Order of Magnitude Change in Mobile and Wireless Spetcrum?

In the wireless business--mobile,  untethered or fixed--supply and demand matters. Scarcity accounts for the value of mobile spectrum, for example. So any big changes in supply will be reflected in both demand changes and “asset value.”

To be sure, different blocks of spectrum are deemed to have different value, based on propagation characteristics. That is why 700-MHz spectrum for mobile, or 600-MHz spectrum , might often sell for much more than 2 GHz spectrum.

Of course, some also will note that costly spectrum is the second-biggest problem for a service provider dependent on licensed spectrum access. Having no spectrum is the bigger problem. The former problem makes the business case more difficult. The latter problem makes the business case largely impossible.  

But business cases built on scarcity cannot survive unchanged if there is a dramatic step function in supply, or a dramatic step function in demand, up or down. And one has to account for a coming big step function in spectrum supply that will increase wireless and mobile supply by an order of magnitude or even two magnitudes.

Those radical changes in supply likely will affect the scarcity premium placed on lower-frequency signals. And so it will be with the coming era of millimeter wave communications.

In the U.S. market, millimeter wave frequencies have been commercially deployed for decades, and talked about as the next frontier for mobile communications for just about that long, as well.

It might be worth noting that fully 90 percent of radio frequency spectrum lies in the millimeter wave regions between 30 GHz and 300 GHz.

Recent tests suggest of 28 GHz and 73 GHz radio systems “demonstrate that, even in an urban canyon environment, significant non-line-of-sight (NLOS) outdoor, street-level coverage is possible up to approximately 200 meters from a potential low-power microcell or picocell base station,” the researchers from NYU Wireless say.

In other words, as a capacity tool, millimeter wave small cells might cover a diameter of about 400 meters (about a quarter of a mile). That might not be as helpful for rural access, but in an urban environment, would be significant. The NYU Wireless tests suggest an order of magnitude boost in capacity is quite possible.

The Federal Communications Commission plans to initially open up nearly 11 GHz of high-frequency spectrum for mobile and fixed wireless networks, of which a whopping seven gigaHertz will be available for unlicensed use.

The rules create space for service in the 28 GHz, 37 GHz, and 39 GHz bands, and a new unlicensed band between 64 and 71 GHz.

The FCC also wants to release another 18 GHz of spectrum encompassing eight additional high-frequency bands, for a total of 29 GHz of new communications spectrum.

Bringing stakeholders together to understand changing supply and demand issues, and the business model for Internet access, is a key focus of the Spectrum Futures conference. Here’s a  fact sheet and Spectrum Futures schedule.

U.S. Mobile Price Wars Moderating?

source: Wall Street Journal

In the Internet and mobile era, price-per-bit, and often absolute prices, tend to decline over time. Periodically, even more disruptive periods of price wars erupt. Both trends--long term price declines, plus occasional outbreaks of especially-rapid price disruption--are part of the larger dynamic of market change.

Some wonder whether a recent severe price war in the U.S. mobile market might be moderating. It is possible. No period of especially sharp price competition lasts forever. At some point, though price competition never ends, its magnitude can moderate.

In Thailand and Elsewhere in Asia, Internet Access is Mobile Internet Access

As I mentioned during a recent keynote address for Telegration business partners (a U.S.-based sales organization focusing on enterprise and mid-market customers), when conducting analyses of Internet adoption on a global basis, one can essentially ignore all fixed network access, look only at mobile Internet access, and still get the trend right, and the magnitudes of usage about right.

Except for about 10.5 percent of Internet users in Asia, for example, who do get access using a fixed network, substantially all the rest of the Internet users do so using mobile networks.

And even that statistic is skewed by large numbers of fixed network users in places such as China, Japan and Korea (with additional users in Australia, New Zealand, Singapore, Taiwan and Hong Kong).

That is not to say other access methods will not emerge, but it is hard to ignore the fact that nearly 90 percent of Internet access in Asia now is provided by mobile networks.

Rural coverage, language relevance, device prices and recurring access costs all are issues. Still, mobile has to be reckoned the primary delivery vehicle.

As the 80/20 rule suggests, "20 percent of activities produce 80 percent of the results." For Internet access, the practical application is that only mobile really matters, where it comes to consumer Internet access.

Bringing stakeholders together to do something about that is the mission of the Spectrum Futures conference. Here’s a  fact sheet and Spectrum Futures schedule.

source: ITU

Still, Asia is home for nearly half of the world’s Internet population. At 1.24 billion users, 46 percent of the world’s Internet users live in Asia, according to Geonet.

