FCC Adopts C-Band Auction Framework

The Federal Communications Commission has formally adopted new rules to auction and make available quickly and efficiently 280 megahertz of mid-band spectrum for flexible use, including 5G. 

Within the 3.7-GHz to 4.2-GHz band, the FCC is allocating the 3.7-4.0 GHz portion of the band for mobile use. Across the contiguous United States. Some 280 megahertz in the 3.7-GHz to 3.98-GHz band will be auctioned.

Another 20 megahertz (3.98-4.0 GHz) will serve as a guard band while existing satellite operations will be repacked into the upper 200 megahertz of the band (4.0-4.2 GHz). 

This 280 megahertz of spectrum will be transitioned to flexible use no later than December 5, 2025.

 Under the Report and Order, eligible space station operators will be able to receive accelerated relocation payments totaling $9.7 billion if they commit to, and succeed in, clearing the spectrum early. 

To be eligible for Phase I payments, operators must clear 120 megahertz of spectrum (3.7-3.82 GHz) in 46 Partial Economic Areas by December 5, 2021. To be eligible for Phase II payments, they must clear the remaining 180 megahertz of spectrum (3.82-4.0 GHz) by December 5, 2023; new flexible-use licensees will be responsible for these payments as well as reasonable relocation costs.

Intel Expects to Lead 5G Base Station Processor Market

Intel now expects to be the leading silicon provider in base stations by 2021, a year earlier than first predicted.

Speedtest Data Shows Rapidly Increasing Fixed and Mobile Speeds

Internet access speeds on fixed and mobile networks are growing fast, Ookla data shows. In 2029 along, global fixed network speeds grew about 32 percent.

The latest data from Ookla’s Speedtest service also shows that U.S. fixed network internet access speeds are on par with South Korea, for example, while mobile access speeds are on par with Western Europe. 

That might be significant as South Korea generally is considered at leader in internet access speeds, while Western Europe is among regions generally considered more developed.

Mobile performance should change significantly, however, as upgrades to 5G using millimeter wave frequencies takes hold. 

source: Ookla Speedtest

Such metrics should always be kept in context, however. What matters with the application of technology is what impact can be wrung from the investments. Speed, coverage, latency and price do matter, but only as enablers of economic and social impact. 

source: Ookla Speedtest

The Ookla data do tend to challenge common assertions, repeated often, including the belief that U.S. internet access is slow and expensive, or that internet service providers have not managed to make gigabit speeds available on a widespread basis. In fact, gigabit coverage is about 80 percent, but take rates might be as low as two percent. 

Other statements, such as the claim that U.S. internet access prices or mobile prices are high, are not made in context, or qualified and adjusted for currency, local prices and incomes or other relevant inputs, including the comparison methodology itself. 

Both U.S. fixed network internet prices and U.S. mobile costs have dropped since 2000, for example. 

source: in2013dollars.com

source: in2013dollars.com

Big Mobile Leader Churn to All Other Providers is Miniscule

If I am reading this churn data correctly, it is going to be hard for new mobile service providers--Comcast, Charter Communications and Dish Network, for example--to break into the top ranks of the U.S. mobile business. 

If I read the data correctly, the four national mobile providers lose between and seven percent and 5.5 percent of their installed base of customers each year. However, most of those losses arguably are to one of the other big four (soon to be big three) service providers.

The U.S. mobile business, in other words, is nearly a zero-sum game where one major provider’s wins come at the direct expense of one of the other existing providers. In any given year, perhaps half of one percent or less might actually shift from one of the top national providers to any of the other third parties. 

It takes a long time for a competent new entrant to actually make market share inroads at such low rates of growth. Profitability is another issue. To the extent that mobility is a scale business, lack of scale means high costs and low profits. 

source: FCC

For cable operators, that might be less a concern, since adding mobility also protects the rest of the cable bundle, while cable operators might hope to retain an advantage in operating costs and capex by using their hybrid fiber coax networks for access operations. 

All mobile virtual network operators together had no more than about five percent share of the installed base of U.S. mobile accounts in 2017. Since then, some would estimate, that share has shrunk. 

