Konrad Zoz
Modellgestützte Evaluierung von Geschäftsmodellen alternativer Teilnehmernetzbetreiber in Deutschland
Nr. 287 / Januar 2007
Summary
The focus of this paper is on local (access) network operators (LNO) with a retail service orientation. A generic Excel-based tool has been developed to cope with such business models. The objective of this tool is to represent the business success of LNOs.
The present paper firstly gives a short overview of competition in the field of fixed network services in Germany. Secondly, the modeling approach, the model structure and the precise implementation of the most important building blocks of the model are presented and essential qualitative and quantitative assumptions are described. The model takes account of the revenues as well as the costs of the envisaged operator. Essential features of the LNO business covered in the model are network deployment (especially accessing Main Distribution Frames (MDF)), the provision of direct access to customers and of voice and data services, respectively, as well as customer acquisition. Furthermore, the model allows to consider not only local network operator services but also the integration of call-by-call services. Thirdly, three types of LNOs are characterized by specific parameter sets. These types differ with respect to the geographic focus of their activities, their network availability, their customer base, and regarding to the provision of call-by-call services. The results of basic model calculations for these three types show that for realistic parameter values each of the three LNO-types is profitable, reaching operating margins (profits divided by revenues) from 4.5 % to 5.5 %. This shows that the business model “LNO” is in a general sense viable and sound. Otherwise stated, likewise a country wide service provision of LNOs also small locally focused and medium sized regionally focused business models are viable. In all of these cases reaching a sufficiently high market share of the potential customer base of the connected MDFs is of crucial importance. Fourthly, we have conducted extensive sensitivity analyses. These calculations show the robustness of the model against variations of essential parameters. Fifthly, we discuss the results of selected scenarios concerning changes in enterprise strategies. A partial analysis approach has been adopted to scrutinize the effects of variations of the customer base, changes in the number of MDFs accessed by the LNO, the (wholesale) price of the unbundled local loop, the interconnection tariffs and the closing-down of the call-by-call business. Both growth strategies (increasing the direct access customer base and the MDF coverage) lead to strong reactions of profits as well as of revenues and costs. Both scenarios yield that increasing the number of direct access telephone subscribers has the highest impact on profits. New customers, demanding DSL-access in excess of the regular telephone line, increase profits, but to a smaller extent. An increase in the (regulated) rental price for the unbundled local loop leads in all cases to markedly lower profits, which are due to the fact that the rental makes up for a prominent part of the cost. Increasing interconnection tariffs lead to noticeable profit decreases only in the case of the LNO type with a considerable call-by-call business. [only a german version available]
Diskussion Paper is available for download.