U.S., India Mobile Spectrum Auctions are Likely to Sell Far Less Spectrum Than is Available for Sale

Good news, bad news seems to be the story for spectrum auctions being planned for 2016 in India and the United States. In both cases, the good news--up to a point--is that lots of spectrum is going to be made available. The bad news--up to a point--is that the expected prices are high enough that neither auction now appears likely to be able to dispose of all the inventory.

The Federal Communications Commission reportedly has been able to clear about $86 billion worth of TV frequencies for auction, as part of its 600-MHz spectrum auction. The problem is that many observers think it unlikely all the bidders together are willing and able to spend more than perhaps $30 billion.

In India, regulators face a similar “problem.”  By coincidence, the Indian government has set minimum prices that would generate, if all inventory will sold, of about $83 billion, about the same amount the FCC has been notified the U.S. TV broadcasters are willing to sell.

The Indian auction of 700 MHz, 800 MHz, 1800 MHz, 2300 MHz and 2500 MHz bands for 4G, and 2100 MHz for 3G, though, is not expected to produce anywhere near that amount of actual buying.

Some industry analysts expect far less spending than that. In fact, some estimate the spectrum sale could generate only $10 billion to $12 billion, leaving much of the spectrum unsold.

In both sets of auctions, the problem seems to be that price expectations are too high, on the part of Indian regulators, the FCC itself and spectrum sellers.

So the likely outcome is that far less spectrum actually will be sold than is offered.

Santa Cruz Launches Millimeter-Wave Gigabit Internet Access

The city of Santa Cruz, Calif. Has activated a millimeter wave  gigabit Internet access network built on Siklu radios. The network, which also uses optical fiber trunking supplied by Cruzio, reaches 8,000 homes and businesses throughout Santa Cruz.

Some might wonder how well millimeter wave access networks will work in an often foggy area such as Santa Cruz. With proper planning, propagation is not an issue, Siklu maintains.

The Siklu network is capable of using spectrum in the 60 GHz, 70 GHz and 80 GHz bands, and presently is getting ready to launch gigabit Internet access services in parts of Kansas City, Mo., working with  the Urban Neighborhood Initiative (UNI), KC Digital Drive and Next Century Cities.

China M2M Market is World's Biggest

China’s machine-to-machine (M2M) market will reach one billion connections by 2020, with the majority coming from the developing Low Power, Wide Area (LPWA) market, according to GSMA Intelligence.

China currently is the world’s largest M2M market with approximately 100 million cellular M2M connections, a figure that is expected to increase to 350 million by 2020.

However, an additional 730 million connections will be enabled by LPWA technology, taking the total figure to just over one billion.

Asia Will Represent 60% of All Global Mobile Subs by 2020

There were 2.5 billion mobile subscribers in the Asia Pacific region in 2015, growing to 3.1 billion by 2020, according to the GSMA.

Some 62 percent of people in the region were mobile subscribers, growing to nearly 75 percent  by 2020.

The Asia Pacific region will account for 60 percent of the world’s one billion unique mobile subscribers by 2020. The four largest markets in the region--China, India, Indonesia and Japan--will represent 75 percent of region subs.

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India alone is expected to add nearly 250 million new subscribers by 2020, but smaller countries in the region such as Bangladesh, Indonesia, Myanmar and Pakistan will also make major contributions to subscriber growth, GSMA predicts.

Mobile broadband (3G/4G) accounted for 45 percent of total mobile connections in Asia Pacific in 2015, forecast to rise to 70 percent by 2020.

Smartphone accounts reached 1.7 billion at the end of 2015, accounting for 45 percent of total connections.

China, India and Indonesia have been the main drivers of smartphone growth, which has doubled over the last two years.

The region will add a further 1.3 billion smartphone connections by 2020, reaching 3 billion, or 66 percent of the mobile subscriber base, by 2020.

