FCC Will Look at Fixed Wireless in Rural Digital Oppportunity Fund Applications

The Federal Communications Commission has decided to allow fixed wireless internet service providers--including those using 5G platforms--to compete for Rural Digital Opportunity Fund support intended to bring internet access to unserved areas. 

The question of “who is eligible” always is an important issue for rural communications support, as the FCC always has favored support for local telcos in such instances. The latest program also includes consideration for “universal service” obligations.

“The principle of competitive neutrality also does not preclude us from addressing other reasonable regulatory objectives, including ensuring that an entity bidding in Auction 904 is expected to be reasonably capable of meeting the relevant public interest obligations if awarded support and that we are spending our universal service fund efficiently to serve as many consumers as possible.,” says the FCC. 

Every applicant must be certified as an “eligible telecommunications carrier” in the state where applicant proposes to operate, for example. 

In addition to financial qualifications and coverage commitments, and despite a generally technology-neutral approach, there are some barriers to specific deployments.

“We will prohibit service providers that intend to use any form of satellite technology from selecting the Gigabit performance tier,” the FCC says. ISPs proposing to use fixed wireless or DSL technologies to supply gigabit tiers of service will be evaluated on a  case-by-case basis, but will face a “high burden” of proof. 

Beyond the technical requirements, voice service is necessary and there are price guidelines as well. “Support recipients are permitted to offer a variety of broadband service offerings as long as they offer at least one standalone voice plan and one service plan that provides broadband at the relevant performance tier and latency requirements, and these plans must be offered at rates that are reasonably comparable to rates offered in urban areas,” the FCC says. “For voice service, a support recipient will be required to certify that the pricing of its service is no more than the applicable reasonably comparable rate benchmark that the Bureau releases each year.”

Past eligibility rules have restricted funding to a single entity in any service area as well, meaning support for both a mobile and fixed provider have been banned. Irt appears the expectation is that only a single entity will be funded in any area. At least, that is what I glean from an admittedly-cursory reading of the regulations.

5G Killer Apps?

As was the case for 3G, many 4G predicted use cases did not occur. In fact, it has been the case that advanced apps often take up to 20 years to become significant. Apps touted for 3G did not become mass market behaviors until 4G. It therefore would not be unprecedented if many touted 5G use cases do not actually become common until the era of 6G. And there is a high probability we will be surprised by use cases that do become common. 

source: IDTechEx

More likely to happen is that predicted 4G use cases actually become feasible with 5G. Live mobile streaming was supposed to be a killer app. To be sure, people often capture video, but it is not so often actually live streamed. “Portable routers” were supposed to be a killer app. Never happened. 

Consumption of streamed video entertainment did become mainstream. But physical textbooks have not been replaced. And the prediction that magazine and newspaper publishers would create multimedia premium content sold as part of “premium” services has failed to happen. 

Nor has augmented reality navigation or widespread telemedicine actually happened. 

Nor is that unusual. Neither 3G or 4G had a killer app that everyone would recognize, though a few use cases, such as using mobile phones to access web  content, or using 4G to watch video, were common new behaviors for 3G and 4G respectively. 

The point is that our predictions or hopes for 5G use cases are likely to prove frustrating, or simply quantitative extensions of what already was happening with 4G. IoT apps have been in commercial use since 2G, for example. 

Changes will happen. Just as was the case for 3G and 4G, developers will find useful ways to build apps using the platform. But we might well be surprised about what those new apps or use cases happen to be. 

Mobile Productivity has Soared Because Scale Matters

Since 2000, productivity growth in the U.S. fixed network business has plummeted, while productivity in the mobile segment of the business has increased dramatically. Prior to 2000, labor productivity growth for the mobile industry was only a little faster during the 1987 to 2000 period. All that has changed since 2000.

Levels of technology investment might explain some of the divergence. But demand shifts arguably account for most of the change.

In the wired industry, output peaked in 2000. In fact, the fixed network part of the industry actually produced less output in 2018 than it did in 2000. Conversely, output for the mobile industry has continued to multiply, growing at an average annual rate of 13.1 percent since 2000, says the U.S. Bureau of Labor Statistics.

source: BLS

The issue is how to explain the differences. If one believes there is a causal relationship between technology adoption and productivity, lower capex for fixed networks--and much higher investment in mobile--might be part of the answer. 

