Payless Broadband Network Limited (PBNL) Wireless ISP Franchise - Proposal
Prepared By: Payless Broadband Network Limited 2 Hinderer Road, Off Oduduwa Road P.O. Box 247, Apapa, Lagos Nigeria Phone: Fax: (01)5839846 (01)2793590 (01)2793591
PROPOSAL FOR PARTNERSHIP TOWARDS THE DEPLOYMENT OF WIRELESS INTERNET ACCESS SERVICES IN NIGERIA
Executive Summary Payless Broadband Network Limited acquired a Wireless Internet Service Provisioning license from the Nigerian Communications Commission (NCC) on December 1st 2005 to operate and provision wireless internet access and related telecommunications services for multi levels of subscribers and businesses in Nigeria. The operation of the license involves the setting up of linked wireless base stations at strategic points of intended coverage areas to form a complete blanket of wireless coverage in targeted areas of Nigeria. This blanket of wireless coverage allows Payless provision intending subscribers on the wireless infrastructure for internet access and internet related activities. This presents a profitable business opportunity with major benefits within this industry for Payless Broadband Network Limited and its business partners. Payless Broadband desires to deploy Wireless ISP network infrastructure using a franchise model in the various state capitals in Nigeria. Our goal is to have fully functional Wireless networks in 17 cities overall and at least in 12 cities between November 2007 and November 2008. To achieve the above vision and goal, we desire to partner with reputable organizations and individuals in the deployment of the Wireless ISP networks. This report is an investment overview to capable individuals and companies towards expression of interest in franchise participation with Payless Broadband Network Limited.
About Payless Broadband Network Limited Payless Broadband Network Limited (PBNL) is the product of structured collaboration between technical entities with versatile exposures and competences in the telecommunication industry. PBNL was founded in 2004 as a Wireless, Internet Service Provider and Telecommunication Services company situated in Lagos, Nigeria. As a private sector organization, along with wireless network provisioning expertise; PBNL consults and advises various Federal and State Governments, Financial Institutions, Power & Energy and private Institutions on all Wireless Communication and Information Technology Solution deployment.
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Payless Broadband Network Limited (PBNL) was officially incorporated on 30th of November 2005 and currently with an authorized share capital of N 110 million. Payless paid up share capital is currently N 110,000,000.00. Payless Broadband Network Limited since inception operates from its corporate head office located at 2 Hinderer Road, Off Oduduwa Road, Apapa, Lagos. The company’s Network Operations Center (NOC) is also located at the head office in Apapa, Lagos. From this location Payless distributes wireless links to its base stations covering areas of Lagos, including Apapa, Ikeja, Unilag, Victoria Island, Ikoyi and Lekki. Payless network infrastructure is built on a solid foundation of technical knowledge from foreign technical partners. These partners provide support per ongoing agreement to ensure efficient operations of base station and subscriber connectivity equipments in the statewide network deployed by Payless in Lagos, Nigeria. The technical partners are Dell USA – Infrastructure Equipment provider (Atlanta, GA), SmartBridges – Wireless equipment provider/technical support (Singapore), Azuretec – Wireless equipment provider/technical support (Taiwan), SkyVision – Internet Backbone Provider (Israel).
Payless Broadband’s Infrastructure Given the critical role Payless Broadband plays in the operation and user internet experience of dependent corporate subscribers, SMEs, and residential users; we decided to deploy the best in class equipment that is suited for our class of service delivery. Payless Broadband currently have installed in our Network Operations Center, a 260ft telecommunications tower, high-end Dell Xeon, Dual Core server systems, as well as Dell gigabit managed switches to provide end to end gigabit communication pipes between internal servers. And guarantee external communications to remote sites and base stations.
