Cost benefit analysis of MVNO business models for LTE 4G services in Bandung city

Abstract

The development of telecommunication technology so rapidly, so industry structure of information and communication Technology in Indonesia must be able to adapt to these changes. The shift of the industry paradigm to data services led to the emergence of new operators in the field of telecommunication service networks, to provide a variety of services and affordable prices to society. Mobile Virtual Network Operator (MVNO) is a part of the Information and Communication Technology convergence industry, where the operator is able to provide communication services to the people without having a frequency spectrum license or even telecommunication network infrastructure. Mobile Virtual Network Operator implementation planning in Bandung using capacity approach on 4G Long Term Evolution technology to determine the traffic requirement that must be served. An economic approach is performed to determine at the business feasibility of Mobile Virtual Network Operator operations with respect to capital expenditure, operational expenditure, average revenue per user and potential customers. Thus, based on the simulation it is found that Reseller Mobile Virtual Network Operator is feasible to implement in Bandung with Net Present Value of 2 billion rupiah and Internal Rate of Return 53.8%, but for Service Provider and Full Mobile Virtual Network Operator not feasible because the value of Net Present Value and Internal Rate of Return is negative. This is because the business capital cost of Reseller Mobile Virtual Network Operator is smaller than other type of Mobile Virtual Network Operator, so it can be covered by business income in Bandung.