% 10% 84% 100% BS configuration BPSK QPSK 16-QAM 64-QAM Total
Evaluation and results
5.1 Investment alternatives

An investment alternative is a feasible choice of network investment in different design options, parameters and assumptions. Exploring parameter combinations of channel bandwidth, application area and channel throughput, we define nine feasible investment alternatives for examining the economic viability of WiMAX technology, as shown in Table 4.
5.2 Analysis results

The examinations of network planning give the results of path losses and cell ranges in different RF channel bandwidths as shown in Table 5. The result shows that the cell in suburban area has wider range since there is small obstacle obstructing radio signal. Technically, the cell range depends on the received signal level of pilot channel (or receiver sensitivity). The receiver sensitivity and interference margin (3 dB) are accounted
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into link budget and used for calculating the maximum allowance path loss. Therefore, the cell range strongly depends on the maximum allowance path loss between base station and subscriber station. We have analysed the effect of user data rate on channel capacity, as shown in Figure 4. The relationship of channel capacity and user data rate is correlated with theory. But the intension of figure is to quantify the result of design between coverage design and capacity design. At the end of study we found that the number of base stations derived from capacity design dominates the number of base stations from coverage design. This led to the conclusion that WiMAX is a capacity dominant system.
Table 4 Network investment alternatives Channel bandwidth (MHz) 3.5 3.5 3.5 7 7 7 14 14 14 Configuration of BS High Medium Low High Medium Low High Medium Low Service area Dense urban/urban/suburban Dense urban/urban/suburban Dense urban/urban/suburban Dense urban/urban/suburban Dense urban/urban/suburban Dense urban/urban/suburban Dense urban/urban/suburban Dense urban/urban/suburban Dense urban/urban/suburban Investment alternatives 1 2 3 4 5 6 7 8 9 Table 5
Path loss and cell range Maximum path loss (dB) 133.39 130.98 127.97 124.88 Cell range (m) Dense urban 600 500 350 300 Urban 1300 1100 900 700 Suburban 2400 2000 1700 1400
Channel bandwidth (MHz) 1.75 3.5 7.0 14.0 Figure 4
Relationship of channel capacity and user data rate
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Finally, we apply the results of channel capacity to estimate the number of BSs in Bangkok, ensuring the network has sufficient capacity to cope with the demand from users. Given the future number of subscribers in the next three years (20102012) forecasted by the logistic curve, the total number of BSs in time series is given, as illustrated in Figure 5.
Figure 5 Time series the number of BSs in Bangkok
We calculate the economic merits of investment alternatives by applying the number of BSs to the economic sub-module. The First Installed Cost (FIC) of the BFWA network in Bangkok is obtained by taking into account the number of BSs in the first year, associated with cost per element and cost evaluation. Table 6 represents the NPV from analysis. The positive value of NPV implies that we can make profit from investment. Through NPV, the investment of WiMAX with operating bandwidth of 14 MHz has profit in all type of areas. However, the maximum of NPV is only appearing in the urban area. The maximum profit belongs to the system configuring a low capacity and operating at 14 MHz.
Table 6 Net present value NPV ($) Dense urban 17,831,957 8,208,436 784,122 4,926,350 143,250 4,162,472 1,521,647 4,319,884 6,634,909 Urban 34,474,968 6,433,661 515,432 3,948,554 868,358 4,840,293 1,688,950 4,519,952 7,001,863 Suburban 1,989,156 337,441 1,036,665 93,855 888,904 1,762,814 852,355 1,501,459 2,125,028
Investment alternatives 1 2 3 4 5 6 7 8 9
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Table 7 summarises the return rate (IRR) of all alternatives of WiMAX investment. The IRR from operating WiMAX at low capacity has a higher positive value compared to other capacities. It also indicates that operating WiMAX at maximum bandwidth of 14 MHz has maximum IRR from the investment. The higher rate of return is due to the alternative requiring minimum investment. The maximum rate of return appears to the alternative 9 (at bandwidth 14 MHz) which is deployed in suburban area where the configuration is low capacity. Table 8 represents the time to recover the investment or the payback period. The shortest payback period appears in alternative 9, implying that operating WiMAX at 14 MHz, with low capacity in suburban area is economically viable. The minimum first investment is, the shortest time of recovering the investment.
Table 7 Internal rate of return IRR (%) Dense urban 15.49% 6.09% 7.78% 1.88% 10.47% 29.29% 16.06% 33.04% 60.15% Urban 4.14% 11.61% 0.81% 13.17% 34.79% 17.64% 37.03% 68.71% Suburban 7.59% 6.05% 26.84% 8.62% 27.10% 56.75% 30.63% 57.18% 102.65% Investment alternatives 1 2 3 4 5 6 7 8 9 Table 8
Payback period PB (Year) Dense urban 11.4 7.2 5.1 6.3 4.6 3.3 4.1 3.0 2.0 Urban 6.7 4.5 6.0 4.3 3.0 4.0 2.9 1.8 Suburban 7.7 5.0 3.4 5.0 3.1 2.0 3.1 2.0 1.2
Investment alternatives 1 2 3 4 5 6 7 8 9
In summary the best economic feasibility of using WiMAX as a technology standard of BFWA is alternative 9. Specifically, deployment of WiMAX system operating at 14 MHz bandwidth in urban area and low capacity configuration has the best economic result. The reason behind the best alternative is due to the fact that this alternative has a maximum cash flow or profit (since maximum positive NPV) comparing with other alternatives. However, the case has not been the shortest payback period compared to other cases but time of payback is much close to minimum value. This value is acceptable because lower payback period provides minimum of risk of investment.
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5.3 Sensitivity analysis

