Is Middle Mile Transport Blocking Internet Access for Everyone in India?

Is the “middle mile” the problem preventing Internet service providers (including mobile operators) from more-rapidly extending Internet access to Indian villages? Some would say so.

In 2013 India reached 900 million mobile connections and became the second largest market in terms of mobile connections and unique subscribers.

But as of 2013, the rate of increase has slowed dramatically, suggesting that some new innovations are required to reignite growth, and use of mobile Internet access by the rest of the population.

Backhaul and middle mile optical fiber facilities, or wireless backhaul, remain a challenge.

Generally speaking, rural Internet access is a matter of the last 15 kilometers to 20 km from an optical network point of presence, researchers at the Indian Institute of Technology have argued.

Both those requirements are important since 70 percent of India’s population, about 750 million people, live in its 600,000 villages.

So some would argue that if we can figure out how to reach across a 15 km to 20 km distance, most villages in India could be served with Internet access.

The cost of using a mobile network to access the Internet clearly have fallen, and will fall further as operators active new 4G networks.

In India and elsewhere, 2G networks were capable of reaching 20 kilobits per second and 4G technologies can reach 250 megabits per second, which is about 12,000 times faster.

At the same time the actual cost of network infrastructure per megabyte is falling dramatically. Costs per bit fell 95 percent as we moved from 2G to 3G. Costs per bit fell 67 percent from 3G to 4G.

From 2005 to 2013, the average cost of a mobile subscription relative to the maximum data speed dropped about 40 percent each year or 99 percent over that eight-year period.

Indians spend 45 percent of their incomes on mobile technologies and platforms whereas Americans only spend 11 percent.

source: Brookings

126 MHz in 600-MHz Band Set for Auction

U.S. TV broadcasters have agreed to sell 126 MHz of spectrum in the 600 MHz band, allowing a reverse auction to begin that will set market clearing prices for the various 10-MHz blocks of spectrum in various geographies nearly able to cover the whole United States.

There always is a chance the auction could propel a new “national” provider into the mobile business, though the huge amount of capital required, and the fierceness of competition in the mostly-saturated U.S. mobile market makes that an unlikely possibility.

Most likely, the big winners will be AT&T, Verizon and T-Mobile. Even though Verizon has suggested it might be cautious about bidding, AT&T and Verizon typically have the greatest incentive, and the biggest war chests, to win most of the new spectrum being allocated, and Sprint will not be bidding.

T-Mobile US, on the other hand, will be able to compete without facing AT&T and Verizon in most of its areas, as T-Mobile US is able to bid on reserved spectrum that largely keeps AT&T and Verizon from countering.

Some smaller local or regional bidders are expected, though. A variety of business models could make sense, in that regard. There remain some regional mobile operators who have primary interests only in only parts of the national geography.

And there always are some bidders who will hope to flip the spectrum to another motivated buyer.

It always is possible a new entrant could try and win enough spectrum to assemble a national network. Such a new entrant most likely would not be aiming to compete in the traditional mobile network, however.

More likely is an alternative approach, perhaps based on assembling a national network that support Internet of Things connections specifically. The reason is that many IoT apps will not require lots of bandwidth, so a 10-MHz national network might be able to create a sustainable revenue model.

Also, the 600-MHz frequencies will have very-good signal coverage characteristics, which translates into lower tower and radio capital spending, and lower power requirements for remote connected devices or sensors.

But such gambits (buying general purpose mobile spectrum to deploy for niche apps) always are highly risky. Even would-be providers of “wholesale capacity” networks, often a business model considered when new entrants ponder acquiring mobile spectrum, most often back away after a serious examination of the business model.

Whether all the spectrum will actually be purchased is the issue. Some have suggested the auction would eventually raise $60 billion. Others believe that is overly optimistic. With the exception of T-Mobile US, which is likely to bid heavily to win new spectrum, most other bidders will evaluate bids in light of other ways to acquire additional spectrum, especially if the need now is "capacity" rather than "reach" or "coverage."

FCC Clarifies Sone Rules for Citizens Broadband Radio Service

The Federal Communications Commission has reaffirmed its decision to create the Citizens Broadband Radio Service in the 3550-3700 MHz (3.5 GHz) band, and took additional steps to finalize the rules for what the FCC calls “an innovation band.”

