Business Data Services (Special Access) Price Controls Will be Relaxed

source: Vertical Systems

Among items the Federal Communications Commission will start to address at its April meeting is a potential change of course on special access (business data) regulations.

The last FCC chairman and commission favored more regulation of special access services, though no action was taken, as the change of presidential administration also clearly meant leadership of the FCC would change.

But the FCC had seemingly been on course to institute lower prices for millions of small businesses, schools, and libraries, with an 11 percent reduction in prices phased in over three years. Critics argued the new price caps would further diminish investment, as demand already is moving away from special access and towards Ethernet access alternatives.

In principle, what is at stake is the proper regulatory stance for an important legacy service that nevertheless is in a declining state, with lots of competition in many--if not virtually all--larger markets.

In fact, executives of independent business data service providers have noted for some years the fact that cable TV operators have taken leadership of the special access market away from independent providers who used to compete with the legacy telcos (primarily AT&T, CenturyLink and Verizon).

source: Vertical Systems

In mid-2016, for example, cable TV operators represented three of the top-10 Ethernet services providers, while independent firms represented two of the top 10 suppliers. Since then, both independent providers were acquired by either CenturyLink or Verizon, however. That means cable operators or other independent operators likely will add additional firms in the top 10, over time.

The new chairman now says he favors relaxing pricing rules where there is competition in the market.  Controversy about special access markets has been a staple of the U.S. regulatory environment for decades.

The FCC has been studying the business data services (special access, primarily T1 and DS3) market for more than a decade. “The extensive record compiled by the Commission's excellent staff shows substantial and growing competition in many areas of the country, thanks to new market entrants like cable companies,” said FCC Chairman Ajit Pai. “Where this competition exists, we will relax unnecessary regulation, thereby creating greater incentives for the private sector to invest in next-generation networks. But where competition is still lacking, we'll preserve regulations necessary to prevent anti-competitive price increases.”

Verizon Launches IoT Network Nationwide

Verizon has launched what it says is the first U.S. nationwide commercial 4G LTE Category M1 (or Cat M1 ) network supporting machine-to-machine and internet of thing applications.

The network, covering which 2.4 million square miles, is built to support low-bandwidth use cases. So Verizon created data plans featuring low-rate, multi-year pricing, offering plans costing as little as $2 per month, per device.

Today, Verizon offers certified chipsets, modules and devices for Cat M1 from Sequans, Telit, Qualcomm Technologies, Encore Networks, Link Labs, and NimbeLink.

Verizon also supports ThingSpace, a global, web-based IoT platform that enables developers and customers to create new IoT solutions and manage their IoT environments end-to-end from the device to the application level, in 175 countries.  ThingSpace is used by 14,000 developers today.

When Cat M1 LTE chipsets that are pre-loaded with the Verizon ThingSpace client are deployed, a turnkey experience is possible. Use of the ThingSpace client on a connected washing machine would allow the machine to securely and seamlessly connect to the 4GLTE network and communicate with the consumer or manufacturer regarding chore status and diagnostic information.

5G Will Build on Virtual Core Networks

5G networks will be different from any prior generation or mobile networks, and will significantly change core networks as well.

The biggest changes are that 5G requires virtualization at the edge and in the core of the network. In other words, 5G will build directly on network functions virtualization and software defined networks.

Basically, 5G will build on a new capability called “network slicing,” which uses network virtualization to support creation of multiple virtual networks over a common physical network.

Such virtual networks--which might feature different sets of network features--also will be used with virtual partitioning of the mobile radio access network (RAN). In other words, it will be possible to create different end-to-end services that are tailored or customized for different use cases.

So it will be possible to create virtual networks with different combinations of capacity, latency, security, duration, reliability and geographic coverage.

Though for generations the goal of every next generation network has been a greater ability to supply bandwidth on demand, 5G is the first mobile network to build on virtualized networks as a core requirement.

Virtualization will take many forms. Core networks will operate at lower cost, and gain ability to create on-demand bandwidth and specialized network features by “network slicing.” In other words, it will be possible to create custom networks that have distinct sets of capabilities.

