SK Telecom Sees Low Cost as Key Advantage of IoT Network

SK Telecom is spending 100 billion Korean won ($89 million) on a nationwide Internet of Things network, platform and apps development between now and the end of 2017.

SK Telecom sees both LTE and LoRaWAN as necessary platforms for Internet of Things and machine-to-machine services and applications, in large part because the IoT network is expected to require extremely low cost and measures to radically extend battery life of devices and sensors using the network.

In broad terms, LTE is seen as supporting mobile apps, while LoRaWAN is seen as the network for fixed sensors and devices.

PricePlan	Data Allowance* (Frequency of communication)	Monthly Flat Rate (VAT Excluded)	Examples of Services	Note
BandIoT35	100KB	KRW 350	Metering and monitoring services (e.g. Advanced Metering Infrastructure (AMI), environmental monitoring, water leakage monitoring, etc.)	- Discount benefits for long-term contracts: Ranging from a 5% discount for two-year contracts to a 20% discount for 5 year-contracts - Multi-line discount: Ranging from a 2% discount for those using 500 lines to a 10% discount to those who use 10,000 lines
BandIoT50	500KB	KRW 500
BandIoT70	3MB	KRW 700	Tracking services (e.g. locating tracking For people/things, asset management, etc.)
BandIoT100	10MB	KRW 1,000
Band IoT150	50MB	KRW 1,500	Control service (e.g. safety management, lighting control, shared parking, etc.)
BandIoT200	100MB	KRW 2,000

source: SK Telecom

LoRaWAN, backed by the global LoRa Alliance, is optimized for low bandwidth and long-life devices. SK Telecom also sees the advantage of lower prices.

LoRa prices are around a tenth of those on SK Telecom’s national LTE-M network.

SKT has also developed an M2M-based platform, ThingPlug, and is working on utility metering, location tracking and monitoring services.

FCC Ends 600-MHz Auction, Prepares for Lower Prices in Next Round

Many have expected that expectations for the 600-MHz spectrum auction were too optimistic, in large part because there now are many new ways for access providers to create usable access bandwidth.

The Federal Communications Commission, in fact, already has halted the auction after submission of about $23 billion worth of bids, where as much as $88 billion had been envisioned.

In the next stage of the auction process, TV broadcasters will be given a chance to lower the prices at which they are willing to sell their spectrum.

“Today’s auction results are unsurprising, albeit disappointing to some,” said Dan Hays, principal at PwC’s Strategy& consulting group. “At just over $23 [billion]in total forward auction proceeds, the first stage results are on the low end of pre-auction estimates and in line with the spending commitments put forward by the United States’ existing mobile network operators.”

The shift to small cell architectures is an extension of the methods traditionally used to reuse any amount of allocated spectrum.

Beyond that, there is additional spectrum held by Dish Network that is expected to be put to use, eventually. As mobile operators shut down 2G and 3G networks, more bandwidth will be available.

And some would-be contestants might hope to acquire spectrum as part of any acquisitions of Sprint or T-Mobile US.

Spectrum sharing will make more spectrum available in the 3.5-GHz band.

Also, the FCC is going to release 29 GHz of new spectrum in the millimeter bands, including about 7 GHz of unlicensed spectrum.

The point is that there are a growing number of ways to find and use communications spectrum. All of it should add up to less of a premium for licensed spectrum, and therefore lower prices.

Fixed Wireless, Made Possible by 5G, Will "Dramatically Change" Gigabit Internet Access Cost Structure, Verizon Believes

With the caveat that savings once envisioned for fiber-to-home networks (FiOS) proved to be less than anticipated, Verizon has high hopes for capital investment costs for fixed wireless, much as Google Fiber now apparently envisions.

“I think of 5G initially as, in effect, wireless fiber,” said Lowell McAdam, Verizon CEO. “With wireless fiber the so called last mile can be a virtual connection, dramatically changing our cost structure.”

Though some might argue that in many deployments fixed wireless will not offer as many capital investment advantages as some tout, avoiding construction costs likely is the big driver of potential savings.

Network element and cabling costs also should be lower, as there is no access fiber and also no optical network terminal, only a router. Likewise, in-home wiring is avoided.

Much depends on network densification efforts primarily supporting 4G, but those same investments should support 5G deployment as a fixed wireless infrastructure.