The CBRS opens up 100 megahertz of spectrum previously unavailable for commercial uses, which it added to existing commercial spectrum to make a 150 megahertz contiguous band that allows current licensees to exercise primary rights to their licensed spectrum, but also to allow commercial use on a secondary basis (with some quality of service measures), plus non-licensed use by tertiary users on a best effort basis.

3.6 GHz Overview Andrew Clegg NSMA Spectrum Management 2015 May 19th, 2015.

Google To Test 3.5-GHz Citizens Broadband Radio Service Shared Spectrrum in Kansas City, Mo.

Google has gotten permission from Kansas City’s city council to test 3.5 GHz frequencies for fixed wireless Internet access. 

The test is noteworthy for a couple of reasons. For starters, Google Fiber believes it can reach more customers if it can use fixed wireless platforms to areas where it can justify deploying fiber to the home. 

The other interesting angle is that 3.5-GHz spectrum matters because it is part of the spectrum set aside for a novel shared spectrum approach that allows commercial users to supply services in licensed spectrum already awarded to government users, on a secondary basis. 

In other words, Google wants to test the viability of using shared spectrum made available as part of the Citizens Broadband Radio Service. 

Google asked for two-year, discounted rate use of some city light poles and other structures in eight areas: downtown, the Plaza, Waldo, 18th and Vine, Zona Rosa, Brookside, Westport and near Barry Road and Interstate 29. The testing will be outdoors in four places and inside at all eight sites.

Google Loon Might be Part of Indonesia Internet Access Solution

Infrastructure cost is not the only problem Internet service providers face, but it is among the top reasons Internet access is not available to everyone across South Asia and Southeast Asia.

"In Jakarta, we can enjoy  Internet speeds up to 10 Mbps, which makes Jakarta the city with the second-fastest Internet speeds in Southeast Asia, after Singapore,” said Indonesia Communications and Information Technology Minister Rudiantara Rudiantara. “But our friends in Maluku and Papua can only enjoy 300 Kbps."

Google Project Loon might provide part of the answer to the infrastructure problem faced by an archipelago of over 17,000 islands.

Google and three mobile operators across Indonesia (Telkomsel, XL Axiata, and Indosat) will test the use of Project Loon as the backhaul mechanism. It appears Project Loon will use Long Term Evolution frequencies that can be used by standard LTE handsets, though it is not clear the phones will receive signals directly.

SIGFOX Launches IoT Network in Brazil

SIGFOX has begun deploying SIGFOX’s dedicated Internet of Things network throughout Brazil, starting with Rio de Janeiro and São Paulo.

The deployment marks the 18th country where SIGFOX is deployed.

“GSMA Intelligence reports that Brazil is the world’s fourth-largest machine-to-machine (M2M) and Internet of Things (IoT) market, which makes the country another major, strategic part of SIGFOX’s goal of establishing one global, seamless IoT network for billions of objects,” said Rodolphe Baronnet-Frugès, SIGFOX executive vice-president networks and operators.

Bharti Airtel Cuts 4G Pricing in Response to Reliance Jio Market Entry

Bharti Airtel has cut prices of its fourth-generation network (4G) data offering in select cities, just a day ahead when arch rival Reliance Jio Infocomm is expected to introduce 4G SIM cards in select markets.

Likewise, some argue that Reliance Jio, entering the Indian mobile market for the first time, will not compete on price.

It is not unusual for executives in any part of the telecom or Internet access business to claim they do not compete on price. In practice, every supplier competes on price, no matter what their preferences might be on that matter.

Capacity or Coverage? Capacity is the Main Driver

There is a bit of a contradiction in the access business. Service providers generally differentiate on price and speed. You will recall that was how personal computer suppliers once competed, and rarely do any longer.

As much as service providers might prefer to compete on some basis other than price or speed, that seems to be the most-relevant way consumers evaluate offers.

"Mobile subscribers now consider average data speeds to be among the most important factors in assessing the quality of the service offered to them by different operators," says Mark Colville, Analysys Mason principal.

