Key Ratios
What are the key ratios in the wholesale wireless business?
Coverage, or the ability to reach customers is a key ratio. In order to decide where and how to expand, we will need to find where businesses are concentrated and at what degrees of concentration. We will need to find whether these businesses are in need of alternative telecommunications products. We will then need to come up with a ratio of how many we need to sign in order to reach profitability in a particular market.
Network loading is a key ratio. Most network products are depolyed with a caluclated oversell. This means that customers all have the ability to use a particular amount of resource, but are not expected to all use that resource at the same time. A normal organization on a broadband link well suited to their size will utilize around 5% of available resources around 99% of the time. They will use 100% of available resources occasionally. Network loading, or oversell, becomes much easier to cope with as a network grows. The more customers and capacity that are added, the more that patterns lose their spiky characteristics and become gaussian.
Payback on equipment is a key ratio. Equipment should be expected to have a life of 3 years with conservative calculations and 5 years with realistic calculations. If an installation is subsidized, a period of time will go by when income will be put towards paying off the equipment. The appropriate ratio is yet to be defined.
Profit Margin is a key ratio. Due to costs of POPs and backhaul, initial expansion into an area will have very low margins. Every customer using in-place infrastructure will raise profit margin. It is yet to be determined at what point additional infrastructure is to be added - whether this should be done ad-hoc, based on market research, when technically necessary, or when a particular profit margin is reached, or some combination of above.