Only a Buyers' Strike Can End the Mobile Upgrade Pattern

Though there is growing disenchantment with the value of 5G, work already is underway on 6G, for the same reasons we always have gotten next-generation mobile networks: faster speeds and lower latency. 

In principle, one might prefer an upgrade path that is more like Ethernet or optical transceivers, which are upgradeable at the edges of the network while often using the same core transport and access networks. 

Mobility is different and more similar to Wi-Fi in its reliance on public spectrum resources, which require clearing of spectrum bands, allocation of new bands and other choices such as channel size that affect potential speed and capacity. Where Ethernet can simply rely on edge upgrades to cores that are not regulated (cables), mobile and untethered networks do require specific allocations of new airwaves. 

One might logically ask why it is not possible to use an architecture that simply reuses the existing formats (4G or 5G) for future extensions that add blocks of spectrum, but retain the other architectural elements. 

Among the issues are device density; management of cell connections; decisions on channel width, modulation and other standards decisions that actually are frequency dependent. Simply put, lower frequencies use smaller channels; higher frequencies can use larger channels. 

Larger channels support higher bandwidths, faster speeds and also are more bandwidth efficient. 

source: Microwave Journal

At least so far, there does not seem to be major supplier support for moves to extend 5G enough to break the cycle of mobile network upgrades. Indeed, it is in the interest of infra suppliers to essentially force service providers to upgrade again in a decade. 

A service provider strike--a refusal to buy 6G--is about the only way to get infra to shift directions, with the possible exception of serious buying support for more-open approaches such as favored by Telecom Infra Project. But even TIP has not taken the approach that the mobile infra upgrade pattern has to be ended in favor of some more open-ended approach. 

Whether mobile operators like it or not, 6G is likely to happen. Infra providers benefit if it does. Mobile service providers might or might not benefit, but they could affect development paths only by refusing to buy. 

So far, serious appetite to do so has not emerged.

ISP Customers Might Gain, App Users Will Lose if New Access Taxes Happen

It always matters when value chains shift value and revenue from one participant to another, especially when segment revenue gains are not shared with customers in the form of lower prices. Also, any segment losing revenue will naturally seek to replace lost revenue. That means higher prices. And, in the end, customers always wind up paying higher prices.

At least theoretically, proposals requiring a few hyperscale app providers to pay fees to internet service providers might lead to lower consumer prices for broadband access. Such payments, some believe, could also lead to higher levels of network investment by ISPs. 

A report prepared by Oxera for the Dutch Ministry of Economic Affairs and Climate concludes that advantages likely would be small, and also have a negative impact on content provider business models, which would lead to higher prices for consumers of those products. 

Broadband consumers might benefit if some of the payments were used to lower home broadband or mobile broadband costs. Others might argue that the improved cash flow would not necessarily result in price reductions for consumers, but only higher profits margins for ISPs. 

Also, consumer gains in the form of potential lower internet access prices would be balanced by higher costs for consumers of hyperscale app and content services, as the new costs necessarily would have to be passed on to users of those apps. 

source: Oxera 

Two items are worth noting. First, the relationship between end users of the internet and app providers is a somewhat classic two-sided market, with ISPs and internet backbone providers arguably acting as the “platform.”. On the other hand, the direct business relationship is between an ISP and its own access customers, or between an ISP and a peering fabric or internet exchange point. 

Since the internet is a “permissionless” environment, no app provider requires a direct business relationship with any ISP to be reached by any internet user. 

source: Oxera 

“Overall, our analysis of the proposals for a levy shows that such a policy cannot robustly be shown to increase economic efficiency, and would potentially bring substantial transaction and set-up costs,” Oxera analysts say. “From an economic perspective, once welfare losses in the market for content are accounted for, the net welfare gain from the policy is relatively small.”

“Without a consumer price reduction, the effect of a charging scheme is simply to transfer money from CAPs (content application providers) to telcos,” the report states. 

Oxera also questions the assumption that app providers “cause” network demand. Instead, traffic is typically caused by a consumer of an ISP. “For example, the streaming of music or a film occurs because the consumer sent a request to the CAP to send them the film,” the report says. “The CAP then obliges.”

Traffic is caused by the ISP customer’s initial request, not the fulfillment of that request. As in the case of natural gas, electricity or water consumption; use of toll roads, airports, seaports, public parking or other “utility or infrastructure” assets, it is customers who directly or indirectly pay for usage. 

The point is that, overall, any subsidies extracted from app providers boosts the business case for telcos, while harming the app provider business case. 

source: Oxera

But this battle is likely not about consumer welfare. Rather, it is about ecosystem participant business models. The effort to tax a few hyperscalers is designed to help ISPs and slow down the hyperscalers; help domestic industries at the expense of foreign. So far, few ISPs have 

argued against the hyperscale tax.