But it also is easy to point to diminished customer demand for products delivered on a high fixed cost platform. As subscriptions have fallen by about half, the cost to serve each remaining customer is correspondingly higher. That automatically hits productivity. 

In the U.S. market, fixed network revenue peaked around 2000, and has steadily fallen since then. For example, long distance minutes of use peaked in 2000. The number of U.S. landlines in service peaked about 2001. Long distance revenue peaked about 2001 as well. 

Put another way, most productivity problems in the fixed networks segment of the business could be fixed if customer demand were to double.

EE Reports Shift of Network Traffic During Pandemic

U.K. mobile service provider EE reports a 45 percent increase in communications app traffic on its network, including WhatsApp, Houseparty, Skype and Teams​ between February 2020 to May 2020, because of the Covid-19 lockdown. 

Because of the lockdown, network usage also changed. EE’s busiest sites shifted from cities to suburban areas. Stevenage, a popular London commuter town, saw a 120 percent increase in data usage for communication apps, for example. 

source: EE

Voice calls lasting for more than five minutes doubled, with overall voice usage increasing by 45 percent. 

Users of video conferencing app Zoom grew more than five times.

What changes could be permanent when the pandemic ends is the question. If the former underlying and pre-existing trends and behaviors mostly reassert themselves, behaviors will not change as much as some believe. 

Despite frequent predictions that “nothing will be the same” after the Covid-19 pandemic ends, it likely will be hard to quantify the impact over a longer period of time, say five to 10 years. That has been the case when looking at changes after the internet bubble burst of 2001, the Great Recession of 2008 or events such as 9/11. 

This forecast of hyperscale data center revenues from 2018 to 2024 might provide an example. One cannot actually see the impact of the pandemic. In some cases, it might take two to four years for prior trends to reassert themselves. In some cases it will not even take that long to hide the Covid-19 impact on time series data sets. 

source: Omdia

The point is that predictions that “everything has changed” or that a “new normal” will emerge post-Covid are likely to disappoint those who want those changes to happen. Underlying trends tend to reassert themselves once a disruptive event has happened, and passed.

Fixed Wireless Market Headed for 500 Million Subscribers?

About 100 million households globally already buy fixed wireless access, offered by 401 mobile operators that have launched LTE fixed wireless access services.

GSA believes 500 million might be doing so by 2025, in large part using 5G, generating revenue approaching $46 billion by 2026.

source: Markets and Markets

“It is exciting that we reached 100 million households with FWA  and the industry expects 500 million households by 2025,” said by Joe Barrett, the president of GSA. “There are 401 operators deploying FWA services, which becomes the best choice for home broadband in many cases.”

5G Infrastructure Market Will Reach $496 Billion in 2027, Grand View Research Says

The global 5G infrastructure market size is estimated to reach USD 496.6 billion by 2027, registering a CAGR of 106 percent from 2020 to 2027, according to a new study by Grand View Research. Most of that spending will be driven by public network mobile service providers, but some will be for support of private networks operated by enterprises. 

In the contest of past mobile capex in the range of $354 billion annually, that suggests 5G capex will constitute virtually all mobile capex by 2027. 

The radio access network segment is estimated to reach a market size of USD 214.7 billion by 2027, expanding at a CAGR of 112 percent from 2020 to 2027, Grand View Research says. 

The sub-6 GHz segment is expected to account for the largest market size of USD 302.4 billion by 2027, largely attributed to the focus by governments on releasing sub-6 GHz frequency bands.

Advanced 4G Networks Keep Coming

It is easy to forget, in the 5G launch, that advanced 4G networks still are being built, and continue to supply the bulk of mobile internet connect time. The Global Mobile Suppliers Association reports that 315 operators have deployed LTE-Advanced networks in 142 countries or territories. Some 327 operators in 138 countries/territories are investing in at least one of the three key Gigabit LTE component technologies.

37 operators (representing nearly 12 percent of all the deployed/launched LTE-Advanced networks) can support UE Cat-16 peak theoretical DL speeds (up to 750 Mbps) or above. Some 32 of those 37 have announced Gigabit (or very near at 979 Mbps) peak theoretical throughput, or better, in the downlink in their deployed/commercial networks.

12 of them have pockets of LTE network capable of delivering the maximum DL speeds supported by Cat-18 devices (up to 1.2 Gbps). Five of those have announced parts of their network can deliver a maximum rate in its commercial LTE network of between 1.2 Gbps and 1.6 Gbps (Cat-19).