The Millimeter Era is Coming

The millimeter  era is coming. "If all goes according to plan, the Commission will adopt rules allowing wireless use in the 28 GHz, 37 GHz and 39 GHz bands on a licensed basis and 64 to 71 GHz band for unlicensed within the next few weeks," said Michael O'Rielly, FCC commissioner.

“Experts predict that the four targeted bands will be insufficient to address future wireless industry needs, and we need to start the process of identifying more frequencies now,” said O’Rielly. “As part of our 5G efforts, later this month, we will start looking at additional frequencies to open up for wireless use.”

As millimeter bands are released for commercial use, they will add more spectrum than all the existing spectrum that has been made available for mobile use in the past. The only issue is how much more capacity will be made available: 10 times or 100 times more.

KT, Verizon Team for 5G Development, Standards

KT has teamed up with U.S.-based telecommunications giant Verizon, to establish global standards and developing technologies for the fifth-generation (5G) wireless network, the Korea Times reports. 

Verizon was the first to roll out 4G networks in the United States in 2010 (and second in the world), and clearly wishes to maintain its leadership in next generation networks.

At the same time, Verizon and others will likely move to exploit 28 GHz frequencies to be allocated by the U.S. Federal Communications Commission for 5G use, even if that band is not a global 5G allocation. 

Customers Want RCS VoLTE, Study Suggests

Mobile subscribers want richer, global and open IP-based messaging experiences from mobile network operators, according to GSMA. In other words, they want features provided by Rich Communications Services and voice over LTE, the GSMA implies.

The challenge, as has been the case for other service provider investments in platforms, is the lack of a compelling and clear incremental revenue driver.

The GSMA report says mobile operators are “unlikely to charge consumers directly for IP-based communications services.”

That also implies that projected financial benefits of up to US$5 billion between 2015 and 2020 for operators in developed markets will come substantially from indirect sources, such as better churn performance or account retention, especially from enterprise accounts.  That always is a tough sell, compared to investments that generate actual incremental revenue.

The research, commissioned by the GSMA and conducted by research firm Context Consulting,  surveyed 4,045 participants from China, India, Spain and the United States about their use of traditional mobile operator voice and SMS services, as well as internet-based messaging services.

It highlighted strong interest in new advanced mobile operator-led messaging services such as pre-calling, instant messaging, live video and real-time photo or file sharing, which are enabled by Rich Communications Services (RCS) and voice over LTE (VoLTE) and work natively on any device and network without the need to download an app.

Operator-led services were preferred to existing popular internet-based messaging services, with 79 per cent of people surveyed saying such a service would be relevant to them and 89 per cent regarding them as unique.

“Although internet-based messaging services are incredibly popular, they are siloed and closed, requiring users to download an app that their contacts might not be on,” said Alex Sinclair, GSMA CTO.

Skeptics might argue benefits will be hard to quantify. As with so many other major investment programs, telco next generation network platforms often provide indirect or revenue neutral benefits.

It is more “you get to keep your customer” than “you grow your revenues.”

Comcast to Enter Mobile Business in 2016?

New Street Research now expects both Comcast and "maybe" Charter to launch nationwide U.S. mobile service mobile service using their MVNO agreements with Verizon, as early as this year.

"We expect cable companies to launch commercial wireless offerings over the next twelve months, with Comcast likely leading the charge," New Street Research predicts.

Cable operators could provide wireless services to 20 percent of their residential customers in the next five years, New Street said in a "very conservative" prediction, stealing 35 million customers from incumbent cellular companies, Fierce Wireless reports.

That would give cable operators 13 percent of the U.S. wireless market, leading to slower growth for T-Mobile US and a one percent decline in Sprint subscribers over perhaps five years.

"We would expect them to roll the product out gradually at the outset; however, once they get going, they could take share pretty rapidly."

Carriers could lose between $1.8 billion and $3.8 billion in EBITDA to cable companies during that time, New Street said, with Verizon and AT&T seeing a seven percent to nine percent reduction in EBITDA in 2021.