Consider networks supporting “autonomous car” services. For safety reasons, the systems reporting in real time on road conditions, hazards, and incidents will require a very reliable, secure connection, with very low latency and high availability so it can make decisions in milliseconds.

That might also be a “value-added” network, sold at a relatively higher price than a best-effort consumer internet application that delivers content to such vehicles.

Another slice of the network could be collecting other measurements from different devices inside the car that do not require constant supervision, such as servicing parameters that need to be transmitted back to the service center by the car’s service date, perhaps once a year.

Such features might even use overlay networks optimized for very low cost, very low bandwidth and long battery life.

In other words, core networks might be configured with different attributes to match different use cases and price points.

Other forms of virtualization will be key, as well. 5G might be the first mobile network that fully integrates use of unlicensed spectrum and shared spectrum, beyond switching between mobile and Wi-Fi networks. Whole mobile networks might also operate solely in unlicensed spectrum.

Since 5G also will be built on use of small cells, backhaul assets will be quite valuable, boosting prospects for integrated providers owning both fixed and mobile assets.

Also, 5G might be the first mobile network whose revenue streams are substantially driven by services provided to machines, servers and sensors, not human beings.

Can Public Wi-Fi Affect Internet Usage in India?

It nearly always goes without saying that affordable prices are a key underpinning of widespread internet access on fixed or mobile networks, so it makes sense that regulators would note the correlation between affordability and usage.

Wi-Fi access, officials in India hope, can play an important role in fostering more widespread and low cost internet access, supplied by fixed networks.  

It bears noting that there always are correlations, and likely direct causality, where it comes to use of internet access services and retail prices. Way back in the days of dial-up internet access, when most such dial-up services were sold on a metered basis, AOL leapt to leadership of the market by abandoning metered pricing, offering monthly access for a single flat rate.

Public Wi-Fi now is seen as an important way to make fixed network internet access more widely available in India. As always, much will hinge on market dynamics. In many other markets where Wi-Fi offloading is prevalent, the offloading happens when consumers offload to their own personal internet services. In that sense,  high use of Wi-Fi is dependent upon, and derivative of, widespread fixed network adoption.

Public Wi-Fi (mostly amenity services) also tend to get significant usage because access happens “at no incremental cost” (“free”). It remains unclear how demand will fare in India, if public Wi-Fi hotspot access is a “for-fee” service.

Ironically, high public Wi-Fi usage might be a derivative of already-existing supply of internet access at affordable rates. not a driver of new and affordable supply. So it remains to be seen how well the new push for public Wi-Fi succeeds.

Spectrum Sharing Changes Business Model for FirstNet

Spectrum sharing arguably is one reason AT&T chose to participate in the process of winning the FirstNet first responder communications network, which has not in the past been seen as commercially interesting. Indeed, some 16 years after the Sept. 11, 2001 attacks on the twin towers in New York, there still is no single communications network for first responders. 

One new carrot, though, is spectrum sharing. Though FirstNet members have first call on the use of the 20 MHz of communications spectrum (in the D block of the 700-MHz range), AT&T also is able to use the spectrum for commercial purposes and consumer services.

That presumably changes the value equation enough that AT&T now feels it can build and operate the network, where in the past neither it nor the other leading mobile service providers were interested. 

Many now believe the same change in business case will be possible as spectrum sharing becomes a more-common practice in other communications bands, such as the 3.5-GHz Citizens Broadband Radio Service (CBRS) and 5-GHz Wi-Fi bands. 


source: Qualcomm 

"We Do Not See a Business Model for 5G" Does Not Mean "Nobody Has a Business Model for 5G"

MTS in 2016, in its core Russian market, saw slightly negative revenue growth, year over year, in both its fixed network and mobile businesses. That might be one reason why MTS executives are skeptical about the 5G business case. Also, MTS, having largely finished its 4G network builds, would prefer to spend less on network capital, not more, which 5G will require.

As always, statements questioning business models have to be parsed. When any executive or scientist says “something cannot be done,” there are unstated qualifiers, whether the speaker acknowledges those qualifiers or does not.

When it is said that there is “no business model for 5G,” that can mean many things. It might mean that “at the present moment, before settled standards, available transmission gear and customer devices such as phones are available, there is no existing business model.” That is correct.