For many customers, advanced LTE is likely to provide the experience required, making 5G optional in the short term. That will change over time as consumer demand for bandwidth outstrips the ability of 4G to continue adding capacity. 

Most 5G Users Still Spend Most of Their Connect Time on 4G

Opensignal’s latest 5G analysis found all 10 studied  operators featuring much-faster speeds for their users on 5G compared with 4G. Speeds on 5G networks were as much as 18.4 times and 1.7 times faster than 4G, depending on the spectrum assets deployed. 

source: Opensignal

Millimeter wave, though providing less coverage, provides much-higher speeds. Low-band spectrum provides good coverage, but less improvement in speed.

source: Opensignal

Also, most mobile users on studied networks continue to spend most of their time connected to 4G networks. 

source: Opensignal

Spectrum Sharing has Business Model Implications

Shared spectrum continues to emerge as a primary tool for wireless and mobile operations. 

Cable operators can overlay the shared spectrum offered by Citizens Broadband Radio Service to add 4G radios on their Wi-Fi hotspots (indoor and outdoor) to create a facilities-based 4G infrastructure supporting their mobile virtual network operator operations. 

Mobile operators can do the same and overlay CBRS assets on the existing mobile infrastructure; aggregate licensed and unlicensed spectrum and aggregate 4G and 5G spectrum assets using dynamic spectrum sharing. 

source: Qualcomm

In other cases some operators might use licensed shared access to support other tenants,  where excess spectrum is available and a willing customer exists. TV White Spaces will allow internet service providers to provide fixed internet access using fallow TV broadcasting spectrum. 

All of those instances have business model implications as they invariably reduce the costs of acquiring and using spectrum.

Nokia Demonstrates 4.7 Gbps 5G, But More to Come

If you have enough spectrum, a mobile network can reach super-high speeds. Nokia, for example, demonstrated 5G speeds of up to 4.7 Gbps in tests performed on commercial base station equipment by combining eight 100-MHz channels of millimeter wave spectrum on the 28 GHz and 39 GHz bands.

That’s a “hero” test, of course, but the difference in designed-for maximum speed between 5G and 4G is quite significant, according to Ookla. 

source: Ookla

In addition to the 800 MHz, the test also aggregated another 40 MHz of 4G LTE spectrum using dynamic spectrum sharing features of the base stations. 

Top speeds have advanced with every mobile next-generation network. 

source: RantCell

People and Businesses Still Do Not Really Know Why They Need 5G

Steve Jobs, former Apple CEO, famously believed that consumers cannot accurately predict their demand for a product they have never seen.  “Our job is to figure out what they're going to want before they do,” he said.  “People don't know what they want until you show it to them.” 

That is not unusual in market research: people often say they will do something, and do not. They often tell researchers they will not do something, and do. People are often incapable of articulating why they do things or how they would behave in the future. 

And price always matters. Respondents often indicate they will spend more for a product or feature than actual behavior suggests they will. In other cases the wrong customers are surveyed. Perhaps the wrong questions are asked, or those who interpret the data are not close enough to the customer reality to interpret the data. And it always is tough to make valid estimates of demand for products that do not yet exist. 

That is likely true of much 5G demand research as well. 

A survey by Global Wireless Solutions finds U.K. consumers have “a lack of enthusiasm” for 5G.  While 19 percent said that they expected that the speed of 5G would change the way they use their mobile device, 67 percent of those surveyed were content to keep using 4G until their service provider automatically transferred them to a 5G network. 

Asked about whether they believe 5G will improve the quality of their mobile service, the results were evenly split between those who believed it would, and those who did not know. About 15 percent of respondents also indicated that they do not ever intend to purchase a 5G-capable phone.

The results indicate a level of indifference around 5G and a lack of urgency from both businesses and consumers when it comes to taking advantage of the emerging network.

Business users seem more optimistic, but still seem in no terrible hurry to adopt 5G. Half of business respondents say (56 percent) 5G is already important, More than a quarter (27 percent) identify that 5G will be important to their business in the future.

But only about 20 percent say 5G applications and services are one of their top three mobile priorities over the next 12 months.

Fully 76 percent of respondents say they do plan to buy 5G phones. Some  53 percent believe they will do so within three years. 

About 19 percent believe 5G speed will change the way they use their phones. Yet 39 percent do not know whether 5G will improve the quality of mobile service, compared to 4G.