The uncertainties of the economy usually pose difficult decisions for project authorisers to make. In these situations, they have to determine the degree of change in an estimate that would affect a capital investment decision. The degree of change is estimated using sensitivity analysis, which is carried out for all alternatives. Figure 6 indicates that the capital cost greatly affects the cost of the project, but there is less effect from the cash flow.
Figure 6 Sensitivity analysis (see online version for colours)
5.4 Implications
The results from analysis address many implications related to network planning, economic and decision policy. The major findings from the analysis are summarised as follows: The result from network planning indicates that WiMAX is a capacity-limited system, i.e. the total number of base stations is dominated by the number of base stations derived from capacity planning. Higher RF bandwidth is the most interesting solution for having high economic performance in network investment, but there is only a specific area suited for having such capability, e.g. dense urban, but not every area needs to have high bandwidth. Compared with two other network configurations, the low capacity is the most likely possible configuration since its economic performance shows viability, whereas high capacity and medium capacity configurations are not economically viable. Financial analysis of BFWA network indicates that operating WiMAX in the low bandwidth is not economically feasible. As a whole, a BFWA network with WiMAX technology has the ability to serve as a wireless citys infrastructure, but care should be taken when deploying the network in different environments.
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From research findings, two major implications have been drawn: technical and policy. The technical implication concerns engineering tasks such as radio design and network dimensioning. Care should be taken when designing the network so that there is sufficient capacity in the appropriate areas. The technical design strongly impacts the scale of network, i.e. the amount of base stations requirements. The class of service area is also important during the network dimensioning process. It is shown that each class of service area requires different amount of bandwidth and system capacity configuration. The policy implication is related to the amount of spectrum availability. The spectrum bandwidth should be assigned in such a way that the size of the RF channel is appropriate for an area and is able to accommodate the traffic volume generated by subscribers in the area. These implications should be taken into account and kept in mind during policy formulation. The spectrum assignment should be allocated with flexibility way (this is a typical problem in spectrum allocation in developing countries).
Discussion and conclusion
The engineering-economic analysis of this study has two assumptions: engineering and area assumption. The first assumption refers to the percentage of modulation distribution to represent the location between subscriber and base station. This approach may be deviated from reality since the location of subscriber may not be the same as assumption. The study attempts to cover this limitation by translation of the location of subscriber into WiMAX capacity configuration: high, medium and low capacity. These three levels of configurations, however, may not represent all granularity capacity of the system. This is the engineering impact to the economy of WiMAX. The second assumption is due to the classification of area under study in Bangkok. Since the study uses population density and land used as the criterion of area definition. This method should be considered especially when applying the model to the area where there is dissimilarity in demography from Bangkok. The study develops an analytical model for assessing technology feasibility and economic viability. Utilising realistic data analysis, this model is more practical than generic assumptions. We also present the effects of the parameters on network dimensioning. The results obtained from the analysis provide the different options for achieving economic viability in BFWA networks. The results from this study indicate that a BFWA system using WiMAX is economically feasible in all aspects except in a system which is configured at 3.5 MHz channel bandwidth with high capacity because this configuration has very low throughput. Systems that have wider bandwidth and lower capacity are economically viable.
Acknowledgements
This work was supported in part by the TOT Public Company Limited, Thailand.
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Engineering Analysis and Economic Evaluation

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Int. J. Services, Economics and Management, Vol. 4, No.

Copyright 2012 Inderscience Enterprises Ltd.

P. Ritthisoonthorn, K.M. Ahmed and D. Krairit