For example, Analysys Mason’s Connected Consumer Survey 2016 found that 18 percent of respondents considering churning to another provider were doing so because of experiencing poor data speeds with their current provider.

While both capacity and coverage are the key requirements for mobile spectrum, the next wave of investments arguably will focus on capacity, rather than coverage, given the growth of demand for Internet access capacity.

“Mobile subscribers now consider average data speeds to be among the most important factors in assessing the quality of the service offered to them by different operators,” Colville says.

                                    

  Global Mobile Data Consumption

source: Cisco

Carlson Wireless Intros New TV White Spaces Chipset Supporting 96 Mbps, Solar Power

Carlson Wireless Technologies is introducing its third-generation TV White Spaces chip module, the “Picasso Gen3,” globally.

Using low-band spectrum in vacant UHF TV frequencies and the new IEEE 802.11af WiFi standard, Carlson’s Picasso Gen3 chip will allow hundreds of users to receive a reliable broadband connection with data download speeds up to 96 Mbps from a single base station.

The range of the UHF signal is three to five times greater than a traditional microwave WiFi signal.

The advantages of using such spectrum are reduced capital investment and operating expense. 

Compared to other fixed wireless platforms, a TVWS network can achieve a 10-fold reduction in the amount of base stations needed.

Unlike some other wireless technologies, Carlson’s Gen3 low-band non-line-of-sight (NLOS) signal penetrates walls, trees, foliage, and bends over hills even at long distances, Carlson says.

The very low power consumption of the chipset design also allows for solar powered base stations.  

Spectrum Matters Because it Allows Us to Connect People to the Internet Affordably

There is a good reason why spectrum policy has emerged as a key underpinning of efforts to eliminate the digital divide. Simply, connecting the unconnected will require infrastructure that costs far less.

A good example is the amount of money a household can afford to spend on communications, per month, as a function of household income. For the cohort including the first billion people, with annual income averaging $29,000 annually, a household can afford to spend $205 a month on communications, according to data developed by Richard Thanki, University of Southampton.

In contrast, for the cohort including the seventh billion, a household can afford to spend only about $2.25 per month. Those of you familiar with the mobile market in India will recognize the number. The average mobile account in India represents monthly spending of about $2.

Where the cohort including the second billion people has household income of about  $12,700, they can afford to spend about $53 per month on communications.

The cohort including the third billion, with income is $5,500, can afford to $23 a month on communications..

The cohort including the fourth billion has $2990 annual income, and can afford to buy $12 a month of communications services.

The cohort including the fifth billion earns $1770 annually, and can afford to spend $7 a month.

The cohort including the sixth billion can afford to spend $4.40 per month on communications. The cohort including the fifth billion people can afford to spend $7 per month.

Average annual income for the cohort including the seventh billion people is $540 per year. Africa and India dominate the seventh billion cohort, many would note.

source: Alliance for Affordable Internet

source: Alliance for Affordable Internet

Bharti Airtel Wants to Launch a Video Streaming Service; Wants to Know if it Can Do So

Bharti Airtel has asked the Telecommunications Regulatory Authority of India to give approval to a streaming video service it wants to offer in India, operating as a managed service, not an “Internet” service available over the top.

That move was almost inevitable in the wake of a ruling by TRAI that zero rating and sponsored apps are unlawful in India. A “big global content provider” wants t work with Airtel to create the new service.

In India, managed services are known as “closed electronic communication networks” (CECN), and can be likened to TV broadcast, radio broadcast or cable TV and satellite video services that are likewise “managed services,” not over the top Internet apps.

Mobile operators, it is fair to say, are frustrated by TRAI’s inability to specify how CECNs can operate, as a practical matter.

The issue is not use of Internet Protocol, or IP networks, or mobile bandwidth used for Internet access. The issue is the “managed,” and therefore “closed” nature of a managed network, where access is restricted to subscribers to such services.

One could have predicted that service providers would explore managed services, in the wake of the TRAI decision. Indian mobile operatros, no less than mobile operators elsewhere, are exploring new revenue sources and roles in the mobile ecosystem.

FCC Wants Industry to Figure Out LTE Spectrum Shariing with Wi-Fi

It never should come as a surprise that service providers argue about the use of spectrum, which is the foundation for any spectrum-based business. So it is not surprising that proponents continue to debate whether mobile networks using Long Term Evolution can "play nice" with Wi-Fi networks.