T-Mobile would see EBITDA growth fall from 13 percent to 9 percent, while Sprint would see growth fall from five percent to roughly zero.

Boeing Proposes Low Earth Orbit Satellite Constellation in 50-GHz Band

With news that Boeing now proposed to launch its own low earth orbit satellite constellation, using 50-GHz spectrum, some might once again note that there is a potential oversupply of LEOS constellations, even if Boeing intends a service that solely serves businesses, not consumers.

Boeing plans to launch 1,396 satellites into low-Earth orbit within six years of the license approval, ultimately deploying 2,956 satellites designed to provide internet and communications services for commercial and government users around the globe.

SpaceX and OneWeb propose constellations that largely would aim to provide Internet access for consumers.

Some of you with longer memories will remember an earlier period in the 1990s when Iridium and Teledesic proposed similar LEOS constellations, ultimately to no avail. Proponents of the latest generation of LEOS proposals will point to vastly different market conditions and infrastructure costs, both of which are substantially true arguments.

So most proponents of new LEOS constellations are betting that a few will survive and attain profitability.

Will Unlicensed Spectrum Create Big New Business Models?

Traditionally, there have been just two major business models for access services, in either mobile or fixed network realms: build and operate your own facilities or lease wholesale access.

Wi-Fi slowly created other models. For mobile operators, use of unlicensed Wi-Fi networks owned and operated by third parties became a significant form of network access. For cable TV operators, Wi-Fi will certainly become a primary means of lowering wholesale costs for mobile services initially based on wholesale arrangements.

With the coming era of millimeter wave access networks, it might be possible to conceive of additional models based substantially or completely on the use of unlicensed spectrum, and other models based on the use of shared spectrum that is akin to licensed access, but at lower costs.

So far, Wi-Fi hotspots have been the way unlicensed access has underpinned commercial amenity access with an indirect business model. But some believe urban networks based on use of unlicensed 60-GHz spectrum could create opportunities for existing or new ISPs, as many new providers of Internet of Things networks are based on use of unlicensed spectrum.

Also, even mobile operators should be able to build additional “fixed access” businesses using their mobile network assets.

Terragraph is Facebook’s new effort to develop a high-capacity, fixed wireless Internet access system running on 60-GHz unlicensed spectrum.  Google, for its part, also has invested in fixed wireless.

At the same time, both firms are testing use of unmanned aerial vehicles for satellite Internet delivery, while Google’s Project Loon is testing use of balloon fleets for the same purpose.

Verizon and AT&T also are looking at fixed wireless.  

Facebook’s Telecom Infra Project meanwhile seeks to develop open source and therefore lower cost network elements and platforms for traditional telecom networks. And Google has other efforts underway in the access network infrastructure or commercial access business.

All those efforts have a common theme, but also distinct missions. Since both Google and Facebook have advertising-based business models, anything the helps connect billions more people creates the revenue opportunity both firms are based upon. In other words, Internet access and Internet users directly create the revenue opportunity.

For that reason, there is direct alignment of “Internet access availability” and “our revenue opportunity” for Facebook and Google.

At the same time, there are nuances. Terragraph and Google’s fixed wireless efforts seem primarily aimed at dense, urban areas. The Facebook Aquila UAV effort, as well as Google’s similar effort, plus Project Loon, are aimed primarily at rural areas.

Facebook’s current satellite delivery effort in Africa also is aimed primarily at rural users. Telecom Infra Project might ultimately provide lower costs in either mobile or fixed realms.

And, for some time, lots of app providers have been pushing for use of more unlicensed spectrum, as well as spectrum sharing, as ways to bring more low-cost communications spectrum to market.

Telcos are likely to prefer use of licensed spectrum. So will cable companies in mobile, eventually. But lots of other app providers are likely to look for ways to leverage lower-cost unlicensed or shared spectrum to underpin Internet access efforts, using several business models.