In principle, why would they? Hyperscaler taxes shift cash towards ISPs, bolstering ISP business cases.

Will APIs Boost Mobile Operator Revenue?

GSMA Open Gateway is a new framework of universal network Application Programmable Interfaces (APIs) designed to provide developers with access to operator network features, starting with eight features:

• SIM Swap, 

• QoD

• Device Status (Connected or Roaming Status)

• Number Verify

• Edge Site Selection and Routing

• Number Verification (SMS 2FA)

• Carrier Billing – Check Out

• Device Location (Verify Location). 

Additional APIs are expected, and GSMA touts the move as similar in potential impact to voice roaming, in terms of enabling global access in a consistent manner. 

Edge Site Selection and Routing supports autonomous vehicles. Verify Location is expected to support  fleet management and incident reporting.

SIM Swap is intended to deter financial crime. “Quality on demand” (QoD) is expected to support low-latency applications such as drone control, robotics, extended reality and immersive online gaming, GSMA says. 

Designed to expose mobile operators’ network capabilities, the effort initially is supported by 21 mobile network operators, 

GSMA itself says the move “represents a paradigm shift.” 

Participants include America Movil, AT&T, Axiata, Bharti Airtel, China Mobile, Deutsche Telekom, e& Group, KDDI, KT, Liberty Global, MTN, Orange, Singtel, Swisscom, STC, Telefónica, Telenor, Telstra, TIM, Verizon and Vodafone.

The level of success might ultimately be determined by developer interest in using those network features and whether and how much mobile operators can create revenue models around the APIs. 

source: Yalantis 

The GSMA Open Gateway has mobile operators in the role of API Provider, while developers are API Consumers. 

source: Yalantis 

The unstated assumption is that developers will find the APIs so compelling they will pay to use them, rather than attempting to create access to those features themselves. The extent of value also hinges on whether a desired value can be sourced in some other way, or does not add enough value to warrant payment of fees.

Why Small Cell Networks are Coming

This is a good illustration of the reason why small cells are the future of mobile networks. It is just physics: the available radio frequencies we have added over time keep moving higher in the spectrum. Lower-frequency signals travel farther before they are attenuated.

Higher-frequency signals are attenuated quite quickly. The only available new spectrum we really can add is in the high-band areas. Those signals support lots of bandwidth, but will not travel very far, so cell sizes must necessarily be smaller. 

source: NTT, SKT 

And while small cells do not cost nearly what macrocells do (an order of magnitude less, at the very least), networks will need many more sites. The basics of cell geometry are that one quadruples the number of sites every time the cell radius shrinks by 50 percent. 

So shrinking from a 10-km radius to 50km radius requires four times as many cells. Shrinking again from 5 km to 2.5 km requires another quadrupling of sites, and so forth. By the time one moves to cell radii of 100 km or so, cell networks are quite dense. 

And optical fiber backhaul often is required to support such site. Ignoring the cost of many times more cells is the additional cost of fiber backhaul. 

So it should not be surprising that network cost is going up.

Mobile or Fixed, High Speeds often Do Not Translate Directly Into Better Experience

With the caveat that “peak” or “top” 5G speeds available from any mobile service provider in any country are different from average speeds indoors or outdoors, experienced device top speeds are growing, as is the case for home broadband networks as well. 

 

source: Cellsmart 

For most customers globally, 4G still is the more relevant indicator, though. The most bandwidth-intensive application most smartphone owners use is video, which makes it a reasonable proxy for access connection speed. And since mobile-delivered entertainment video delivered in high-definition format rarely consumes more than 10 Mbps, that is a reasonable working definition of “necessary” mobile device connection speed. 

source: Cellsmart 

As with home broadband, typical speeds are almost always in excess of that level, though, up to a point, “more” is often better. Mobile web pages often take 70 percent longer to load, compared to desktop or laptop pages, though, so the impact of speed on mobile web page experience is more difficult to assess. 

One reason mobile apps have become popular is because apps load faster than web pages, however. The point is that typical mobile speeds do not have to be in three digits to support the apps most people use. The same can be said of fixed network speeds and experience. 

Announcements about multi-gigabit home broadband upgrades now have become so commonplace we are no longer surprised by the advances, which so outstrip the usual recommendations for minimum app bandwidth that we must reckon speed claims as marketing platforms, not user requirements. 

In fact, the primary value of any home broadband connection is assuring minimum bandwidth for all the simultaneously-connected devices at a location. The actual capacity required by any single app or device are quite low, in comparison to gigabit or multi-gigabit services. 

As observers always seem to note, web browsing, use of email and social media are low-bandwidth use cases, rarely actually requiring more than a couple of megabits per app. 