None of the uncertainty can be resolved until customers (consumer and business) have had some time to use 5G, and until new use cases are developed and deployed. That might take five years. It might take a decade. It could take longer.

Movandi Helps 5G Millimeter Bend Around Obstacles, Boosts Signal Levels

LightSquared or Ligado, Interference with GPS Issue Has Not Gone Away

I’m not convinced 40 MHz of mid-band spectrum makes a huge difference, one way or the other, to the trove of mid-band spectrum being allocated for 5G. The Federal Communications Commission believes interference with the Global Positioning System will be minimal. The Department of Defense vehemently disagrees. 

As you recall, that was a contentious issue when Ligado called itself LightSquared. Not much seems to have changed, in that regard. 

The C-band remains the biggest new block of 5G mid-band spectrum being prepped for 5G use, representing about 280 MHz, plus the Citizens Broadband Radio Service, representing about 150 MHz of new spectrum. 

source: Ligado

The Difference Between "Key" and "Integral"

Headline writers traditionally have been different people from story writers at magazines and newspapers, for reasons directly related to the production process, and explains why headlines sometimes actually mis-state what a writer has written. Sometimes the change is as subtle as saying key in a headline when the writer only actually said “integral.” 

Nobody doubts that satellite connectivity will be a part of the 5G ecosystem, in roles where satellite excels: remote area backhaul, aircraft communications and maritime, for example. Satellite is, in other words, an integral part of the 5G ecosystem, and key in some defined use cases. 

But it stretches too far to say that satellite is “key” for 5G overall. Millimeter spectrum, small cells and Wi-Fi integration arguably are “key” for 5G. Virtualized networks and network slicing arguably are key for 5G. Internet of things as a new use case for 5G arguably is key. 

Satellite use cases are integral overall, key for communications in remote areas or for maritime and aircraft communications. Basically the same might be said for low earth orbit satellite constellations, as well as geostationary satellite use cases.

Enterprise 5G Might Substantially Include Private Networks

The enterprise 5G market for service providers and infrastructure suppliers is more complicated than was the case in prior generations, when virtually the only suppliers of mobile service, and the only buyers of mobile infrastructure, were public network operators. In the 5G era, private networks operated by enterprises will be possible. 

 

So even if global 5G business mobile subscriptions are predicted to grow to 175 million at the end of 2024, up from 500,000 at end-2019, that likely will not represent the total of 5G connections, but only those provided by public network service providers. 

A significant number of 5G connections could well be supplied directly by enterprises themselves, in much the same way that enterprises have used Wi-Fi to support their private data networks on premises and campuses. 

Of course, total mobile subscriptions (representing consumer connections to public networks)  could grow to 1.9 billion at end-2024, up from 13 million at end-2019, Omdia predicts. 

In 2024, 5G-based fixed wireless access is set to account for $7.4 billion, or 29 percent, of global FWA revenue, the firm also predicts. 

source: Omdia 

A wide range of industries are investing in private 5G networks, Omdia says.  Around 40 percent of the announced deployments of enterprise 5G networks since 2016 have been  for manufacturing, followed by 18 percent of deployments in transportation and logistics. 

Utilities, energy, and mining together make up a further 20 percent of deployments, followed by public safety at seven percent. 

Tough to Break Through App Clutter

Getting people to change habits is very difficult online, whether that is convincing them to adopt a new social, communications, shopping or information app. Getting a new mobile app to break through the clutter is perhaps equally hard. 

 

Games arguably are different, as each new game is a discrete new app. But most non-game apps must vy for attention against hundreds of thousands of other apps. 

 

Mobile app use is highly specific. Most people in 2015 actually relied on just three apps, according to comScore, no matter how many they had loaded on their devices. That has not changed much, despite the explosion of mobile app availability. 

 

In 2020, In the United States, mobile users spend 96 percent of their time using a total of 10 apps, over a month’s time, comScore says. Fully half of users spend half of total app time with a single favored app. After the top three apps, usage dips into low single digits very rapidly. 

 

source: comScore

 

Nor is it easy to get attention. In 2019, over half of all U.S. mobile users downloaded zero new apps every month. And most new apps get used just once, testament to the difficulty of establishing a new habit. 

 

On a monthly basis, people use just about 20 apps total, at any point during the month. 

source: Statista

 

The point is that chances of breaking through mobile app clutter are nearly impossible, in most cases.