At least in part, Google has chosen to go direct, becoming an ISP, a mobile services and Wi-Fi hotspot supplier. Project Loon would act as a commercial partner for 4G mobile networks, but also is a commercial operation.

The other business model is open source. Facebook already has done so in the data center area. Now it is working to bring an open source approach to telecom network infrastructure as well.

Facebook, for the moment, continues to insist it does not want to become a commercial provider of Internet access. Indeed, its approach has been to create new platforms that take an open systems approach, usable by any entity.

The Telecom Infra Project already has major support from telecom service providers and network infrastructure suppliers. Presumably, Project Aries and Terragraph would be available for other suppliers to sell commercially.

Google’s UAV effort relies on partnerships with mobile operators who have licenses for spectrum Project Loon will use.

In some quarters, the bigger question is whether more firms such as Google might eventually decide there is a business model beyond open source, research and development. As telcos represent on access platform, and cable TV uses a different platform, might others eventually use additional distinct platforms, including networks based on use of unlicensed and shared spectrum?

How Much Spectrum Actually Will be Sold in India's Upcoming Auction?

Some have speculated, and few have hoped, that a huge spectrum auction--representing as much as 2200 MHz of spectrum, would generate about $83 billion in revenues for the Indian government. That auction of 700 MHz, 800 MHz, 1800 MHz, 2300 MHz and 2500 MHz bands for 4G, and 2100 MHz for 3G, might result in more spectrum being acquired in the 800 MHz and 1800 MHz bands than 700 MHz.

But some industry analysts expect far less spending than that. In fact, some estimate the spectrum sale could generate only $10 billion to $12 billion, leaving much of the spectrum unsold. Some think much of the unsold inventory will be in the 700-MHz range.

Rajiv Sharma, telecom analyst at HSBC, said the government's auction revenue targets are overly ambitious and "based on unrealistic expectations" as it expects to raise a whopping $83 billion, which is 2.8 times the telecom sector's present revenues.

"None of the existing incumbent carriers have the balance sheet to bid for pan-India 700 MHz spectrum at current prices, and we believe a lot of 4G spectrum might remain unsold in the 700 MHz, 2300 MHz and 2500 MHz bands," said Sharma. "We see good demand for 1800 MHz, selective demand for 2100 and 700.”

Millimeter Waves for 5G Will More than Double Wireless Spectrum for Communications

It is too early to say, with precision, how new millimeter wave spectrum allocations around the world, to support 5G mobile networks and other applications, will increase the total supply of wireless communications bandwidth and spectrum. But millimeter spectrum is going to be released for use by communications entities. 

Some might guess that the new millimeter wave capacity will equal or exceed all prior wireless allocations yet made. There are tradeoffs: distance for capacity, generally speaking. 

That noted, millimeter wave capability will boost typical access speeds up to an order of magnitude from 4G levels, as 4G ultimately will boost capacity more than an order of magnitude over 3G. 

In fact, that is likely an extremely-conservative estimate of capacity gains. “You can take all of the useful spectrum we now use from DC to 30 GHz and drop it into the lower end of the millimeter-wave region and still have 240 GHz left over,” said Lou Frenzel of Electronic Design.

“The unlicensed band at 60 GHz contains more spectrum than has been used by every satellite, cellular, WiFi, AM Radio, FM Radio, and television station in the world,” some would say.

Not Enough Mobile Spectrum in Latin America

None of the Latin American countries have reached 50 percent of the 1300 MHz of 3G and 4G mobile spectrum suggested by the International Telecommunications Union (ITU) for 2015.

In Latin America, only four countries in the region have allocated over 30 percent of the ITU’s suggestion for 2015: Argentina (31 percent), Brazil (41.7 percent), Chile (35.8 percent) and Nicaragua (32.3 percent), with all four having allocated the 700 MHz band.

Also, three markets stand below the 20 percent spectrum target suggested: El Salvador (16 percent), Guatemala (16.2 percent) and Panama (16.9 percent). These countries are yet to announce a date for their next spectrum licensing process. The remaining Latin American countries lie below the 30 percent compliance level but over 20 percent.  

