Alternative ownership and operations models: Hospitality

DOCUMENT
181.09.01
Alternative ownership and
operations models:
February 2017
www.smallcellforum.orgscf.io
Hospitality

Contents
• Why do we need new ownership and operations models?
• Introduction to our approach
• Application to key verticals
• Case 1: Hospitality
• Key takeaways
© Small Cell Forum Ltd 2017

1. Why do we need new ownership models?
• The present operator-led model has, or will soon, hit its limits
• While good indoor mobile coverage is now a business necessity, MNOs typically serve only a small
percentage of requests for indoor coverage
• The development of alternative business models is critical to triggering the mass deployment of small
cell solutions as this will:
• extend the value chain for indoor solutions to more parties;
• distribute the upfront capex and risk across these partners;
• introduce new opportunities for returns on small cell investment;
• reduce financial risk by shifting some of the investment from capex to opex;
• increase the size of the addressable market.
• No matter how small cells are acquired, there is a requirements for cohesive integration with the macro
network, a range of backhaul options, multi-technology SON, and interoperability – at an affordable cost
for the Enterprise to acquire and operate over their life.

Level of interest in small cells, and plans to deploy
7.25 7.11 7.08 7.06 7.03 7.02 7 6.75 6.69 6.63 6.38 6.25
5.3
0
10
20
30
40
50
60
70
80
90
0
1
2
3
4
5
6
7
8
%ofenterprises
Scale1-10
Interest level Adopted or planning small cells
94% said poor indoor service has an impact on business, 42% serious (>7)
63% would pay more for improved service
Nemertes Research enterprise survey
March 2016

Reasons for interest in small cells cites by more than 25%
0
10
20
30
40
50
60
Better
connectivity for
apps
Better
connectivity for
voice
Replace or
augment fixed
telephony
Improve
security
Improve
productivity
Improve cellular
performance for
visitors and
customers
Improved user
satisfaction
Location
tracking
%ofrespondentsNemertes Research enterprise survey
March 2016

Top reasons to deploy small cells in public venues
42.0%
38.3%
35.8%
33.7%
27.2%
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0%
Make the venue a more desirable destination for customers
Support mobile commerce
Support socal media engagement
Added-value service
Many visitors don't know or want to sign on to Wi-Fi
Nemertes Research enterprise survey
March 2016

United States enterprise market
2012 USA enterprise census data
• Assume
• 500+ employee enterprise minimum
• Manage costs with MNO contract(s)
• Total market size
• 1.2 million enterprises
• 59.9 million employees
• 30% market need is
• 360,000 enterprises
• 18 million employees
• Unknown quantity of sites
FIPS
Code
Geographic
area description
Enterprise
employment
size
Number of
establishments
Employment
00 United States 1: Total 6,692,235 115,919,945
00 United States 2: 1-4 2,844,581 5,901,921
00 United States 3: 5-9 1,004,118 6,523,859
00 United States 4: 10-19 629,856 7,970,161
00 United States 5: 20-99 684,038 19,382,785
00 United States 6: 100-499 356,516 16,265,644
00 United States 7: <500 5,519,109 56,044,370
00 United States 8: 500+ 1,173,126 59,875,575
For definitions, see http://www.census.gov/programs-surveys/susb/about/glossary.html.

And a view of the EU market
92%
7%
1%
0%
29%
20%
17%
34%
21%
18%
18%
43%
1
3 2
1
3
2
Enterprises number
Employees number
Value added
EU27 enterprises contribution by category
Micro
Small
Medium
Large
Company
category
Employees Turnover or Balance sheet
Micro < 10 < €2 million < €2 million
Small < 50 < €10 million < €10 million
Medium-sized < 250 < €50 million < €43 million

And a view of the EU market
Figure 1: Number of enterprises by sector and size EU-27, 2012
Percentageshareofsector
enterprisesbysize
Numberofenterprises,Millions
Micro Small Medium Large Total enterprises in the sector
B Mining and quarrying
C Manufacturing
D
Electricity, gas, steam and air
condition supply
E
Water supply, sewerage, waste
management and remediation
activities
F Construction
G
Wholesale and retail trade;
repair of motor vehicles and
motorcycles
H Transportation and storage
I
Accommodation and food
services
J Information and communication
L Real estate activities
M
Professional, scientific and
technical activities
N
Administrative and support
services

What is our objective?
• Understand the challenges of the current models
• Derive new models to overcome these
• Provide enterprise with new channels & approaches to resolve their indoor coverage
needs
• Provide MNO with new models and partners to help them address a broader market
while minimising increased CAPEX investment
• Address more of the market:
• Improving the mobile service available to businesses and consumers
• Presenting growth opportunities for equipment vendors, service businesses and
MNO
• Build on high quality indoor mobile coverage to create new application and service
opportunities for businesses and their customers