Sometimes, as with earlier generations of technology, some companies, having capital issues, and having just made a big platform investment, have downplayed the importance of a coming platform, to protect the value and revenue of their “just built” platform. That is reasonable, and provides yet another set of qualifiers: “we cannot, at the moment, having just finished our latest next-generation platform, afford to invest in yet another next-generation platform.” That also would be reasonable.

In other cases, the qualifiers might relate to potential market opportunities, as in “we do not see, in our current markets, serving current customers, incremental revenue opportunities of sufficient size to justify making the investment in 5G.” That also would be a rational set of qualifiers.

All of those sorts of qualifiers, and others you might think of, are reasonable enough ways to understand what actually is being said when one hears an exec say “there is no 5G business model.”

What is meant is that “there is no 5G business model for our assets, geographies, customer bases, financial resources, human and financial capital assets and markets, at this time, and with our current understanding of incremental revenue opportunities.”

That never should be taken as a statement that “no other company, in any market, and with any different set of resources, can create one or more new business models sufficient to support investment in 5G, at some point when standards, network platforms and consumer terminals are available.”

There is a difference between “we cannot do so” and “nobody can do so.”

Access, Transport Becoming Virtualized

The old distinctions between “my network” and “other networks,” plus the reliance on “my spectrum” versus “any available spectrum” now will change with 5G, even more than has been the case with 4G, A new TIA survey of industry executives suggests. That significant virtualization of spectrum assets and spectrum networks also will accompanied by virtualization of core networks. In fact, virtualization is an underpinning of 5G.

More than half (55 percent) of respondents plan to deploy Licensed Assisted Access (LAA) and prefer the notion of operating LTE in unlicensed spectrum. That is an example of bonding unlicensed spectrum with licensed spectrum to support mobility services.

Of course, other methods of using Wi-Fi also are considered important. LTE+Wi-Fi link aggregation (LWA) and LTE Wi-Fi integration, (a forerunner to the LWA), were both favored by 41 percent of respondents, the study found.

The larger point is that 5G will customarily be deployed in complement with other licensed and unlicensed wireless technologies. That is a major step towards virtualized access.

In fact, so important a development is such virtualization that a variety of initiatives to leverage unlicensed spectrum are under way, including LTE-LAA, LWA, LTE WiFi Integration, Wi-Fi offload and MuLTEFire.

LTE-LAA and MuLTEFire use LTE radio technology operating in unlicensed spectrum. LTE-LAA uses both licensed and unlicensed spectrum bands, while MuLTEFire enables LTE radio technology to operate entirely in unlicensed spectrum.

In a larger sense, virtualization has been the trend across telecommunications for a couple of decades. With the separation of access and apps, services and products can be used by any consumer or business with internet access, irrespective of the "ownership" of the physical facilities.

So user access to products, apps and services now is fundamentally virtualized. The virtualization of the physical networks is in line with that broader movement.

source: TIA  

More U.K. Spectrum for Wi-Fi

Ofcom, the United Kingdom communications regulator, has decided to authorize an additional 125 MHz of capacity for Wi-Fi  in the 5-GHz band (5725 GHz to 5850 GHz). That is the first step in what might be additional actions, including allowing Wi-Fi use in the 5850-MHz to 5925 MHz band now used to support mobile operations.

The additional spectrum will allow for wider channels, which should improve bandwidth efficiency and support higher speeds. The number of 80 MHz channels will increase from four to six. Three additional 40 MHz channels and six additional 20 MHz channels would also be available.

Ofcom also says itg could open up spectrum for Wi-Fi at 5350-MHz to 5470-MHz band as well.  

source: Ofcom

Ironically, moves to add more Wi-Fi spectrum in the millimeter wave bands in the U.S. market are happening at the same time that all four leading U.S. mobile service providers now are offering unlimited use plans. In principle, that means some customers might no longer have an incentive to switch access to Wi-Fi, since doing so does not save money or improve user experience (Wi-Fi tends to be slower than 4G).   

Faster Approval of Services Using Spectrum Above 95 GHz?