In 2017, perhaps five percent of all mobile accounts were supplied by MVNOs. 

What is always tricky is the way MVNO accounts are attributed. In 2017, for example, perhaps 40 percent of all MVNO accounts were affiliated with one of the four national carriers. So it is possible that only about three percent of MVNO accounts actually are owned by third parties. 

The larger point is that it will be difficult to take share from the top three national providers. They do not lose that many accounts each year, and most of the lost accounts are gained by one of the other two big service providers.

Mobile Operators in Asia and Euirope Collaborate on Edge Computing

China Unicom, Deutsche Telekom, EE, KDDI, Orange, Singtel, SK Telecom, Telefonica and TIM have joined forces, with the support of the GSMA, to develop a multi-access edge computing platform that is interoperable. 

The platform, to be developed in 2020, will make local operator assets and capabilities, such as latency, compute and storage available to application developers and software vendors enabling them to fulfil the needs of enterprise clients.

There are other interoperability efforts also underway, including 3GPP efforts, in addition to work by ETSI. 

In the end, standards are not a business model, but an enabler of business models. Some note that the edge is a possible business battleground, as many in the ecosystem hope to capitalize on the opportunity as providers of computing as a service, computing platform as a service or colocation. 

Hyperscale cloud computing firms now are moving into the incipient business at the same time 5G suppliers hope to secure a position. But tower owners and some retailers might also expect they have a role as well. 

In the past, connectivity providers have often failed to compete with cloud computing suppliers or with independent data center providers, either. Verizon and AT&T. for example, already seem to be taking different roles in an effort to monetize existing assets for edge computing. 

Colocation and connections might be the role telcos eventually are forced to assume, their aspirations notwithstanding. Interoperability will be important for connectivity providers as they seek to serve global enterprises, allowing a single “throat to choke” offer for facilities scattered around the globe. 

At least so far, though, such capabilities seem more advanced at the level of colocation and hosting than actual computing as a service, at least in part because the current standards mostly apply to the ways different telcos operate their networks to support edge computing.

Will 5G Boost ARPU?

Some mobile service provider executives hope 5G will allow them to increase average revenue per user. One possible way to do so is require a price premium for 5G plans. The other approach is to bundle 5G as a feature of premium plans. Some U.S. service providers will take the former approach, some the latter method. 

In the U.S. market, Verizon and AT&T take the approach of bundling 5G as a feature of its unlimited usage plans. T-Mobile and Sprint have taken the other approach, with no cost premium to use 5G. What will happen after the firms complete their merger is unclear, but there is little reason to believe that approach will change. 

source: GSMA

Verizon Aggregates 8 100-MHz 5G Channels to Produce Speeds of

If you have enough bandwidth, you can supply very fast internet access. Verizon, for example, now plans to commercially introduce eight-channel carrier aggregation on its millimeter wave 5G network in 2020. 

A recent trial aggregated 800 MHz of 28-GHz band spectrum using Samsung Network’s 5G NR 28 Ghz access unit, which has been commercially deployed by Verizon. That test obviously used 5G channels that each represent 100 MHz of bandwidth.

The result was downlink speeds as high as 4.2 Gbps.

source: Apis Training

First deployed on 4G networks, carrier aggregation--at the moment--might support speeds up to about 600 Mbps. 

source: Semantic Scholar

Verizon recently demonstrated 4.2 Gbps speeds on its 5G millimeter wave network using Samsung Electronics Americas infrastructure, Motorola Mobility devices and Qualcomm Technologies technology under the hood.

Motorola’s upcoming flagship device is powered by the Qualcomm Snapdragon 865 Mobile Platform with the Snapdragon X55 5G Modem-RF System.

Value of 5G is Highly Use Case Specific

To a large extent, the perceived value of 5G for end users and service providers turns on the new value the network can supply, and that arguably is unclear at the moment. Suppliers of devices arguably have an easier time of justifying the business case, as new devices are necessary. 

App providers will be most positively  affected if their apps hinge on ultra-low latency or ultra-high bandwidth or  ultra-low battery life. Least affected are apps that already run fine on networks with moderate latency and 10 Mbps to 25 Mbps per user. 