Total spectrum requirements for 2020

	Total spectrum requirements for 3G	Total spectrum requirements 4G	Total spectrum requirements
Lower user density settings	440 MHz	900 MHz	1 340 MHz
Higher user density settings	540 MHz	1 420 MHz	1 960 MHz

The International Telecommunications Union (ITU) estimates that, by 2020, a range of 1340 to 1960 MHz of spectrum will have to be allocated to mobile service.

Spectrum Crunch and Spectrum Abundance: Both True

Spectrum (communications capacity) is a complicated matter. On one hand, there never seems to be enough spectrum to handle ever-growing numbers of users, the growing number of connected devices and higher-bandwidth applications such as full-motion video.

According to Cisco, mobile data traffic has grown 4,000-fold over the past 10 years and almost 400-million-fold over the past 15 years, while global mobile data traffic will increase nearly eight-fold between 2015 and 2020 alone.

So service providers always complain about the “spectrum crunch” that threatens to derail progress on the communications front.

On the other hand, many critics of the present spectrum allocation process say there actually is plenty of unused spectrum that could be put to use if we were smarter, and used new tools to allow use of fallow spectrum that already has been licensed.

In that view, hoarding of spectrum to prevent its use--intended or unintentional--is as big a problem as the total amount of usable communications spectrum.

The “unity of opposites” here is that both arguments are correct: there is a lack of available spectrum, as demand for communications soars, and “more” is needed.

On the other hand, there is plenty of available spectrum within the already-allocated 30 MHz to 3 GHz bands, if we could efficiently share its use, while protecting the existing license holders.

One way or the other, the simple answer for the capacity crunch is “more spectrum.”

Since most spectrum useful for communications--from 30 MHz up to about 3,000 MHz--already is allocated, spectrum sharing is the answer to gaining use of huge amounts of spectrum already licensed to existing users.

But spectrum sharing also is the key to efficient use of new spectrum in the millimeter bands (3 GHz up to 300 GHz). The notion is “use it or share it,” rather than the ability to squat on resources that nobody else can use, even if the licensee is not making any use, or only light use, of a resource.

In one important sense, spectrum sharing introduces a market mechanism for spectrum use that is efficient, and encourages licensees not to hoard valuable assets, but put them to work.

The traditional exclusive licensing of spectrum on an “exclusive right to use” basis  is inefficient. In fact, some policy advocates claim that as much as 95 percent of licensed spectrum is not used. Those claims appear to be based on a 2005 National Science Foundation study.  

Other studies of U.S. spectrum use between 30 MHz and 3 GHz did not always find that degree of fallow bandwidth, but the point is that much spectrum is not used much, most of the time.

That, plus the expected incremental demand for mobile and wireless communications, is driving innovations in network architecture (small cells), radio technology, mobile traffic offload, new spectrum (millimeter waves) and spectrum sharing.

All of that suggests the importance of two broad strategies: making better use of spectrum that is available, but lightly used, and opening up non-traditional bands of spectrum that traditionally have been very hard to use for commercial purposes.

And advancements in computing technology driven by Moore’s Law now are crucial to that effort. Simply, cheap and powerful computing makes possible lower-cost sharing of spectrum, as well as commercial use of millimeter waves (above 3 GHz and below 300 GHz) that have been too expensive and too difficult to use, in the past.

In the former case, sophisticated and cheap computing means we can allocate access in real time, in ways that literally were not possible in the past.

In the latter case, we also intentionally can design access systems, using those same techniques that allow robust sharing of resources among a number of potential users.

But just as important is the application of processing power to improve the usefulness of millimeter wave frequencies that are distance-limited (signals do not go so far) and signal propagation limited (signals cannot go through solid objects).

At the same time, the use of small cell networks helps overcome both distance and line-of-sight limitations. Better radio techniques also allow us to “bend” signals around solid objects and recover signals that have become weak or scattered.