Spectrum policy is not the only major shaper of access provider business models, but it is, among key influences, arguably the single-greatest determinant of mobile and wireless provider business models, simply because, without spectrum access, no business is possible.

That has been the rule in the mobile business globally, up to this point. But there is at least some fraying of that older model, as unlicensed spectrum now becomes a platform for new competitors, as huge blocks of new --and likely cheaper--spectrum are made available, and as shared spectrum becomes more common as well.

One element of all that change is that “5G could transform the wireless world and provide even more robust competition to wired networks,” said Federal Communications Commission Chairman Ajit Pai. In principle, all the new assets will allow new competitors to enter the untethered or mobile markets, as well.

In 2016, the FCC opened up nearly 11 GHz of spectrum in the bands above 24 GHz for mobile use. The FCC further authorized the first-ever LTE-unlicensed (LTE-U) devices in the 5 GHz band, a move that will lead the way for spectrum sharing overall, and for the use of licensed and unlicensed spectrum to support mobile communications.

The FCC might also accelerate release of additional spectrum. “As part of our so-called ‘Spectrum Frontiers’ proceeding, we asked questions about allowing novel wireless uses and technologies in frequencies above 95 GHz,” said Pai. “Those frequencies haven’t traditionally been used for mobile wireless technologies.”

Signaling faster decision making, Pai noted that “applications for experimentation above the 95 GHz band could qualify for Section seven treatment.” That is significant. Section seven of the Communications Act requires that decisions about whether a petition or application is in the public interest should occur within one year after such petition or application is filed. In other words, should entities ask for permission to run services above 95 GHz, they might now expect a “yes or no” decision within 12 months.

Dish Network Keeps Spectrum Assets, at Lower Cost, with NB-LTE Build

Dish Network is raising $1 billion in a bond sale expected to be used by Dish to build a narrowband Long Term Evolution (NB-LTE) network. That has cost and performance implications. NB-LTE is optimized for low bandwidth communications (250 kbps downlink, 20 kbps uplink).

Dish says it use its spectrum licenses in the AWS-4 Band and Lower 700 MHz E Block to build a “5G-capable network,” focused on internet of things (“IoT”) apps and services, and expects to have a network built, covering 70 percent of the U.S. population, by March 2020.

Such a network essentially is a 4G narrowband network in a class with other low power, wide area (LPWA) networks designed to support sensor communications, not human users. NB-LTE is a “5G” network in the sense that it aims to support machine-to-machine communications, not in the sense of being part of the formal 5G standard, as such.

That helps clarify a key part of Dish Network’s wireless strategy, which is to avoid losing rights to its spectrum because it has not made meaningful progress towards building an actual network. It also is reasonable to assume that building an LPWA network will cost far less than building a full 4G or 5G network, so Dish keeps its asset safe, while spending less money to do so.

According to Federal Communications Commission rules, Dish has to activate a network with 40 percent signal coverage, using the  700 MHz licenses it purchased in 2008 (a deadline it will miss), or, alternatively,  reach a 70 percent buildout by March 2020. That latter target is what Dish now will have to meet. Similar requirements are in place for other spectrum Dish has rights to use.

By focusing on NB-LTE, Dish can claim it is building a network that does not compete head to head with the LTE networks operated by the other big mobile service providers, as NB-LTE aims to support machine-to-machine devices, not human end users.

Much still remains to be established. Dish has no special competence in M2M services and industries, and no operational experience with mobile services. It likely would need a partner to both build and provide retail services. Beyond that, the market size for M2M services is unproven, if considered the next wave in mobile revenues and Dish’s ability to gain enough market share also is unknown, given competition from several would-be nationwide IoT networks and IoT efforts by the other four major U.S. mobile service providers.

As always is the case when new platforms emerge, existing platforms and capabilities, as well as forthcoming technologies and features, are labeled in a way that makes them part of the future. That is the case with NB-LTE, which formally is a 4G standard.

On the other hand, the network’s stated purpose and ultimate use will be for LPWA devices, a class of applications considered the hallmark of coming 5G business models.

Sprint Launches Gigabit LTE

Sprint has activated what it calls the “first U.S. deployment of gigabit class LTE live on a commercial network” in its New Orleans market.