To support gigabit per second access speeds, Verizon probably will have to keep radios no further than about 500 yards from any intended customer site, McAdam said. So small cell spacing of about 1,000 meters or so also is likely.

India's Mobile Market Will Shrink by Half

Some competition, most would argue, is better than monopoly. Robust competition likely is normally viewed as desirable. But ruinous levels of competition generally do not last too long, as most suppliers simply go out of business.

It might be possible to view mobile service provider competition levels in India as quite-competitive. Whether the level of “ruinous” competition has been reached--with the market entry of Reliance Jio--is not clear.

But it might be logical to ask whether that is nearly the case. If so, one also would predict that many of the current smaller providers will go out of business, possibly through complete collapse but more likely as they are absorbed by one of the surviving competitors.

The point is that, unless governments try to prevent consolidation, too much competition often leads to ruinous outcomes for any industry subject to extreme levels of competition.

That the Indian mobile market is going to consolidate, in a significant way, now seems inevitable. With Reliance Jio’s entry into the market, and the inevitable price war that will follow, only the larger players will have the scale to survive. So smaller players will exit the market.

That could shrink the market by half.

Over time, markets tend to consolidate, and they tend to consolidate because market share is related fairly directly to profitability. One rule of thumb some of us use is that the profits earned by a contestant with 40-percent market share is at least double that of a provider with 20-percent share.

And profits earned by a contestant with 20--percent share are at least double the profits of a contestant with 10-percent market share.

That is why one of the main determinants of business profitability is market share. Generally, entities that have high share are much more profitable than their smaller-share rivals.

Source: Marketing Science Institute

And that is likely to be especially true for business products that are not purchased frequently, or are hard to understand, such as business communication products and services.

For infrequently purchased products, the return on investment of the average market leader is about 28 percentage points greater than the ROI of the average small-share business.

For frequently purchased products (those typically bought at least once a month), the correspondingly ROI differential is approximately 10 points.

There are reasons for that differential.

Infrequently purchased products tend to be durable, higher unit-cost items such as capital goods, equipment, and consumer durables, which are often complex and difficult for buyers to evaluate.

One might argue that communications services also are products buyers generally find complex to understand and hard to evaluate on metrics other than recurring cost or upfront investment.

Since there is a bigger risk inherent in a wrong choice, the purchaser is often willing to pay a premium for assured quality.

Frequently purchased products are generally low unit-value items where risk in buying from a lesser-known, small-share supplier is less crucial.

Source: Marketing Science Institute

Such differentials also occur when buyers are fragmented, and no small group of consumers accounts for a significant proportion of total sales.

In such cases,  the ROI differential is 27 percentage points for the average market leader.

However, when buyers are concentrated, the leaders’ average advantage in ROI is reduced to only 19 percentage points greater than that of the average small-share business.

When buyers are fragmented, they cannot bargain for the unit cost advantage that concentrated buyers receive.

source: Glen Berg Source: Marketing Science Institute

7% of Mobile Subscribers on 5G by 2025

Some 300 million 5G handsets will have been sold by 2025, Strategy Analytics predicts. That forecast assumes seven percent of global subscribers will be on 5G networks by 2025.

“While the first commercial 5G handsets will appear in small numbers in 2020 in South Korea and Japan, from 2021 more countries including the US, UK, Sweden, UAE and China will see their own launches,” said Ken Hyers, Strategy Analytics director.

By 2022 tens of millions of 5G handsets will be sold, representing sales volume in the low single-digit range as a percent of total device sales.

Ericsson predicts there will be 150 million 5G subscriptions globally by the end of 2021.

In 2021, South Korea, Japan, China and the United States are expected to lead the uptake of 5G subscriptions.

source: Ericsson

600-MHz Spectrum Auction Bids Reach $22 Billion, But Demand is Slowing

Bids in the U.S. 600-MHz spectrum auction have reached about $22 billion, with bidding increases now seemingly now slowing in the top-10 biggest markets as well as broader top-27 markets. Demand in smaller markets has not been robust.

The likely outcome is that not all available spectrum--about 126 MHz--will actually be bought.

source: Future Mobile Services

Verizon Launches LTE-Advanced Nationwide, Boosting Peak Speeds 50%

Verizon has launched enhanced LTE-Advanced technology to bring 50 percent faster peak wireless data speeds to more than 288 million people in 461 U.S. cities.