Since low-band and millimeter wave high-band versions of 5G support such radically different key performance indicators, and since mid-band is seen as the “best” compromise of coverage and capacity, it also matters which flavor of 5G is best suited to different use cases. 

source: EY

It also matters whether a localized, private deployment primarily is needed, or whether wide area coverage is necessary. In other words, if a local area network will suffice, with cabled network backhaul to the core network, use of public 5G networks might not be required.

On the other hand, use of widely-scattered and numerous sensors, in motion or outdoors, will benefit most from public 4G or 5G network access. 

Another big strategic question is whether 5G, in combination with other service provider assets, can somehow create new value for business partners beyond simple connectivity. Can analytics, behavior and location be harnessed to create platforms of usefulness for business partners?

To what extent can major app suppliers do this themselves, without relying on connectivity provider data mining?

U.S. Tribal Entities Eligible to Apply for 2.5-GHz Spectrum

More mid-band spectrum in the 2.5-GHz region now is being allocated to U.S. tribal entities, with additional spectrum to be made available after those assignments are made before August 2020. Unallocated spectrum then will be sold by the Federal Communications Commission. 

The first 2.5-GHz licenses being auctioned by the Federal Communications Commission will go to federally-recognized American Indian tribes. The spectrum available in this window is a portion of the 2.5 GHz band, consisting of three different channels: one 49.5 megahertz channel, one 50.5 megahertz channel, and one 17.5 megahertz channel. Tribal entities may apply for one, two, or all three of these channels, depending on availability.

The  2.5 GHz band, which extends from 2496 to 2690 MHz, includes 20 channels designated for Educational Broadband Service, 13 channels designated for commercial Broadband Radio Service (BRS), and a number of small guard band channels. The Federal Communications Commission now plans to allow secondary market transactions and an auction to repurpose that spectrum. 

Sprint owns over 110 MHz of 2.5 GHz spectrum in most markets, as a result of its acquisition of Clearwire. In fact, Sprint (now T-Mobile)  holds nearly 80 percent of the licenses for 2.5GHz EBS and BRS spectrum, which equates to an average of 150 MHz of capacity in 2500 MHz nationwide.

The new T-Mobile will hold around 160 MHz on average of 2.5 GHz mid-band spectrum in the top 100 markets, and potentially as much as 194 MHz. 

The FCC move to commercialize the band essentially allows Sprint to keep all of its 2.5GHz spectrum, and paves the way for the rest of the band to be auctioned off at some unspecified point in the future.

The auction rules do not appear to allow winning bidders to force incumbent EBS users off the spectrum, a situation that could, again, favor Sprint, which has been subletting some of that capacity from educational institutions. For that reason, some observers believe Sprint will not face competition from AT&T and Verizon for the unallocated spectrum blocks. 

Some of us believe fixed wireless will be the use for much of that 2.5-GHz spectrum. An internet service provider that has about 40 MHz of that spectrum (possibly 114 MHz or so in total that is not controlled by Sprint), operating in a rural area without lots of line-of-sight obstructions, might be able to deliver speeds of over 230 Mbps downstream, with a /25 Mbps return at distances of about four miles, near line of sight. 

At perhaps eight miles, speeds of 100 Mbps downstream, with 20 Mbps return, should generally be possible. At about 18 miles distance speeds might reach 25 Mbps downstream, with return of about 3 Mbps or so.

source: BTIG

 A, B, C, D, and G channel groups,8 with each group comprised of three 5.5 megahertz wide channels in the lower or upper band segment and one 6 megahertz-wide channel in the middle band segment.9 Currently, there are 1,300 EBS licensees holding 2,193 licenses.

Only specified entities are eligible to hold an EBS license, specifically (1) accredited public and private educational institutions, (2) governmental organizations engaged in the formal education of enrolled students, and (3) nonprofit organizations whose purpose is educational and include providing educational and instructional television materials to accredited institutions and governmental organizations.

Our rules permit EBS licensees to lease their excess capacity to non-educational entities to use for non-educational purposes.12 And most EBS licensees do so. There are 2,087 active leases of EBS spectrum, compared with 2,193 licenses.

