Economic Modeling and Strategic Input for LTE Backhaul

The planning and optimization of long‐term evolution (LTE) backhaul has to be based on a company's overall strategy. Economic modeling is very useful for all levels of planning, not only for the long‐term investment preparation, since now also smaller optimization cycles can be motivated by business benefits and different ideas compared. Many strategic topics around LTE do not directly affect backhaul planning. Starting from the backhaul benefits, three separate types of benefit are discussed. First, service providers receive cash payments for the transmission services sold. In the second case, LTE backhaul is modeled as a contributor to the LTE service revenue. In the third case, various costs shall be saved. This chapter discusses the concepts of net present value (NPV) and payback period with a simple example. The calculations are based on cash inflows and outflows that do not depend on financial accounting.