LTE-Advanced uses channel aggregation to boost bandwidth. In Verizon’s case, that meant bonding spectrum over three distinct frequency bands, including  700 MHz, AWS, and PCS spectrum.

LTE Advanced uses a combination of two-carrier and three-carrier aggregation.

Customers will continue to enjoy typical download speeds of 5 Mbps to 12 Mbps, but two-channel carrier aggregation has shown peak download speeds of up to 225 Mbps.

Three-channel carrier aggregation boosts speeds to more than 300 Mbps.

Some 39 LTE Advanced-capable phones and tablets already can take advantage of carrier aggregation, including Samsung Galaxy S6 and S7 smartphones, Moto Droids and Apple iPhones.

Qualcomm

"Speed and Price" Still are the 2 Main Ways Mobile ISPs Try to Differentiate

“Headline speeds” and prices are the two main ways Internet service providers position themselves in the market. You can argue that is a tough way to compete, and it is. Competing on price never is fun.

At the same time, speed is driven not directly by end user requirements but by rival claims. In that sense, it does not matter whether customers “need” faster speeds. Faster speeds are going to be supplied--and marketed--because aside from speed there is mostly only price as a differentiator.

That is not to say that, at the margin, other sources of value are unimportant, or ineffective. Within a zone of comparability, the extensiveness of a Wi-Fi hotspot network can be important.

Service features such as exemptions for consumption of mobile video entertainment from usage buckets can be significant differentiators. “Unlimited usage” waxes and wants as a feature touted by ISPs.

Still, competitive dynamics, and not actual end user demand, are what drives investment and marketing decisions in the telecom business. The gigabit Internet access trend provides an example.

Without Google Fiber, it is doubtful the big move to gigabit Internet access in the U.S. market would have gathered such force. But it is also true that without a move to gigabit speeds by Comcast, the largest U.S. ISP, the move would not have been so widespread.

With the caveat that executives have lots of reasons for taking public positions, Gary Bolton, Adtran VP says that two years ago, service providers told him that the biggest reason for deploying gigabit service was to satisfy future customer demand.

But that does not explain “why now?” In point of fact, it might be difficult to justify a jump to gigabit speeds “now,” by any rational measure of end user demand or app functionality requirements.

The simpler explanation is that, no matter what was said in public, he threat of competition is what motivated the investments “now.”

Recently, 70 percent of respondents surveyed by Adtran indicated competition is a top reason for deploying gigabit services, up from fewer than 50 percent in 2014.

In truth, competition arguably accounts for nearly 100 percent of the business motivation for deploying gigabit services. Google Fiber wanted to prod the rest of the industry to increase speeds much faster.

Comcast wanted to retain its marketing edge over its telco competitors. Telcos responded just to stay in the game. And many new suppliers saw “gigabit” as offering a way for them to enter markets with a distinctive value proposition.

But there is one other really-significant new development.

Compared to all prior eras, “physical media” is less important. In the past, only fiber to home networks might have been deemed technologically possible of providing gigabit speeds.

Now hybrid fiber coax can do so. And coming mobile 5G networks also will do so routinely. At the same time, stubborn business cases for fiber to home deployment have lots of leading suppliers looking at fixed wireless in a serious new way.

Both Facebook and Google are developing or investigation use of platforms based on use of fixed wireless.

AT&T has told the U.S. Federal Communications Commission that it is going to deploy many millions of fixed wireless access paths, while Verizon also has said it is looking at fixed wireless, especially as a result of its early 5G network deployment.

But headline speed, as always, might not be so crucial. More gigabit offers should also mean that more offers in the hundreds of megabits per second range will be offered. In the near term, that is functionally as useful as gigabit, for end users.

Urban Areas Generate Higher Rates of Mobile Network Problems than Rural Areas

As big a problem as rural mobile coverage might be, most people--and the most demanding customers--live in urban areas. For that reason, the sheer volume of coverage or capacity problems will happen in urban areas.

That explains both moves to “densify” mobile networks, use of distributed antenna systems, use of small cells and moves to release new spectrum, share spectrum and make better use of unlicensed spectrum.

Customers living in urban areas experience the highest number of overall network problems, at 15 problems per 100 connections (PP100), compared to 12 PP100 among those living in rural areas and 10 PP100 among those living in suburban areas.

Customers living in urban areas experience more calling problems than those living in rural or suburban areas (19 PP100 compared to 13 PP100, respectively); messaging problems (eight PP100 compared to five PP100); and data problems (20 PP100 in urban areas, 15 PP100 in rural areas).