The 2.5 GHz spectrum remains largely unassigned in much of the rest of the country, especially in rural areas west of the Mississippi River.

In general, each EBS license is based on a circular Geographic Service Area (GSA) with a 35-mile radius (with an area of approximately 3,850 square miles).

Once the rules become effective, both incumbent EBS licenses and new EBS licenses once issued will be free of the eligibility restrictions, and EBS licensees may assign or transfer their licenses freely. 

Will 5G Have Huge Impact? If so, How Long Will it Take?

Observers breathlessly sure that 5G is going to have huge impact on consumers, apps or services are likely going to be quite disappointed in the near term. But that is the nature of big technology introductions. The benefits take quite some time, oftentimes a decade or even two decades, to show clearly what the impact has been. 

To the extent that 5G follows the 4G adoption pattern, in a decade most consumers will be using 5G, but not all. That has tended to be the case in many markets since the time of 2G. Though it can take a decade to reach nearly 100 percent adoption, 2G take rates reached close to 100 percent in as few as five years. 

source: Ovum

Adoption of 3G, on the other hand, tended to take a decade to reach 30 percent to 60 percent, in European countries, for example. 

source: Ovum

4G took about a decade to reach 80 percent adoption. If 5G gets adopted at about the same rate as 4G, we should see 5G adoption rates of about 80 percent by 2030. 

source: Researchgate

source: Deloitte

Within 10 years, though, we will be moving into the early stages of the 6G era. Consider the example of gigabit internet access. 

What has changed, in terms of productivity and benefits, since gigabit internet access “became a thing” about 2011? To be sure, in the U.S. market cable operators now routinely offer gigabit internet access to their customers. 

Few seem to buy it. In fact, perhaps two percent of consumers actually buy a gigabit per second service. Of course, within a decade, a majority of consumers in the U.S. market will be using 5G, so the scale of use offers more hope that material advantages could develop. 

We might, or might not, see tangible results from high 5G uptake in five years or so, possibly in the consumer segment and possibly in the enterprise segment. What needs to be kept in mind that is that near-term results, in the first few years of introduction, will not be enough time to make an assessment.

Even With Subsidies, Rural Telecom is Tough, Telstra Argues

Even when there is a 50-percent subsidy, Telstra now argues many rural cell sites are not sustainable, especially in very-sparse areas where satellite coverage is the logical alternative. 

"The declining numbers of customers per site means the revenues a carrier can earn from each blackspot are low, and we are now at a point where revenues are insufficient to offset the operational costs of the sites, particularly in NBN satellite areas," Telstra says. 

That sustainability challenge illustrates the point that network costs and revenues always are directly dependent on potential customer density. That is why the Australian government has a subsidy program to support cell site construction in rural areas where a strict financial evaluation indicates a cell site should not be built, as there is not sufficient recovery of capital and operating costs. 

Consider this graph of user density in the United Kingdom, which shows that 90 percent of U.K. users live on just 40 percent of the land area, with 60 percent of people living on just 10 percent of the land surface. Since terrestrial cabled network cost is directly proportional to density, networks will cost least where density is highest, most where density is lowest. 

source: Raconteur

Population density is even more skewed in the U.S. market, where about 63 percent of people live on just 3.5 percent of the land area, according to the U.S. Census Bureau. Most of the access network cost problem lies in the last couple of percent of U.S. locations. 

There is a direct relationship between housing density and network cost. Most of the coverage problem lies in the last two percent of housing locations. 

Consider many U.S. states where rural population density ranges between 50 and 60 locations per square mile. 

In the vast western regions east of the Pacific coast range and west of the Mississippi River, population density can easily range in the low single digits per square mile.

The point is that rural communications supply will always be challenging, simply because, at low densities, no cabled network can sustain itself without subsidies. Even wireless last mile alternatives will often struggle in that regard, leaving some satellite or other untethered solution as the only viable candidates for service.

Smartphones are Nearly Half of Consumer Tech Spending

Smartphones now represent close to half of consumer spending on technology and durable goods, GfK says. 

