Presentation on theme: "Funding And the Business Plan. Technology Development Costs – Functional requirements – Equipment Qualification Incremental Project Build Costs – Scale."— Presentation transcript:
Funding And the Business Plan
Technology Development Costs – Functional requirements – Equipment Qualification Incremental Project Build Costs – Scale of deployment (all repeaters?) as well as incremental manufacture costs Incremental System Operation and Maintenance Costs Types of Cost
Construction costs have been estimated to increase transoceanic system project costs between 5% and 10 %, excluding amortization of development costs 80% attributed to repeaters; 20% to terminal equipment and other facilities. Typical Estimates?
Business Case Factors Project Purpose – Primarily for Telecommunications Strategic Fit with the interests of the cable owner Business environment considerations – customer perceptions Costs Funding Benefits – Financial and non-financial Risks: to the benefits, to the recoupment of costs from the sensor technology to the operation of the cable, from the sensor partners to the reputation of the project, from the regulators of each jurisdiction to the permitting of the cable
What would secure adequate funding or in-kind support? No negative impact on the cable operator’s build costs, project timeline and operational costs. All incremental build costs are paid by sensor customer. Project timeline is the same as if no sensors had been applied. All incremental operational costs (e.g. Power) are paid by sensor customer.
No negative regulatory impact on the cable operators’ securing of permits in a timely manner. No sensors in EEZ or territorial waters? No UN NGO or coastal state regulatory impact due to change in status of cable under UNCLOS. What would secure adequate funding or in-kind support?
No negative operational (maintenance) impacts. No maintenance obligations due to sensor failure(s) No operational delays in repairing cables No additional permitting for repair operations due to change in status of cable under UNCLOS. What would secure adequate funding or in-kind support?
Positive financial return on facility A net profit to the cable operator from revenues obtained from sensor users, regardless of the actual utility of the sensors. Positive social return Positive public relations due to presence of sensors and public reporting of results. Any Risk? What would secure adequate funding or in-kind support?
Perspectives / Questions / Issues 1 Normal technology development is for profit in deployment. Who is funding this development? A supplier gamble? – Internal development (IRAD) is usually invested based on an anticipated ROI - is it the same for all system vendors? More complex systems imply more complex issues with deployment, maintenance and repair. How will this factor into the operator/vendor business models? Life cycles for cable systems are expected to exceed 20 years with upgrades for transmission performance. Will sensors change this model?
Perspectives / Questions / Issues 2 Sensor density may be a factor of the failure rate over 20+ year life, with no anticipated repair effort. – If no traditional cable recovery and repair of sensor elements what density will be critical? – Can sensor development support a 20+ year life span? – If repeater spacing is increasing in response to cable operators’ demands for cost optimization, how will that mitigate the minimum critical density? Who will pay for closer spacing and higher power for higher density?
CASE STUDY SubPartners has been developing a business model for the application of environmental and other scientific sensors to its proposed APX East cable extending between Australia and USA Apart from basic sensor applications, such as seismic activity, salinity, etc., consideration has also been given to the possibility of applying specific customer technologies, however the primary emphasis remains with the basic sensor technologies, which are regarded as more durable, in a situation where repeaters will not be recovered because of sensor failures Sensors “blistered” to the repeaters have been preferred over tethered arrangements It is not intended to apply sensors to all repeaters, rather to make a more strategic placement on a small proportion of repeaters, with specific placements determined in consultation with the customers Prospective customers are government agencies and educational institutions, which will procure access to sensor data as well as support the significant upfront funding of the sensors, so there will be an upfront fee and recurring charges. No decision has yet been made on data exclusivity, however if/when APX East connects with some of the Pacific Island states, SubPartners intends for the data to be shared with these nations, particularly the data regarding temperature, pressure and seismic activity, further enhancing their Tsunami detection capabilities and also developing their R&E communities. The business model under development is examining securing a net return on investment within a months period