The service uses three-channel carrier aggregation and 60 MHz of Sprint’s 2.5 GHz spectrum in combination with 4X4 MIMO (Multiple Input Multiple Output) and 256-QAM higher order modulation.

Sprint plans to use its 2.5 GHz spectrum to offer gigabit LTE service in high-traffic locations across the country.

With 204 MHz of spectrum, and more than 160 MHz of 2.5 GHz spectrum in the top 100 markets, Sprint has more licensed spectrum capacity to deploy Gigabit Class LTE than any other U.S. carrier, Sprint says.

In conjunction with unlimited usage plans, and assuming tethering is allowed, such moves are another shift in market dynamics that will make mobile access more competitive with fixed network access. Up to this point, the slower speeds and higher cost-per-gigabyte of mobile data, compared to fixed service, has sharply limited product substitution.

That now is changing.

New 5G Spectrum Identified by U.K. Report

Spectrum expected to be used in the United Kingdom to support 5G networks includes spectrum from 694 MHz to 790 MHz; 3.8 GHz to 4.2 GHz range,  3.4 GHz to 3.8 GHz; 24.25 GHz to 27.5 GHz. Other possible bands above 30 GHz include 32 GHz, 40 GHz and 66 GHz.

There is a good reason at least some observers are concerned about the on-rushing 5G era: uncertain but potentially-big new revenue streams will first require a big level of investment.

“Despite the potential for substantial returns, the business case for the investment required for the deployment of 5G is not yet established,” the report duly notes.

“5G networks will therefore require a step change in investment,” says a United Kingdom government report on 5G.

Also, underscoring the belief that 5G will involve a “network of networks,” the report argues that, “unlike previous generations of mobile telecommunications, it is possible, given the breadth of the potential 5G ecosystem, that the additional investment required in digital infrastructure will not come purely from established network operators.”

As part of the effort to support 5G introduction, the U.K. government is creating a national 5G test bed, initially investing up to £16 million to conduct trials, including testing of networks and apps.

How Will Unlimited Access Affect Spectrum Assets?

Among the issues facing mobile operators in the United States is the impact of unlimited usage on user behavior, network resources and therefore user experience, not to mention business metrics such as churn, average revenue per account, gross revenue and profit margins.

Some are concerned consumers will boost consumption, straining networks and leading to consumer dissatisfaction. Others might see a shift to capacity-based competition as an advantage. T-Mobile US, Sprint and AT&T all believe their spectrum assets will prove advantageous in any such competition, especially compared to Verizon.

Of course, spectrum abundance or scarcity also is a direct function of the number of customer accounts a service provider serves, not simply the amount of available spectrum. Since Verizon and AT&T have the most customers, they actually “need” more spectrum, compared to the smaller customer bases served by Sprint and T-Mobile US.

source: Mobile Experts  

In that regard, AT&T executives are more confident than might be inferred from a spectrum standpoint.

“If you look at our current holdings of spectrums and...about 40 megahertz of underutilized or unused spectrum from WCS and AWS-3...we have a unique ability to put a whole lot more capacity out there, said John Stephens, AT&T CFO.

If it wins the FirstNet contract, AT&T also expects to gain another 20 MHz of spectrum in the 700 MHz frequencies.  

Will Just 3 Indian Mobile Operators Have 97% Share in a Year?

In the fourth quarter of 2016, Bharti Airtel had a market share of 33 percent, Vodafone India had about 24 percent, while Idea Cellular had nearly 19 percent. If Vodafone and Idea merge, the new entity would have about 43 percent share, and become the market leader.

Perhaps that is one way to position Reliance Jio’s aggressive market share goal, which is to attain 50 percent market share in about five years. Some might call that more than ambitious. Others would say that if the new leader has 43 percent share, Reliance Jio is not simply dreaming in setting a 50-percent share goal.

Tata Teleservices had about six percent share, Aircel about 5.5 percent share and Reliance Communications about four percent share, according to HSBC.

So what would a stable Indian mobile market look like? In capital-intensive markets where scale matters, it might be reasonable to expect the market shares of the largest three providers to follow a rough pattern: the leading provider is followed by the number-two provider with half the share of the leader, while the third provider has half the share of the number-two provider.

