Insights in costing of continuous broadband internet on trains to allow delivering value via services

Continuous broadband Internet on trains is at the moment being deployed worldwide but not always profitable. Solely providing internet for travellers will have a negative return on investment. But, different service providers could be interested to share the unused capacity of resources deployed to offer other services. In this way, resources and their costs are shared over several services and revenues may rise above the total cost. Service operators should therefore be able to make well informed decisions based on an ex-ante estimate of the cost of a service. Using activity based costing (ABC), we investigate on the one hand how to determine the total cost of resources supplied and on the other how to estimate the cost of consumed resources of a service. Our results show that ABC can adequately cope with the case specific nature of the rollout of services on a train. ABC provides insights in the contributors to the cost per service and the unused capacity. Moreover, obtained results can be used to distribute the cost based on the usage of resources, activities and services, evaluate the service mix and identify candidates for outsourcing. Still, ABC does not give insight in how the unused capacity of a resource should be allocated. The optimal allocation of unused capacity will therefore remain the focus of future work

Insights in the cost of continuous broadband Internet on trains for multi-service deployments by multiple actors with resource sharing

The economic viability of broadband Internet services on trains has always been proved difficult, mainly due to a high investment cost and low willingness to pay by train passengers, but also due to unused opportunities such as non-passenger services (e.g. train performance monitoring, crew services) and optimization of the resources consumed to offer Internet services. Evaluating opportunities to improve the return on investment is therefore essential towards profitability of the business case. By efficiently sharing resources amongst services, costs can be pooled over several services in order to reduce the investment cost per service. Current techno-economic evaluation models are hard to apply to cost allocation in a multi-service deployment with multiple actors and resource sharing. We therefore propose a new evaluation model and apply it to a deployment of Internet services on trains. We start with a detailed analysis of the technical architecture required to provide Internet access on trains. For each component, we investigate the impact by the different services on resource consumption. The proposed techno-economic evaluation model is then applied in order to calculate the total cost and allocate the used and unused resources to the appropriate services. In a final step, we calculate the business case for each stakeholder involved in the offering of these services. This paper details the proposed model and reports on our findings for a multi-service deployment by multiple actors. Results show important benefits for the case that considers the application of resource sharing in a multi-service, multi-actor scenario and the proposed model produces insights in the contributors to the cost per service and the unused amount of a resource. In addition, ex-ante insights in the cost flows per involved actor are obtained and the model can easily be extended to include revenue flows to evaluate the profitability per actor. As a consequence, the proposed model should be considered to support and stimulate upcoming multi-actor investment decisions for Internet-based multi-service offerings on-board trains with resource sharing