In Thailand, which introduced 3G networks not so long ago, Internet usage has skyrocketed. And virtually all of those gains are because people use mobile devices for Internet access.

source: TechCrunch

Across Asia, 58% of People Do Not Use the Internet

Across Asia, about 58 percent of people still do not use the Internet, according to the International Telecommunications Union. It you exclude China, Japan and Korea, plus the city-states of Singapore and island of Taiwan, the percentage of Internet non-users can, in some cases, range upwards of 76 percent.

Bringing stakeholders together to do something about that is the mission of the Spectrum Futures conference. Here’s a  fact sheet and Spectrum Futures schedule.

source: ITU

Devices Really Matter Where it Comes to Mobile Network "Call Drops" and "Internet Access"

Wireless communications always are a bit tricky because radio waves--even when carrying digital signals--are analog processes. Conditions in the physical environment--presence of nearby metal, human body parts, walls, trees and other obstructions directly affect signal propagation and signal strength.

A study by Professor Gert Frølund Pedersen of Aalborg University shows that downlink signals can easily vary by 10 decibels between various phone models and makes. Keep in mind that a 3 dB difference in signal strength means signal is cut by 50 percent. Each successive 3 dB drop means another 50 percent drop in signal strength.

Roughly, that means a signal intended to reach a receiver at any set level can be reduced to about 12.5 percent, at the same exact location, using some devices, and varies also when a device is used by different people, using the same device, at the same location.

That is because people hold the phones differently, and that affects signal reception, depending on placement of antennae in each device.

One clear conclusion of the study is that phones vary by an order of magnitude in terms of signal reception. The antennas inside the best phones are up to ten times better than those in the worst phones.

This study was performed in Denmark in autumn 2012. The four Danish network operators (TDC, Telenor, Telia and 3) were asked to provide a list of their top 10 selling phones from the past year.

On the basis of the four lists, nine phones were selected for testing on the GSM 900, GSM 1800, UMTS 900 and UMTS 2100 air interfaces.

The point is that mobile networks are not the only reasons why mobile customers encounter call drop, signal quality and other signal-strength-related issues.

Developments in wireless access platforms that will affect business models and signal strength will be part of the discussion at the Spectrum Futures conference. Here’s a  fact sheet and Spectrum Futures schedule.

Santa Cruz ISP Starts Gigabit Network Build Featuring Millimeter Wave Radio Access

Cruzio, an independent Internet service provider operating in Santa Cruz, Calif, has begun construction of the optical fiber trunking network that will support gigabit Internet access for Santa Cruz.

The network will use millimeter wave fixed wireless as the “last mile” technology.

In a somewhat unusual twist, the city of Santa Cruz actually will pay for and own the dark fiber trunking network, which Cruzio will light, lease and operate. The city believes the build will cost between $45 million and $50 million, to reach possibly 22,000 residences.

Cruzio will be the sole retail tenant of the network.

How Will ISPs Replace 1/2 Current Revenue Within 10 Years?

Wish Ronquillo, Venture Partner, Ruvento Ventures, Singapore

The telecom business is not alone in facing huge business model disruption because of technology advances. Consider driverless cars. By some estimates, as much as $160 billion out of $200 billion in revenue (for insurance premiums) is at risk of disappearing or shifting because driverless cars will reduce accidents so much that premiums will fall.

For those of you doing the quick math, that is an 80-percent hit to existing revenues.

Deloitte, for example, forecasts today’s $200 billion in personal-car-insurance premiums is safe for about seven or eight years, then slide to about $40 billion by 2040.

On the other hand, Deloitte believes $100 billion could shift to product-liability insurance and coverage bought by ride-sharing businesses, for a net drop of about 50 percent in total auto insurance revenues.

Jay Fajardo, CEO, Launchgarage, Philippines

Assuming that change happens over roughly a decade, it would fit a pattern of revenue shift we have seen, and likely will continue to see, in the global telecom business, where roughly half of all present revenue sources disappear, and must be replaced, about every decade.

That is why so much of the content at the upcoming Spectrum Futures conference will focus on app development and app partnerships. Venture capitalists Wish Ronquillo and Jay Fajardo, as well as app development consultant and VC V. Shrinath will be speaking at the event.

According to the Federal Communications Commission data on end-user revenues earned by telephone companies, that certainly is the case.

Shrinath V, Venture Capitalist and Google Developer Expert, India

In 1997 about 16 percent of revenues came from mobility services. In 2007, more than 49 percent of end user revenue came from mobility services, according to Federal Communications Commission data.

Likewise, in 1997 more than 47 percent of revenue came from long distance services. In 2007 just 18 percent of end user revenues came from long distance.