2. Introduction to our approach
The building blocks for our models:
Sales and marketing On-premise deployment
Operations and
maintenance
Supporting mobile
infrastructure
• Marketing and sales
to Enterprise
• Small cell equipment
purchase
• Project management
• Planning and design
• Connectivity
• Installation and
commissioning
• Acceptance testing
• Optimization
• System monitoring
• User/enterprise tech
support
• System upgrades and
expansions
• Spectrum ownership
• Mobile core network
• WAN backhaul

2. Introduction to our approach
A few simplified definitions of key players as used in our eco-system models :
• Mobile network operator (MNO): Provides mobile voice and data service to businesses and consumers. Typically the
owner of spectrum licenses and the mobile core network. Mobile service can be offered to direct subscribers or via
intermediaries such as neutral host service providers or MVNO.
• Neutral host (service provider) (NH): Provides a managed indoor service to the enterprise via a neutral host network
and acts as an intermediary between the MNOs and the enterprise . This is particularly important when indoor mobile
coverage from multiple MNO is required by the enterprise. The NH could offer a fully managed service themselves or
integrate part of the service from other specialist application partners. The small cell solution for a neutral host network
could be a single multi-operator solution or multiple single operator solutions from each of the MNOs which are then
integrated by the NH.
• Systems integrator (SI): Acts as the prime contractor to manage the design and build of the indoor small cell solution for
the enterprise. The SI will use a combination of in-house experts and specialist application partners. Unlike the NH the SI will
not be responsible be the intermediary with the MNO or provide an ongoing managed service of the small cell network
• Enterprise: The company occupying the building and seeking to provide mobile coverage to its customers, visitors and
employees or the building owner offering this service to its business tenants
• Small cell vendor: The provider of the primary small cell equipment used in the indoor network

New models can expand the market by
broadening ecosystem participation
Examples to illustrate the shift in operational responsibilities with different ownership models
Category or stage Function Current MNO-Led Neutral host Enterprise purchase
Sales and marketing
Small cell equipment purchase Mobile operator Neutral host Enterprise
Marketing and sales to enterprise Mobile operator Neutral host Small cell vendor
On-premise deployment
Project management Mobile operator Neutral host System integrator
Planning and design Mobile operator System integrator System integrator
Connectivity Mobile operator Neutral host Enterprise
Installation and commissioning Mobile operator System integrator System integrator
Acceptance testing Mobile operator System integrator System integrator
Optimization Mobile operator System integrator System integrator
Operations and maintenance
System monitoring Mobile operator Neutral host Mobile operator
User/Enterprise tech support Mobile operator Neutral host Mobile operator
System upgrades and expansions Mobile operator Neutral host System integrator
Supporting mobile
infrastructure
Spectrum ownership Mobile operator Mobile operator Mobile operator
Mobile core network Mobile operator Mobile operator Mobile operator
WAN backhaul Mobile operator Neutral host Enterprise

Summary risk and reward for key partners
Mobile operator Neutral host Systems integrator Enterprise
Risks as they move from
total control to a
federated model;
especially with regard to
security and QoE.
Reward as other entities
provide capital and enable
acceleration of
construction delivering
improved network KPIs.
Able to satisfy key safety
services such 911.
Risks as they move from
well understood
technology and business
models.
Adapting to meet specific
regulatory/security
requirements of certain
enterprises.
Reward as they can
address buildings and
venues that could not
meet business case in the
past.
Risks as projects move
from expensive long
duration to short fast
moving.
Reward as they take on
increased project volume
and expand their services
business.
Risks as they take on
responsibility for cellular
“last mile”.
Reward as they satisfy
demand for seamless
cellular operation while
also delivering key safety
services such 911 as well
as other business and
consumer oriented
services such as mobile
check-in.

Mobile network operators – risk and reward
Risk
• Brand perception
• Poorly performing Enterprise installed infrastructure
harms reputation
• Operations
• The party that is building and operating small cells
must have necessary skills and tools
• Operators without well developed
methodology/automation to federate their
operations with enterprises and neutral host
providers may face challenges
Reward
• Customer satisfaction
• Mobile devices just work without intervention
• Public safety
• Emergency services dispatch accuracy helps first
responders get to scene of emergency
• Regulatory compliance for indoor dispatch
• ROI improvements
• Creative financial approaches to providing small
cells to enterprises can satisfy their needs
• Small cells Capex can be transferred to other eco-
system partners who would purchase elements and
have ROI attached to them
• Enabling dark spectrum in a building that an
operator bought from government increases ROI
• Opportunity to add further value added services
such as smart buildings