Figure 1: Payless Broadband’s mast, servers and switching equipments at the Network Operations Center
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Our billing platform is based on the Radius (AAA) billing protocol which is a standard billing interface to support remote billing with third-party Radius capable systems. This billing model consolidates Payless services under a single pre-paid and post-paid platform thereby providing Payless with many options for a convergent system with triple play capabilities. Payless Broadband overall network has been carefully designed to work in a modularized form, with the following 3 moving parts: The Internet Backbone (VSAT, Fiber or other) This part of the network is modeled to work independently from the corporate network; and only handles internet traffic movement of all subscriber authentication requests as well as authenticated subscribers request from the various base stations to the internet. It is architected in this manner to allow Payless substitute its backbone link or aggregate the existing link to avail higher bandwidths to the network without changing any components within the Payless network The Wireless Gateway (proxy Radius) with the attached wireless base station systems. The wireless gateway system is responsible for forwarding all authentication requests to the Central Billing system by means of remote Radius protocol integration. Within an authentication process; the user enters a user name and password to gain access to the internet. This authentication request is sent to the Central Billing, and it returns an authenticated or unauthenticated response to the wireless gateway. An authenticated response sent by the Central Billing is used by the wireless gateway to secure the users access and set the bandwidth per their subscribed service plan, before user is allowed to go out to the internet via the Internet Backbone link. The Central Billing and administrative system The central billing system is permanently located at the Network Operations Center in Apapa and supports the corporate network, and billing rules which drive all possible service plans provisioned by Payless. This central system services all billing requests which are forwarded by the wireless gateway systems from the base station subscribers
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The key advantages of this network, and what the franchised network leverages on; is the fact that the internet backbone and the wireless gateway systems can run together to form a complete remote system to provision enough base stations to blanket a state. The following are features and advantages for the remotely deployed system: 1. Wireless ISP infrastructure will be deployed at a fraction of the cost used to setup the NOC, and at a cost that is unmatched by any ISP in Nigeria 2. Timeframe to complete deployment of 5 base stations and infrastructure setup for a franchised network is less than 4 weeks 3. Infrastructure will be able to run in a hands-off mode with the key maintenance activity being monitoring of equipment health 4. Payless will monitor user access activities from the NOC in Lagos, and provide the following on behalf of the franchised network: a. Customer service support assistance for new and existing subscribers b. Scheduling of new subscriber installation activities for installation engineers c. Scheduling of maintenance activities for support engineers d. Dispatch of available field support engineers for emergency maintenance activities 5. The franchised network can operate with the predefined billing rules already configured and used for servicing Lagos subscribers, or Payless can define new sets of billing plans that will be tailored to the remote locations requirements as an added service 6. Optionally the franchised network can design its roaming policies and charging for subscribers who roam from the Payless network or from any other remotely deployed network onto theirs 7. Franchised network will have available a web interface which will allow effective management of existing subscribers and provisioning of new subscribers to the network 8. Customized web portal will be available to handle redirect for existing and intending subscribers that need to gain access to network 9. Subscriber will be able to self provision their internet access links with the use of pre-paid cards via the web portal page 10. Based on the billing systems support for franchise and affiliate network designation, all activities for the franchisees network (new subscriber creation and management, revenue collection, and payment posting to customer account) will be encapsulated and grouped under the franchisee; separate from all other franchised networks running on the same central billing system and will operate under the common umbrella account (“Payless”). 11. The affiliate network architecture will allow the franchised network additional advantages of being able to self generate accounting reports which will give the details below: a. List of all subscribers provisioned by the franchisee on their network Payless Broadband Network Limited
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b. Total revenue earned directly from customer service provisioning c. Pre-paid cards which have been used by the subscriber to gain access to the franchisees network d. Total revenue earned from prepaid cards used at the franchisees network
Wireless Internet Service Provider (WISP) Project Wireless Internet Service Provisioning involves design and setup of a means of provisioning end user internet access or delivering the last mile access on a wireless platform. This means of delivery when designed and executed properly results in massive savings, when compared to the cost of setting up a cabled infrastructure to deliver the same level of service. Due to the flexible nature of wireless RF signal propagation through air, WISP base station setups as well as end user provisioning can now be completed in hours and no longer weeks or months. The key challenges which are faced in the Nigerian telecommunications environment today and especially for provisioning of internet access and internet related services in areas of the country can be observed under the following: Cost of extending an adequate wireless or wired infrastructure to remote areas; to the Wireless Internet Service Provider in most cases cannot be justified Inadequate or no infrastructure to create a possible deployment path up to the areas where these services are required Because of the profitable nature of running WISPs many operators in the market today have jumped into the business without any foresight or long term direction. This has resulted in WISPs coming into the market with: Promises of new technology which cannot be delivered Adverts of service pricing which is not reflective of what is actually provisioned for the subscriber Epileptic and unreliable service which becomes frustrating for subscribers No professional customer service infrastructure to educate and enhance subscriber experience Provisioning processes which are not well planned and executed No follow-up on customer to address reported customer issues or solicit feedback
Payless Broadband Network Limited spent 2 years of intensive studies of the Nigerian internet market to design a solution that will fit perfectly with this environment and close the gaps that exist today in internet access delivery and where current and past Wireless ISPs have failed in this industry.