Comcast 5G Offered at No Price Increment to 4G

One big unknown mobile service providers have pondered about 5G is whether it would be possible to charge an incremental fee. Some mobile service providers--generally attackers rather than market leaders--have concluded that the best path forward is to charge a zero premium for 5G access. T-Mobile and now Comcast are among such firms. 

Comcast announced that Xfinity Mobile is launching new data plans with 5G services included free, regardless of how customers choose to pay for data, whether its unlimited or by the gigabyte.

Xfinity Mobile’s 5G service--suppled by Verizon--is available in 34 major cities across the United States, including Atlanta, Boston, Chicago, Denver, Detroit, Houston, Memphis, Miami, Minneapolis, Spokane, St. Paul, and Washington, D.C.

New and current customers can choose from two straightforward 5G data options: “by the Gig” shared data starting at 1 GB for $15, 3 GB for $30 and 10 GB for $60, or unlimited plans for $45 per month per line.

5G Adoption is Faster than 4G, Ericsson Argues

5G is different from 4G in at least a few ways, says Ericsson. When looking back at when 4G networks were launched, there were real questions about when to adopt, on the part of mobile operators. So far, 5G introductions show global adoption, with about 15 times the number of 5G network launches in the first year, compared to the pace of 4G network launches. 

On the supply side, In the first year 5G infrastructure was commercially available, 59 networks were launched. In its first year (2010), 4G had but four launches.

Trends on the demand side also show faster adoption than 4G. Some 17.7 million 5G subscribers were gained in the first year. For previous mobile generations, reaching the same volumes took 10 quarters for 4G, 11 quarters for 3G, and 14 quarters for 2G. 

source: Ericsson

What might not yet be clear is whether early adopters will gain a disproportionate share of subscription growth, as was the case when 4G launched. Ericsson likens the pattern to “winner take all.” 

The compound average growth rate for the 49 “first mover” 4G network operators worldwide was 8.5 percent up until 2018, at the same time as the remaining 238 services providers declined by 1.95 percent.

That might require some explanation. Perhaps the first movers were operators in economies with stronger economic growth, bigger internal markets, higher average revenue per user, mobile operators with higher profit margins and revenues to begin with. 

The caveat is that 5G is likely not a “silver bullet” that automatically confers revenue growth advantages on every mobile operator, in every market, without exception. First movers arguably have other reasons to believe they will reap the advantages of higher growth.

Consider edge computing and internet of things applications, which many believe will drive new use cases and revenue. As often is the case, opportunities hinge on scale. Outside of China, the United States and Europe, large internal markets, financial incentive and other favorable preconditions might not exist. 

There are other differences. The 4G business model  focused on the consumer value proposition, notes Peter Linder, Ericsson head of North American 5G customer engagement marketing. 

In contrast, 5G is likely to favor use cases in enterprise and business markets. At least that is what enterprise executives say they believe. Fully73 percent of enterprises polled by Ericsson saw first-mover advantages as the most important strategic objective for 5G. 

The desire to be perceived as innovative (54 percent), and the understanding that 5G is key to digital transformation (53 percent) also are top advantages seen by enterprise executives. 

Some other differences between 5G and 4G early deployment might not be so different, though. 

Ericsson notes that the initial performance difference between advanced 3G (HSPA with a maximum 168 Mbps downstream speed) and 4G LTE (maximum 150 Mbps) was small. 

But that was not the case in every market, and was complicated by the fact that some markets launched WiMAX, which did offer speeds quite substantially faster than 3G, earlier than 4G was available.  In such cases, the user experience of 4G might have been quite a bit better than 3G. My own experience was that WiMAX was notably better than 3G, as U.S. networks were not then notably fast. 

And many early 5G launches have not supplied a user experience dramatically different from 4G. That especially is the case where 4G is advanced and 5G uses low-band spectrum or even mid-band spectrum in many cases. Networks using millimeter wave are the exception, but such deployments have not been widespread, yet. 

The point is that in the early transition to 4G, the performance improvement might not have been significant in all markets. In some, though, 4G really was a noticeable improvement. Despite Ericsson’s hopes, 5G might have similar early outcomes. The 10-times-better speed might not initially be widely available. Nor might consumers actually reap advantage from the higher speed. Beyond a certain point, faster access speeds do not improve user experience for today’s apps. 

Still, 5G is getting first-mover activity by service providers on a wider scale than did 4G. Whether that matters, in the long run, is perhaps dependent on what new use cases and revenue models can be created, and where.