The debates are perhaps more important than is typical, since the U.S. Federal Communications Commission wants the industry to figure this out on its own, without a firm directive from the agency.

Given the stakes, some compromise eventually will be reached.

source: RCR

T-Mobile US Adds 2 Million Net New Accounts in 1Q 2016

T-Mobile US appears once again to be capturing most of the net account growth in the U.S. mobile business in its first quarter of 2016, much as cable TV firms are gaining nearly 100 percent of the net growth in the fixed line Internet access business.

We will know for certain, soon enough, but some believe the first quarter will show that all the leading four firms gained net phone accounts.

T-Mobile US says it added 2.2 million total net adds in the first quarter of 2016 and more than one million postpaid net new accounts, of which about 877,000 were phone accounts.

T-Mobile US also had retail prepaid net growth of 807,000 accounts.

Significantly, churn rates in the key postpaid segment dropped to 1.33 percent per month.

Service revenues of  $6.6 billion were up up 13 percent, year over year.

Adjusted earnings (EBITDA) of $2.7 billion was up 98.1 percent, year over year, on the strength of a gain on spectrum activities of $636 million.

Adjusted EBITDA margin--excluding the spectrum gain--grew 24 percent, year over year.

source: Jackdaw Research

DoJ Approves Charter-Time Warner Cable Merger

The U.S. Justice Department on Monday gave antitrust approval to the Charter Communications proposed purchase of Time Warner Cable and Bright House networks, which would create a new and heftier second-largest U.S. broadband provider and third-largest video provider.

Approval by the Federal Communications Commission is expected.  

The merger will create a new cable TV industry market structure, with two dominant firms at the top, and then a huge gap to number three, a situation that roughly mirrors the structure of the U.S. fixed line telco industry, where two or three very-large providers lead an industry where all the rest of the providers are much smaller.

In fact, the new U.S. cable TV market structure will look much like the U.S. mobile industry does.

You Can't Tell What Businesses Google, Facebook, Amazon or Vodafone, Orange and AT&T Might Be in in 10 Years

When headlines link “Google, Ford, Uber,” you know something is happening. When all three firms work together, across application, automobile and ride-sharing industries, something is pulling all three outside their present business models.

These days it can be dangerous to work in your own silo

Technology and competition now allow participants in just about any ecosystem to assume new roles. So Amazon is launching a fashion brand and supplying some of its own delivery services.

Google and Facebook already are Internet access providers. Google is a mobile and video entertainment services providers. Facebook and Google build their own servers, while Facebook has created an open source data center architecture.

To support its consumer access and video services, Google built its own decoders and modems, instead of buying them from existing telco and cable TV suppliers.

French telecom giant Orange has entered the banking business.

The point is that it is nearly impossible to know how your core business will change in 10 years, what you will be selling, to whom you will be selling, and who you will be competing against.

According to consultants at Accenture, 35 percent of polled consumers would consider buying their fixed high speed Internet access from Google; 20 percent would buy from Microsoft; about 17 percent would buy from Apple.

Some 32 percent would buy mobile Internet access from Google, while 24 percent would buy their mobile voice from Google and 26 percent would buy text messaging from Google.

You could probably get similar results asking consumers about which other potential suppliers they would buy from.

You might note that French telecom operator Orange is acquiring a majority stake in Groupama Banque, allowing Orange to create the mobile-only Orange Bank in France at the beginning of 2017.

Orange will own 65 percent of Orange Bank, while Groupama retains a 35 percent ownership.

Through Orange Bank, Orange and Groupama will offer all essential banking services over a mobile platform, including current accounts, savings, loans and insurance services, as well as payment.

The combined ambition for the two groups is to attract over two million customers in France. Plans call for expansion to Spain and Belgium as well.

“This agreement is a major step forward in our ambition to diversify into mobile financial services as we outlined in our Essentials 2020 strategy,” said Stéphane Richard, Orange chairman and CEO.

Orange's investment is part of its ambition to diversify its business, perhaps part of a potential trend: mobile operators becoming banks. That, in turn, is part of a larger effort by European and other mobile operators to avoid becoming dumb pipes.