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Payless Broadband first designed a network which is robust and modular to allow scalability, ease of subscriber self provisioning (i.e. by means of secure portal login) and supports a rapid expansion model of the WISP infrastructure with very minimal cost. Secondly we picked the technology (WiFi - which has worldwide interoperability with other WiFi capable devices) which can handle broadband access with equipments that can deliver that level of access over long range connections. Modularity of our network design has allowed our base station deployment and service provisioning process work independently of the subscriber’s hardware solution; so users who have their WiFi compatible devices can also gain access and enjoy our service plans. Third the hardware independent model supported by our network design allows Payless to include or deploy hardware which uses any type of licensed or unlicensed non interfering frequency to augment already deployed base stations and can form a migration path to newer and more robust last mile technology which will enhance Payless ROI and as well gets implemented without any added infrastructure cost or infrastructure changes The last item which was wrapped around Payless network operations is a complete Customer Relationship Management solution. This solution is used by Payless to create and drive all necessary interactions with our subscribers, right from the prospecting stages, through site provisioning and continues through all maintenance activities and as long as the customer is using our service.
Payless Broadband Solution to Available ICT Infrastructure Problems in Nigeria Payless Broadband intends to deploy Wireless ISP infrastructure in various cities in Nigeria. The business model involves setting up Points of Presence, and linked wireless base stations in different cities where internet access and related ICT/Telecom services can be provisioned for the subscribers. This has tremendous benefits to the subscribers as many Wireless ISPs in today’s market are not able to decouple their network design; just as Payless has done and immediately integrate a remote network which can be installed anywhere in Nigeria or other countries.