Neutral host provider – risk and reward
Risk
• Competitors
• If NH does not embrace small cells, their small
cell enabled competition could displace them
• Model development
• Well understood models for technology and
business must be adapted to insure customer
satisfaction and profitability
• Small cell systems need to support NH visibility
to support value creation capabilities
• ROI
• Not all opportunities will be accessible to NH
providers
Reward
• Scaling up operations
• Fixed investments in NOCs, OSS/BSS, and
services by NH providers are spread across
more properties
• More revenue from more sites that failed
business case in prior models
• Future business
• Building owners who benefit in leasing by
superior mobile coverage could want more of
their properties included
• Other mobile operators join NH to enable their
spectrum in NH managed buildings

Systems integrator – risk and reward
Risk
• Operator relationship
• Installations resulting in poor KPI’s can
damage reputation.
Reward
• Enterprise market
• Market opening once Enterprises are
allowed to acquire small cells without
operator funding.
• Subcontracting to traditional enterprise SI’s
who don’t have skills/relationships to
handle cellular
• Services revenue
• Lifecycle support, break-fix, and
maintenance contracts enable SI’s to
support enterprise small cells for any of the
possible buyers.

Enterprise – risk and reward
Risk
• Operator relationship
• Ideally, risk is reduced when mobility is
managed by IT and not Procurement.
• Operations
• Enterprise may not be able to support end
user “cellular last mile” adequately.
• Operator may not have a well developed
methodology/automation to federate their
operations with enterprise.
Reward
• Employee satisfaction
• It’s a big win for IT when mobile devices
just work without intervention.
• Public safety
• Emergency services dispatch accuracy
helps first responders get to scene of
emergency.
• Financial benefits
• Zero rating of domestic consumption while
on the enterprise’s small cell network
rewards Enterprise procurement.

New models can create value for partners in
the ecosystem
• Extending the ecosystem extends the market
• Mobile service is improved for businesses and consumers
• New deployment service opportunities are established
Consumer
Enterprise
MNO
SCvendor
Consumer
Enterprise
MNO
SCvendor
NH
SI
App developers
Advertising
Investors
Consumer
Enterprise
MNO
SC vendor
NH
SI
‘A growing pie has more slices for all’

3. Applying our thinking to key verticals
Verticals to be assessed:
1. Hospitality
2. Healthcare
3. Commercial Property
4. Stadiums/ event locations
5. Shopping malls
6. Corporate office

A rapidly growing sector…
– with increasing sensitivity to social media
• The global hotel industry revenue is predicted to reach $550 billion US dollars in 2016
• An increase in revenue of almost $100 billion US dollars in five years
Source: The Global Hotel Industry and Trends for 2016
Killarney Hotels 2015
The power of TripAdvisor is
legendary, so good hotels don’t want
to get review headlines like these:
“Wi-Fi and mobile coverage is poor
so be prepared.”
“All very good – but poor mobile
signal coverage.”
”Almost no mobile connection. Hotel
is fantastic in every way: rooms,
staff, view, surroundings. But, if you
need to be available through mobile,
this is not the place to stay.”

Hotels.com Mobile Travel Tracker
A global study of 9,200 travellers across 31 countries. May 2016
The Hotels.com™ Mobile Travel Tracker uncovers the true impact mobiles are having on our booking and travel behaviours. It
reveals that as mobile usage continues to grow and smartphones keep getting smarter, they’re shaping our travel mind-sets
more than ever before, with almost a third of people admitting they book more trips than ever thanks to mobile.
Current behaviors:
• 42% of people globally have booked a hotel on mobile;
rising to 53% for the under 30s.
• 76% of travelers named the mobile device their number
one travel accessory
• 42% of people have made a same day hotel booking
thanks to mobile, with 14% even booking their hotel in
the airport departure lounge
• 47% of people say their mobile device is their primary
information source for finding interesting spots, events
and restaurants whilst away
Future expectations:
• 35% would use their mobile to book a restaurant or
taxi whilst travelling
• A third would be happy using their mobile at a self
check-in kiosk at a hotel.
• Travelers also said they would like to have a more
two-way conversation with hotels via mobile during
their stay.
• 31% would happily instant message a hotel
• 30% would order room service on mobile
• 32% would welcome push notifications with
destination information from the hotel.