The lesson is that watching and responding to your present competition might be a trap. The big competitors, and maybe future market leaders, increasingly come from outside your existing market.

That is why it is so important to spend at least some time pondering developments outside your immediate business and technology silo. That is just as true for suppliers of fixed wireless access as it is for mobile service providers, cable TV companies or giant app providers, device or infrastructure providers.

Millennials Prefer Texts to Calls

If given a choice, 75 percent of Millennials would rather communicate with a business by text message than voice, a survey sponsored by OpenMarket finds. 

Some 76 percent would rather receive a communication by text message than voice, because it is more convenient.

I doubt anybody finds that a surprise.

Will Upcoming India Spectrum Auction Bankrupt Some Mobile Firms?

A massive Indian spectrum auction in 2016 might prove problematic, for traditional and new reasons.

On one hand, the auction will release up to 2,000 MHz of spectrum, across a wide range of frequencies useful for communications purposes. The problem is that some observers believe the service providers cannot possibly afford to buy all that spectrum, at suggested prices.

Some speculate that sold spectrum--assuming virtually everything is purchased--will amount to about US$83 billion, increasing mobile service provider debt loads as much as 185 percent.

At such levels, the auctions would represent more than 25 percent of the country's national budget for the financial year 2016-17, and more than double the combined revenues generated (around $38 billion) by all telecom companies during the financial year 2014-15.

In fact, of the projected $85 billion in potential revenues, the sale of 700 MHz spectrum alone is estimated to represent around $64 billion. It would not be unheard of for some spectrum to remain unsold whenever an auction is held.

It is possible the proposed spectrum auction in India might result in quite a lot of the spectrum, even desirable spectrum, remaining unsold.

Spectrum deemed useful both for coverage (700 MHz, 800 MHz, 900 MHz) and capacity (1,800 MHz, 2,100 MHz, 2,300 MHz and 2,500 MHz) now are scheduled for sale.

To the extent that spectrum constraints contribute to call drop problems, the new capacity will help. But observers now warn that minimum prices are set at high levels, implying high prices for purchased spectrum.

In fact, some mobile service providers have called for postponing at least some parts of the auction, altogether.

Excessive prices been a problem in the mobile industry before. Overpayments for 3G spectrum nearly bankrupted a number of tier-one service providers in Europe, for example.

Also, high reserve prices mean huge debt loads for firms that win spectrum, hampering their ability to spend money on other infrastructure, services or even customer service.

And though it has not had any appreciable impact on government thinking, some would argue that at least some spectrum should be released for unlicensed use. That sacrifices some government revenue, but has proven to be an effective way of stimulating supply of access services.

There appears to be no support for that concept, at the moment, in the design of the auction and the setting of prices.

India Mobile Operators "Profiteering?"

Rajan Mathews, Cellular Operators Association of India director general, has a tough job. COAI represents Indian mobile operators recently accused by a Telecom Regulatory Authority of India official as a “cartel” that is “interested in profiteering at the expense of consumers,” said  Attorney-General Mukul Rohatgi.

"This is a cartel of four-five players in a country of a billion," Rohatgi said. "They earn huge revenues and couldn't be bothered about consumer satisfaction."

Ignore for the moment the realities of the Indian market, where a typical customer account represents just $2 a month in revenue.

Mobile operator infrastructure costs some 30 percent more than global averages, says Rajan Mathews, Cellular Operators Association of India director general.

That is not all. Spectrum prices range from 30 percent to 35 percent higher than global averages as well.

And Indian mobile operators labor with less spectrum. “Every mobile operator in India has, on average, 12 MHz to 15 MHz of spectrum,” said Mathews. “Globally, every operator has 45 MHz to 50 MHz.”

Then there are taxes of various types, including spectrum taxes, though some relief recently has been gotten, which is helpful.

As always, there are battles between service providers building their models on licensed spectrum, and others who want greater reliance on license exempt spectrum.

Those decisions obviously affect both business models and the degree of competition in Internet access and other markets.

Availability of unlicensed frequencies also affect spectrum values and service provider choices about access network deployments.

All of that in turn affects the pace of Internet access investments across India.