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This network diagram below shows how Payless Broadband Network Limited supports its remote franchise networks. The franchise network runs as Remote Location 1 tagged “WISP Franchise” in the network diagram:
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Upon full implementation, the solutions should provide and support: Availability of internet access in remote areas where there is no service provider Provisioning of subscribers to the franchisees network with Payless Customer Premise Equipments Provisioning of subscribers to the franchisees network with WiFi compatible laptops or WiFi devices Franchisee provisioning of hotspots and Cyber Cafés as affiliates to the network via Cyber Cafés link (i.e. Cyber Café or hotspot provider will run a wireless gateway box at their location through the franchisees network, and communicate directly with the Payless central billing as a means to outsource their billing and voucher/pre-paid card creation to Payless via the franchisees network) Efficient billings, payment/settlement process with verifiable internet usage details updated in real time Reliable, efficient and scalable network to grow with capacity of your subscriber base without hardware changes Portal interface to support more secure network access for existing or intending subscribers. Users are automatically redirected to portal page for authentication Ability for subscribers to self provision their internet access with use of prepaid cards. Franchisee will automatically become a reseller and a distribution channel for Payless pre-paid cards Optionally extension of value added services to the franchisees network from Payless to enhance suite of products available to subscribers of the franchisee without having franchisee run the high cost of setting up a base infrastructure
WISP Network Expansion Program With the completion and commissioning of the Lagos Point of Presence and blanketing of Lagos state; Payless Broadband now desires to extend its service to other cities or remote locations within or outside the country where the need for this class of service is required. As a starting point for this initiative Payless Broadband desires partners that would support the deployment efforts in the following cities in Nigeria: 1. Abuja (not available - territory assigned on February 27th 2008) 2. Kaduna 3. Port Harcourt 4. Enugu 5. Calabar Payless Broadband Network Limited
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6. Jos 7. Owerri 8. Kano 9. Onitsha 10. Ibadan 11. Maiduguri 12. Benin 13. Sokoto 14. Makurdi 15. Bauchi 16. Ilorin 17. Aba
Opportunity for Partnership Payless Broadband desires to partner with different companies and individuals to deploy WISP services the cities indicated above. The model involves the franchising of Payless Broadband’s Wireless Internet Service Provider operating license and resources to reputable companies with the capacity to deploy the infrastructures required to commence service in the various cities. Under this arrangement, Payless Broadband will be responsible for providing the following to its franchisee: • • • • • • • Cover for the franchisee under its Wireless ISP operating license Technical, and Business assistance and resources Marketing guidance to deliver on sales targets set for the franchisee RMA guidance for equipment exchange and replenishment of inventory Billing and Settlement options Updated feedback on regulatory interaction with the Nigerian Communications Commission Additionally, inclusion agreements under any of its newly acquired licenses
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The partner companies or franchisees will be responsible for the following: • Funding of infrastructure to be deployed o o o o o • • Wireless gateway equipment Internet Backbone link Base station/tower leasing Base station equipments Subscriber equipments
Preferred point of presence for wireless network distribution Operational staff (installers/support, marketers)
The partnership arrangement has a number of benefits to the parties involved including: • • • • • • • • • • Opportunity to rapidly deploy a wireless network and expand to several cities with very minimal cost resulting in higher revenue streams to the partners Benefiting from the corporate goodwill enjoyed by the partner companies in their remote regions of operation Opportunity to fulfill the provisioning of internet access and related services on a national basis as contained in the license document Franchisee becomes a distribution channel for Payless pre-paid cards, and accrues additional revenue from prepaid card sales Sharing of business risk by partner companies Opportunity to own and run a Wireless ISP business without the cost and overwhelming effort expended in acquiring the license Accelerated time to market for service offerings Guaranteed return on investment within a short period of time Referrals from Payless for enquiries on network coverage and solutions which can be deployed by the franchisee Franchise partnership arrangement is not limited to one location only per individual or business entity
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Partnership Requirements Prospective partners to Payless Broadband must demonstrate the financial ability to establish the required Wireless ISP infrastructure in the cities selected within 2 months. The necessary equipments to be deployed will be pre-arranged on the franchisees behalf and must meet Payless Broadband’s technical specifications. The design and setup of the network operating centers where required; will be provisioned by the franchisee and will follow the standard guideline proposed by Payless Broadband.