Though the impact of COVID-19 is not entirely clear, analysts at GfK expect global smartphone sales to remain stable, with global sales of €444 billion in 2020. GfK expects sale of 1.37 billion devices globally in 2020. 

The share of smartphones with a display of at least 6 inches reached 70 percent of units in 2019, up from a share of 24 percent in 2018. 

GfK global consumer surveys show that despite the cloud storage services, consumers consider the internal storage as the most important feature when choosing a smartphone. Some 37 percent of all smartphones sold in 2019 had 128GB of storage or more. 

Half of consumers say battery life is one of the most important features when buying a new smartphone. About 38 percent of the smartphones sold in 2019 had a battery capacity of at least 4,000 mAh. Performance speed and battery life are also crucial for 44 percent of consumers,

Are Private 4G and 5G Networks a Threat to Mobile Networks?

Are private 4G and 5G networks a substitute for public network connections, or complementary? The answer each of us gives will shape views on whether private networks using 4G or 5G are substitutes or complementary to public mobile networks.

Personally, I do not see private enterprise 4G or 5G networks as any threat to mobile operator revenues. They are, I'd argue, no different from Wi-Fi networks already commonly owned and operated by enterprises, organizations and consumers, and therefore a complement, not a competitor, to public networks.

Still, private 4G and 5G networks inevitably will become marketing platforms. Some infrastructure suppliers will tout the fact that they sell infrastructure "only to service providers" and not "direct to enterprises," the implied message being that "we do not compete with our customers."

It is likely to prove a non issue. Fixed networks always have had a clear demarcation point between the public network and the private enterprise or consumer networks. Mobility services are different because, in principle, they are supposed to reach "everywhere," including indoors. That has been problematic since mobile operators began to use mid-band frequencies, which simply do not penetrate windows and walls as well as low-band frequencies.

But widespread use of Wi-Fi as an offload mechanism for smartphones shows that the distinctions between public and private networks are far from zero sum. In fact, private networks now are an essential part of the infrastructure for using phones and other devices requiring internet connectivity.

On the other hand, hype about the benefits of such networks seems overdone.

As tantalizing as projected productivity advances using 5G and edge computing might be, it is worthwhile to recall that past eras of automation and computerization often have failed to move the needle where it comes to measurable productivity gains. 

Nokia points out that the era of applying information and communications technology to manufacturing managed to produce productivity gains of less than one percent. The implication is that advanced 4G and 5G private networks will produce greater gains, across a range of use cases including video surveillance and analytics, immersive experiences, smart stadiums, eHealth, machine remote control, cloud robotics and process automation. 

source: Jeremy Rifkin

It has been hard to quantify the benefits of computerization, digitalization or applied communications and information technology for many decades. The productivity paradox suggests that information technology or communications investments do not always immediately translate into effective productivity results. 

source: Goldman Sachs

This productivity paradox was apparent for much of the 1980s and 1990s, when one might have struggled to identify clear evidence of productivity gains from a rather massive investment in information technology.

Some would say the uncertainty covers a wider span of time, dating back to the 1970s and including even the “Internet” years from 2000 to the present.

The point is that it has in the past taken as long as 15 years for technology investments to produce measurable gains. 

Computing power in the U.S. economy increased by more than two orders of magnitude between 1970 and 1990, for example, yet productivity, especially in the service sector, stagnated).

And though it seems counter-intuitive, even the Internet has not clearly affected economy-wide productivity. Some might argue that is because we are not measuring properly. It is hard to assign a value to activities that have no incremental cost, such as listening to a streamed song instead of buying a compact disc. It might also be argued that benefits accrue, but only over longer periods of time. 

The fourth industrial revolution could well take quite some time to produce measurable benefits as well. Of course, we might be wrong about the productivity paradox. The fourth industrial revolution might achieve something we have not seen before. Still, history suggests we would do well to temper expectations. 

Even broadband impact on productivity is a matter of debate, for example. So enterprise managers might want to be patient. It might well take 15 years before the quantifiable payoff from the “fourth industrial revolution” is obvious. 

As with so much other technology investment, we are likely to be initially disappointed.