“More spectrum” arguably is the single most important issue in communications. But spectrum sharing arguably is the most important tool for securing that needed spectrum.

source: May El Sherif

We are about to see the benefits.

The  Federal Communications Commission expects to vote July 14, 2016 on a proposal to free up frequencies above 24 GHz for 5G applications. The Notice of Proposed Rulemaking is prodigious, involving new “flexible use service rules” (spectrum sharing in licensed bands) in the 28 GHz, 37 GHz, 39 GHz, and 64 GHz to 71 GHz frequency ranges.

In addition to traditional licensing, the FCC proposes spectrum sharing and reservation of a huge amount of unlicensed spectrum, perhaps as much as 14,000 MHz, for unlicensed use.

Compare that to the 100 MHz allocated in the United States for Wi-Fi at 2.4 GHz frequencies, and the 150 MHz allocated in the United States for Wi-Fi at 5.8 GHz frequencies. THe FCC is proposing to release two orders of magnitude (100 times) more unlicensed communications spectrum than presently is available to support Wi-Fi.

As you would guess, incumbent service providers, including mobile and satellite firms, oppose sharing, while others, especially app providers, support spectrum sharing. But it seems inevitable that spectrum sharing, following the model of the 3.5 GHz Citizens Broadband Radio Service band, will be proposed.

The proposed CRRS service would use a three-tier access rights system, reserving priority access for existing licensed users, but allowing licensed secondary rights for commercial users where the primary licensee is not using the spectrum, with best effort licensing for other devices and services (on the model of Wi-Fi).

Where mobile channels typically involve 5 Mhz, 10 MHz (as well as “bonded” channels of 20 MHz), the new proceeding would routinely involve 200-MHz wide channels, which would allow orders of magnitude more bandwidth per user.

“Our plan proposes making a massive 14 gigahertz unlicensed band,” says Federal Communications Commission Chairman Tom Wheeler. “Many of the high-frequency bands we will make available for 5G currently have some satellite users, and some federal users, or at least the possibility of future satellite and federal users.”

That means “sharing will be required between satellite and terrestrial wireless,” he said.

FCC Expects July 14, 2016 Vote for Rulemaking on Shared Spectrum in 28 GHz, 37 GHz, 39 GHz, 64 GHz to 71 GHz Ranges

The  Federal Communications Commission expects to vote July 14, 2016 on a proposal to free up frequencies above 24 GHz for 5G applications. The Notice of Proposed Rulemaking is prodigious, involving new “flexible use service rules” (spectrum sharing in licensed bands) in the 28 GHz, 37 GHz, 39 GHz, and 64 GHz to 71 GHz frequency ranges.

As you would guess, incumbent service providers, including mobile and satellite firms, oppose sharing, while others, especially app providers, support spectrum sharing. But it seems inevitable that spectrum sharing, following the model of the 3.5 GHz Citizens Broadband Radio Service band, will be proposed.

The proposed CRRS service would use a three-tier access rights system, reserving priority access for existing licensed users, but allowing licensed secondary rights for commercial users where the primary licensee is not using the spectrum, with best effort licensing for other devices and services (on the model of Wi-Fi).

Why Mobile Broadband Matters

There is one simple reason why mobile Internet access is so important: by 2021, it will be the way seven billion accounts get access to the Internet, compared to only about half a billion using fixed networks to do so.

By 2021, some 5.5 billion or so people will be using mobile services. Accounts are more numerous than "people" because many users have more than one subscriber identity module, which authorizes service.

Our present assumption that fixed networks are faster than mobile networks might not be quite so accurate by 2021, either, as 5G networks boost mobile speeds to equal, or in some markets, exceed, what is generally available on fixed networks.

That is not unprecedented. In the United Kingdom, for example, 4G speeds were faster than fixed connections in some instances. In the U.S. market, 4G often was faster than some cable TV connections and some telco digital subscriber line services, as well.

source: Ericsson