Urban areas have a much higher proportion of younger mobile subscribers who are heavier users.

The overall number of network quality problems is 17 PP100 among customers 18 to 34 years old compared to 10 PP100 among those 35 years and older.

J.S. Power looked  at 10 problem areas, including dropped calls; calls not connected; audio issues; failed/late voicemails; lost calls; text transmission failures; late text message notifications; Web/app connection errors; slow downloads/apps; and email connection errors.

Expected Phone Ownership Duration Affects Customer Satisfaction

With the caveat that consumer satisfaction with mobile service is not the same as satisfaction with the buying process, AT&T and Consumer Cellular garner top marks from buyers.

Also, overall satisfaction with the mobile purchase process increases as the expected duration of mobile device ownership decreases.

Overall satisfaction with the purchase experience is higher among wireless customers who purchase a mobile device and expect to use it less than one year.

Among full-service customers who purchase or upgrade a mobile phone with their carrier, overall satisfaction is 853 (on a 1,000-point scale) among those who plan to use it for less than a year; 843 among those who plan to use it between one and two years; 809 among those who plan to use it between two and three years; and 817 among those who plan to use it three or more years.

Mobile full-service customers who expect to use their phone less than a year tend to be younger and early adopters of new technology.

More than half (58 percent) of customers who expect to own their phone for less than one year are 18 to 34 years old.

Just 28 percent of all customers expecting to own their phone for three or more years are in the 18 to 34 age range.

As you would guess, customers who expect to own their device for less than a year are early adopters.

Some  79 percent of customers who expect to own their phone for less than a year say they “strongly agree” or “somewhat agree” that they are among the first to try new technological products, compared with 37 percent who expect to own their phone for three or more years who say the same.

“It’s surprising to learn that the expected length of mobile device ownership can influence the purchase experience process,” said Kirk Parsons, senior director and technology, media & telecom practice leader at J.D. Power. “However, the study suggests that cost and service coupled with offerings, such as more data plan minutes or unlimited usage plans, are significant reasons overall satisfaction is above average among younger subscribers.”

Overall purchase experience satisfaction is 834 among mobile full-service customers and 807 among non-contract customers.

Full-service mobile customers who purchase a phone and expect to use it less than one year pay an average of $188, compared with $279 for those who expect to use it between one and two years; $312 for those who expect to use it between two and three years; and $313 for those who expect to use it three or more years.

About 78 percent of full-service customers indicate they made a purchase in a wireless retail store, while 54 percent purchased over the phone and 61 percent purchased online.

Some 62 percent of non-contract customers bought a device in a store and only 38 percent made the purchase by telephone.

AT&T ranks highest among wireless full-service carriers, with an overall score of 845.

Consumer Cellular ranks highest for the first time among wireless non-contract carriers, scoring 899.

Triple the Throughput, Double the Distance for Wi-Fi?

Just because something is “impossible” today does not mean it actually is impossible; we simply haven’t solved the problem, yet. So it is with Wi-Fi signal reach and potential bandwidth. In a recent test, researchers were able to triple throughput and double distance for Wi-Fi.

Researchers at MIT's Computer Science and Artificial Intelligence Lab think they have perfected a system that dramatically improves Wi-Fi connections by eliminating signal interference.

MegaMIMO 2.0 (multiple-input and multiple-output) varies the frequency range of Wi-Fi signals within the required spectrum, avoiding signal interference. That, in turn, boosts throughput and range.

U.S. 600-MHz Spectrum Bids Reach $18.6 Billion

It still does not appear to some of us that the full expected amount of revenue to be raised from the U.S. 600-MHz spectrum auction will be as robust as some proponents had hoped. Bids now are up to about $27 billion, but supply and demand are in balance in two markets, though none of the top-10 markets.

We are not yet finished with the auction, and there is a big auction of India spectrum coming as well. But some believe both auctions will show that a number of other developments now are going to put limits on spectrum prices.

Simply, contestants know other options are coming: unlicensed spectrum, shared spectrum, huge new blocks of millimeter wave spectrum. In the U.S. market, there also remains a significant chunk of spectrum held by Dish Network, and which has yet to be put to use.

Also, some would-be buyers of spectrum might expect to acquire such capacity as a part of any eventual purchase of either Sprint or T-Mobile US.