SCF Hospitality deployment stories

Drivers for using this model:
• Poor macro coverage from certain operator(s)
• Specific MNO agreement(s) at Company level
• Limited in-house technical expertise
• Simple and reliable MNO managed service
Category or stage Function Current MNO-Led
Sales and marketing
Small cell equipment
purchase
Mobile operator
Marketing and sales to
enterprise
Mobile operator
On-premise
deployment
Project management Mobile operator
Planning and design Mobile operator
Connectivity Mobile operator
Installation and
commissioning
Mobile operator
Acceptance testing Mobile operator
Optimization Mobile operator
Operations and
maintenance
System monitoring Mobile operator
User/Enterprise tech
support
Mobile operator
System upgrades and
expansions
Mobile operator
Supporting mobile
infrastructure
Spectrum ownership Mobile operator
Mobile core network Mobile operator
WAN backhaul Mobile operator
MNO
Risk:
• Limited market addressed –
unsatisfied business and
consumer customers
• Only able to serve a
percentage
of the customers in the hotel
reducing ROI
Reward:
• Fully managed service fee
Hotel
Risk:
• May require multiple MNO
• Expected to cover
system cost
Reward:
• Full MNO managed service
Models for the Hospitality sector
1. MNO led

2. Hotel purchases directly
• Unable to source system from MNO/reduce MNO service fee
• May be closest to existing Wi-Fi model
• Use in house technical experts or existing
MNO
Risk:
• Reduced control of system
performance
• SI approval process may be
required
Reward:
• Address more of the market
Hotel
Risk:
• Interaction with multiple
parties. May not secure all MNO
Reward:
• Leverage in house technology /
existing SI partnerships
Category or stage Function Enterprise purchase
Sales and marketing
purchase
Enterprise
enterprise
Small cell vendor
On-premise
deployment
Project management System integrator
Planning and design System integrator
Connectivity Enterprise
Installation and
commissioning
System integrator
Acceptance testing System integrator
Optimization System integrator
Operations and
maintenance
System monitoring Mobile operator
support
Mobile operator
System upgrades and
expansions
System integrator
Supporting mobile
infrastructure
WAN backhaul Enterprise
SI
Risk:
parties
Reward:
• New service opportunity
Small cell vendor
Risk:
parties
Reward:

3. Neutral host
• Unable to source system from MNO/reduce MNO service fee
• Limited in-house or SI experience in mobile
• Multi-operator service required
MNO
Risk:
• Reduced control of system
performance
• NH approval process may be
required
Reward:
Hotel
Risk:
• Higher fees for fully managed
service
Reward:
• Full NH managed service for all
MNO services
NH
Risk:
Reward:
• New service opportunity
Small cell vendor
Risk:
parties
Reward:
Category or stage Function Neutral host
Sales and marketing
purchase
Neutral host
enterprise
Neutral host
On-premise
deployment
Project management Neutral host
Planning and design Neutral host
Connectivity Neutral host
Installation and
commissioning
Neutral host
Acceptance testing Neutral host
Optimization Neutral host
Operations and
maintenance
System monitoring Neutral host
support
Neutral host
System upgrades and
expansions
Neutral host
Supporting mobile
infrastructure
WAN backhaul Neutral host

Points to consider for the Hospitality segment
• Good indoor mobile coverage is now a business necessity
• Revenue from meetings, conferences etc can be lost due to poor mobile coverage
• The smartphone is now the essential travel item
• Customers are demanding more and more mobile services
• This creates an opportunity for hotels to streamline operations and upsell services
• Increasing demand may necessitate enhancement of existing Wi-Fi, potentially with small cell
• Key factors in selecting the right model
• Only large chain hotels are likely to see the MNO invest in the small cell system; most others will
need to seek and alternative models and cover the cost through capex or service charges
• In many cases the hotel will require indoor service from multiple MNO
• MNO may require that ’approved’ NH & SI partners deploy small cell systems

4. Key takeaways and next steps
• Good indoor mobile coverage is now a business necessity. This is both a challenge and an opportunity
• The operator led business model is throttling deployment of small cell solutions
• Alternative ownership and operations models will increase the addressable market by:
• Extending the value chain for indoor solutions to more parties
• Distributing the upfront capex and risk across these partners and shifting some of this to OPEX
• Introducing new opportunities for returns on small cell investment
• In future updates to this presentation we shall:
• Address additional vertical markets such as Healthcare and Commercial Property
• Investigate how new apps and services can create further value for the ecosystem
• Consider shared spectrum models, such as CBRS, which may be an alternative model to providing
service to all enterprise employees, customers and guests

Alternative ownership and operations models: Hospitality

Recomendados

Recomendados

Más contenido relacionado

La actualidad más candente

La actualidad más candente (20)

Similar a Alternative ownership and operations models: Hospitality

Similar a Alternative ownership and operations models: Hospitality (20)

Más de Small Cell Forum

Más de Small Cell Forum (20)

Último

Último (20)

Alternative ownership and operations models: Hospitality

Notas del editor