You can count those as one single change, or two changes. Either way, it literally is the case that half of revenue sources changed within a decade.

That change in revenue sources is going to continue. Mobile voice and messaging already is declining, and in its place mobile Internet access is growing. For fixed network operators, video revenues are growing, while voice is shrinking, and high speed access has become the anchor service.

The point is that there is a very good reason for all service providers to assume they will have to replace half their current revenue in 10 years, and possibly for every decade thereafter. It now appears the auto industry is about to experience that same sort of change.

46% Mobile Adoption in Africa

More than half a billion people across Africa now buy mobile services, the GSMA says.

A GSMA report says there were 557 million unique mobile subscribers across Africa at the end of 2015, equivalent to 46 percent of the continent’s population, making Africa the second-largest mobile market in the world.

Africa’s three largest markets – Egypt, Nigeria and South Africa – together accounted for around a third of the total subscriber base. The number of unique mobile subscribers is forecast to reach 725 million by 2020, accounting for 54 per cent of the expected population by this point.

Mobile broadband (3G/4G) accounted for just over a quarter of total connections at the end of 2015, but is expected to account for almost two-thirds by 2020.

Sprint to Boost LTE Speeds to 200 Mbps

Sprint plans to boost its 4G speeds up to 200 Mbps, by bonding its 4G channels, using carrier aggregation.

“We're already rolling out devices in the market that supports three channel carrier aggregation that are expected to deliver big speeds in excess of 200 megabits per second when we were allowed three channel carrier aggregation in the network expected as early as early 2017,” said Marcelo Claure, Sprint CEO.

5G Will First be Commercialized in Fixed Wireless Mode

There is one thing both AT&T and Verizon seem to agree on, where it comes to 5G: fixed wireless is where we will see the early commercial deployment. In part, that is because the licenses restrict use of 28 GHz spectrum for fixed uses only, not mobile, and 28 GHz is among the first new millimeter bands expected to be made available for commercial use by the Federal Communications Commission.

Some might question how useful 28 GHz spectrum will be as a platform for Internet access (mobile or fixed) because of the extremely high frequency. As observers will note, lower frequency signals (600 MHz, 700 MHz, 800 MHz, 2 GHz) are better for coverage and in-building reception.

Since millimeter waves tend to be line of sight, and do not propagate as far as lower-frequency signals, some might wonder whether such frequencies will be so useful for outdoor coverage applications, such as Internet access.

In principle, the answer seems to be that the expected architectures (small cells) will help by reducing the expected coverage area. That means any specific location might have a reasonable chance of connecting with multiple transmitter sites. If signal from one small cell is difficult, perhaps another small cell, shifted 90 to 180 degrees, will work.

Beam-bending techniques also are in development. Even with older generation radios (2000 or so), it was possible to transmit 28-GHz signals 1.5 to three miles. That is enough coverage to be useful for Internet access purposes.

Small cells, of course, will, by design, not be expected to transmit over such distances. So the rough rule of thumb is that, in a fixed application, “roughly line of sight” paths will be designed. But it remains to be seen whether peer-to-peer and mesh network architectures also will play a role in getting around obstacles.

Some providers of business access services using point-to-point radios use just that technique to relay signals (trunking) between network nodes to reach locations inaccessible to any one antenna location.

Expect Google and Faceblook to talk about those issues at the Spectrum Futures conference in Singapore, 20-21 October, 2016.

Bringing stakeholders together to do something about that is the mission of the Spectrum Futures conference. Here’s a  fact sheet and Spectrum Futures schedule.

source: METIS

Why Revenue and Profit are Being Wrung Out of the Access Business

In the access business, relatively “small” changes in the number of competitors can lead to big swings in prices, packaging, gross revenue and profit. That is the case even ignoring the big changes a switch to Internet Protocol as the next generation network transport layer has brought.

In the mobile business, you can understand the dynamics through the debates about “how many service providers are necessary to maintain robust competition?” European and U.S. regulators have made clear a preference for four facilities-based providers, rather than just three.

Japanese and South Korean regulators have made clear a belief that two facilities-based competitors is not enough in the mobile market, and that three would be better.

In the Indian mobile market, mobile executives have concluded that, with the market entry of Reliance Jio, five to eight facilities-based competitors is way too many.

In the fixed networks business, we clearly see the effect of non-facilities-based competition (wholesale) as well as facilities-based competition (cable TV operators, satellite video competitors, Google Fiber) on former monopoly markets.

In virtually every U.S. fixed network locale, a telecom provider that once had 90-percent-plus take rates now has perhaps 40 percent share of the consumer services market (with a cable TV and two satellite providers taking some Internet access; voice or video entertainment market share).