In other words, it would not be unreasonable to expect that if the leader has 40 percent share, number two has 20 percent share, while number three has 10 percent share. That pattern would have the leading three providers sharing about 70 percent of the market.

In the mobile business, it is not unreasonable to expect stable patterns that have the top providers holding even more share than that. In a market where the leader has 50 percent share, number two could have 25 percent share, while number three has 12.5 percent share, for a total of 87 percent market share.

That is not so unusual. In fact, some believe that could happen. Even now, the smaller providers collectively have about 25 percent market share. Over the next year, they could lose as much as 85 percent of that share to the top-three Indian mobile operators. That could mean 21 percent more share for the top three providers.

So the top three might hold about 97 percent share in a year. In that case the 50-25-12.5 percent share pattern would be quite feasible. In an unstable pattern, the shares held by each of the top three might be something like 40-30-20, after the consolidation.

So while 50-percent share is likely a stretch, it is not impossible.

5G NR Push Aims for Year-Earlier Deployment of 5G

A bevy of large mobile communications companies announced their support for the acceleration of the 5G New Radio (NR)  standardization schedule to enable large-scale trials and deployments as early as 2019, a year earlier than expected.

AT&T, NTT DOCOMO, INC., SK Telecom, Vodafone, Ericsson, Qualcomm Technologies, British Telecom, Telstra, Korea Telecom, Intel, LG Uplus, KDDI, LG Electronics, Telia Company, Swisscom, TIM, Etisalat Group, Huawei, Sprint, Vivo, ZTE and Deutsche Telekom support accelerating the timetable for finalizing the specification.

The first 3GPP 5G NR specification will be part of Release 15, the global 5G standard that will make use of both sub-6 GHz and mmWave spectrum bands.

At least some of the supporters have business reasons for wanting a faster commercial standard: 5G NR will make fixed wireless broadband operate at gigabit rates (in other words, competitive with fiber to premise), at cost per bit cost-per-bit comparable to fixed networks.

Also, some operators might perceive business advantages for earlier deployment, especially where software-defined networks already are in place. As its name suggests, 5G NR will require an SDN core.

Some mobile operators might argue against “prematurely” locking in the standard, to allow more time for figuring out what other capabilities might be needed. But it also is common for operators not in the best position to invest to argue for more caution where it comes to major new platforms.

Based on the current 3GPP Release 15 timeline the earliest 5G NR deployments based on standard-compliant 5G NR infrastructure and devices will likely not be possible until 2020.

Instead, the new proposal introduces an intermediate milestone called “Non-Standalone 5G NR” that will support  large-scale trials and deployments starting in 2019.

Non-Standalone 5G NR will utilize the existing LTE radio and evolved packet core network as an anchor for mobility management and coverage while adding a new 5G radio access carrier to enable certain 5G use cases starting in 2019.

Private 4G, 5G Latest Enterprise Networking Possibility

“Private cellular” or “private mobile” networks are among the new possibilities created by new spectrum access methods, most especially license-exempt or shared spectrum. In principle, that could include enterprise voice networks or shared indoor mobile infrastructure.

Private networks are far from new. Enterprises always have created their own phone services (private branch exchanges, local area networks, Wi-Fi hotspots). Now we might well see private 4G and 5G networks, deployed by enterprises.

Nokia, for example, is introducing platforms that can use unlicensed and shared spectrum to create private end-to-end networks for vertical applications in specific  industries. That might prove important for  enterprises, venues and the hospitality industry in the United States using the 3.5 GHz Citizens Broadband Radio Service (CBRS) shared spectrum.

Enterprises can use CBRS to create “private LTE” networks. “Neutral host” networks are another application, where an enterprise can create an open platform supporting multiple mobile suppliers for indoor access.

Likewise, Quortus and Telefonica believe  DECT replacement and mixed voice and secure data services can be created for enterprises and other organizations using unlicensed spectrum.

Telefónica says it is pioneering the use of private cellular, particularly for its industrial and enterprise customer base. Emergency restoration is another potential application for Quortus solutions.