Financial Analysis How the Franchise Network generates revenue: Revenue will be generated from sales of customer premise equipments used by subscribers, and referral orders from Payless for companies/individuals interested in acquiring equipments for their private WiFi network Revenue from referral projects within Franchisees location which can be completed on behalf of Payless by franchisee (e.g. HotSpot setup at Hotels or ICT provisioning, customized internet access link provisioning for large corporate entities) Franchisee will generate revenue from subscriber internet access provisioning for the classes of subscribers and services listed below: o Subscriber categories: Residential, SMEs, Cyber Cafés, Hospitality Outfits, Corporate, Mobile/Nomadic users o Monthly Pre-paid Service Plans: 100k @ N5,000.00, 128k @ N12,000.00, 256k @ N20,000.00, 384k @ N28,000.00, 512k @ N70,000.00, and 1mb @ N125,000.00 o Pay-As-You-Go Minute Plans: 1000mins @ N2,500.00, 2100mins @ N5,000.00, 4300mins @ N10,000.00, 8700mins @ N20,000.00 o Pay-As-You-Go Usage Plans: 200mb @ N5,000.00, 450mb @ N10,000.00, 950mb @ N20,000.00, 2048mb @ N40,000.00, 3584mb @ N68,000.00 Revenue will be generated from sale of pre-paid cards to pay-as-you-go subscribers on the network Revenue is generated from provisioning of wireless access in airports, hospitality venues and creating mini hotspots for hospitality guest Revenue from sale of specially configured hotspot box systems that can be used to provision Cyber Cafés, and hotspots instantly in a single installation and support outsourced billing and subscriber management to Payless
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Setup Cost Payless Broadband total cost for provisioning a Franchisee location of up to 5 base stations with coverage of 6 10 miles radius per base station is estimated at N 30,000,000.00. Depending on the total coverage to be achieved in the franchisees city of choice; estimated cost can be under or over the amount indicated. For locations outside Nigeria; please contact Payless Broadband Network for additional information.
Return on Investment: The Broadband Wireless ISP business in Nigeria is conservatively estimated at over N 195,000,000,000 (One Hundred and Ninety Five Billion Naira) Annually. Payless Broadband target is to capture at least 10% of the Broadband Wireless ISP business in each city of operation within 5 years. From the financial analysis developed and detailed below, our investors are guaranteed a return on investment within a 12 to 18 months period of the operation of each location. The financial summary for a franchised network location showing the projected return on investment is given below:
Assumptions 1. The franchise partner invest N 30,000,000.00 to deploy the franchise network location 2. The franchise partner gets 100% of net profit in the first year, and 70% in the subsequent years 3. Each location is treated as an independent site 4. Roaming agreements can be designed for inter-franchise payment settlement for roaming users Below is a projection of revenue for a franchise location which will provision a total of 456 users for the first 12 months of operations and up to 5352 users in the 5th year for the following categories: 1. 120 - Mobile/Nomadic users - User who connect using laptops and are only interested in the service 2. 96 - Corporate Users – Corporate users, Cyber Cafés, and hospitality users 3. 240 - Residential Users – Residential customers who connect using CPEs at their home
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Pls. note the income assumptions in this projection has been made with the lowest costing equipments and Service plans that can be subscribed in the categories identified. Income assumptions is only for user internet access services and does not include telephony/voice services, or custom network projects which will accrue additional revenue to Franchisees Franchise Network Location
Financial Summary
Year 1
Year 2
Year 3
Year 4
Year 5
Gross Earnings
N 70,521,600.00
N 344,160,000.00
N 591,840,364.60
N 889,056,000.00
N 1,245,715,200.00
Operating Expenses
N 26,461,690.87
N 27,001,218.00
N 32,519,564.80
N 41,639,622.53
N 46,953,095.35
Payment to NCC at 2.5%
N 2,378,690.87
N 5,550,278.69
N 9,788,107.62
N 14,829,786.61
N 20,978,336.83
Profit before taxation
N 44,059,909.14
N 317,158,782.00
N 559,320,435.20
N 847,416,377.47
N 1,198,762,104.65
Taxation
N 13,217,972.74
N 95,147,634.60
N 167,796,130.56
N 254,224,913.24
N 359,628,631.40
Profit after taxation
N 30,841,936.39
N 222,011,147.40
N 391,524,304.64
N 593,191,464.23
N 839,133,473.26
Revenue to franchise partner
N 30,841,936.39
N 155,407,803.18
N 274,067,013.25
N 415,234,024.96
N 587,393,431.28
Revenue to Payless Broadband
N 0.00
N 66,603,344.22
N 117,457,291.39
N 177,957,439.27
N 251,740,041.98
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