A variety of forces--deregulation, privatization, competition, new technology, mobile and Internet--have combined to radically reduce retail prices for voice services. Those same forces are reducing retail prices and sales volumes for carrier messaging and entertainment video.

Internet access speeds have gone up--dramatically--while prices per bit are falling (just as dramatically) because of competition from Google Fiber’s symmetrical gigabit services.

At the same time, the access business has gone from a stand-alone industry to a part of a bigger Internet ecosystem sweeping commerce, retailing, content and all communications services into one much-bigger “industry.”

In that bigger ecosystem, all access services are a smaller part of a bigger whole, and all “apps and services” conceptually can be created and delivered “without the permission” of the access provider.

And much more is coming.

The access services business has in the past been ruled by assumptions of “scarcity,” with direct implications for business models, namely high prices and high profits. Even after the advent of competition, scarcity of mobile and Wi-Fi spectrum, as well as the huge sunk costs of fixed networks, have modified the assumption of scarcity only a little.

And even if access networks remain relatively costly, we can envision a future where relative abundance (if not absolute abundance) is the rule, not the exception.

Consider only one example. In the U.S market, less than one gigaHertz of bandwidth presently is authorized for all mobile and Wi-Fi communications.

But the Federal Communications Commission is preparing to release seven gigaHertz of new unlicensed spectrum, plus four gigaHertz of licensed mobile and wireless spectrum at first, and then 18 GHz more spectrum in a second phase, for mobile and wireless use.

That represents at least a 36-fold increase in available spectrum. Add to that the small cell architectures and higher-order modulation techniques and one can plausibly argue that each gigaHertz of new millimeter wave spectrum will deliver an order or magnitude--or perhaps two orders of magnitude--more usable capacity than existing mobile or Wi-Fi networks.

Any business defined by scarcity might have high prices and high profit margins. Any business defined by abundance has the opposite problem. Get ready to solve those problems.

Bringing stakeholders together to do something about that is the mission of the Spectrum Futures conference. Here’s a  fact sheet and Spectrum Futures schedule.

Fixed Wireless Might Soon be a Major Access Platform in U.S .Market

Reza Arefi, Intell

Though it might have seemed improbable just a few years ago, fixed wireless might become a major Internet access platform in the U.S. market, driven by twin developments. First, a variety of major firms--including Verizon and AT&T--but also including Google and Facebook, now are talking up the potential use of fixed wireless as an access platform in a variety of markets, rural to urban.

Second, the release of huge amounts of millimeter wave spectrum in the U.S. market--including seven gigaHertz of unlicensed millimeter wave spectrum--will make possible new business models that do not directly involve purchasing spectrum.

Reza Arefi of Intel will talk about the business implications of millimeter wave spectrum at Spectrum Futures.

Both mobile and fixed wireless access are expected to reach new levels of potential affordability as a result. Work on 5G mobile standards already includes a baseline of gigabit speeds for mobile applications, with a roadmap for 10 Gbps and more.

Greg Leon, Google wireless product manager

Fixed applications also will be possible, and the payback models should benefit, as virtually all observers consider fixed wireless to be a less costly option for widespread Internet access, compared to use of fiber to premises.

Google Fiber has put its plans to build a fiber access network in Portland in the fall of 2016 on at least temporary hold. “Why” is the question everyone should be asking.

Greg Leon, Google product manager for fixed wireless, also will be speaking at Spectrum Futures.

In principle, Google Fiber could be wrestling with the business model, as competitors Comcast and CenturyLink have themselves been upgrading their own networks in the Portland area. That might make for a more-difficult payback model.

CenturyLink, for example, already is gigabit services in Portland, as does Comcast. That arguably makes harder the business model for Google Fiber or any other ISP that might be contemplating entering the Portland market.

It will not be so easy to attack as the only provider of 1 Gbps service if the other two leading ISPs already are doing so.  

"We're continuing to explore the possibility of bringing Google Fiber to Portland and other potential cities," Google says. "This means deploying the latest technologies in alignment with our product roadmap, while understanding local requirements and challenges, which takes time."

Also, it might be reasonable to assume that Google Fiber is about to try and become “Google Internet” and use fixed wireless as the access platform, not optical fiber.

That would be a major development. Facebook, AT&T and Verizon are other entities expected to promote or use fixed wireless as a major access platform for Internet access, and eventually gigabit access services.

Personally, I think Google Fiber has looked at the numbers and concluded a gigabit network that might cost $300 million is simply too big a risk in the existing Portland market, compared to its potential prospects several years ago: before CenturyLink and Comcast moved to upgrade.

This could be the leading edge of a very big change in access strategy and business models.