As always, entertainment video is the bandwidth hog, as high-definition TV might require up to 10 Mbps per stream. 4K and 8K streaming will require more bandwidth: up to 35 Mbps for 4K and perhaps 100 Mbps for 8K, per stream, when it is generally available. 

Online gaming might require a minimum of 10 Mbps. Work at home generally is a low-bandwidth requirement, with one exception: video conferencing or perhaps some remote work apps. Some recommend 10 Mbps to 20 Mbps in such cases. 

So the key variable for any specific home user is how many people, devices and apps are used concurrently, with the key bandwidth variable being video streaming beyond high definition content (4K, at the moment). 

But even in a home where two 4K streams are running (up to 70 Mbps); two online gaming sessions are happening at the same time (up to 20 Mbps) and perhaps three casual mobile phone sessions (up to 6 Mbps), total bandwidth only amounts to perhaps 96 Mbps. 

Gigabit speeds are overkill, in that scenario. And yet we are moving to multi-gigabit services. We know more capacity will be needed over time. But right now, home broadband speed claims are in the realm of marketing platforms, as available bandwidth so outstrips user requirements. 

Many estimate that by 2025, the “average” home broadband user might still require less than 300 Mbps worth of capacity. Nielsen’s law of course predicts that the top available commercial speeds in 2025 will be about 10 Gbps. 

source: NCTA 

That does not mean the “typical” customer will buy services at that rate. In fact, quite few will do so (adoption in single digits, probably). In 2025, perhaps half of customers might buy services operating at 1 Gbps, if present purchasing patterns continue to hold. 

Whatever the top “headline rate,” most customers buy services operating at 10 percent to 40 percent of that headline rate.                                               

Rural Tower Business to Get a Boost?

Denser mobile networks require more cell sites, and that goes for rural areas as well as urban, to some extent. 

What Comes After 6G?

To some extent, the mobile connectivity industry already is moving towards a “reuse rather than replace” mode for its development of next-generation networks. For example,  6G will build on 5G as 5G was built on 4G. 5G networks were designed to be compatible with 4G core networks, for example. 

What remains unclear is the extent to which standards can be created more analogous to Ethernet or optical transmission, where physical media does not have to be largely replaced to upgrade network performance. 

So far, much of the talk about a future 6G platform centers on applications and use cases that can be supported; integration of many other access networks or the role of the 6G network in supporting edge computing, for example. 

Optical transceiver capabilities have continued to develop over time, supportinGbps capacities that have Gbpsrown from 2.5 Gbps through 10 Gbps, 100 Gbps, 200 Gbps, 400 Gbps, and 600 Gbps to 800 Gbps. 

 

source: LightCounting 

As much as connectivity executives hate the phrase “dumb pipe,” as it implies low-margin, commodity products, transparent media is what makes it possible to upgrade Ethernet and optical networks more gracefully. 

Physical media changes still happen. Waveguides get better, which can eventually require installing new transport media. Still, transport media is less an issue for Ethernet and optical transport systems than it has been for mobile phone generations. 

ource: Prooptix.com, ufiSpace 

Still, one has to ask: is the mobile networks problem fundamentally the need to replace platforms every decade, or is it the revenue operators can generate after installing the new networks? 

In principle, a 50-percent increase in infra costs is not an issue if revenue grows 100 percent, for example. Instead, the issue is that higher infra seems correlated with slight increases in revenue. 

It therefore is not a surprise that mobile executives continue to look for ways to improve the business model by cutting costs or boosting revenue or both. That propels the push for fees to be paid to internet service providers by a few hyperscale app providers, for example. 

Compared to fixed networks, though, mobile networks have been replaced about every decade in the digital era precisely because computing technology improves at a Moore’s Law rate (double the performance about every 18 months).

As a practical matter, that means cheap processing allows us to do things that were economically not viable 10 years ago. Very sophisticated signal processing, for example, allows us to multiply the intensity of use of any given amount of spectrum available. Commercial use of millimeter wave frequencies, for example, is now possible because the cost of processing signals is low enough to recover useful signals at distances not possible in the analog and earlier digital periods. 

Additional spectrum also helps. Early spectrum allocations were limited enough that radio channels had to be “narrow,” featuring relatively little bandwidth. That matters as “wider” channels featuring more bandwidth are inherently more efficient. 

So wider channels enhance capacity, all other things being equal. But those wider channels only are possible because additional big blocks of spectrum have been released for mobility use. In other words, unlike a terrestrial optical network, the “pipe” itself gets bigger only when governments allocate more spectrum. 

So it has not been easy to create a “transparent” (or “dumb”) transport medium that can be capacity-upgraded simply by swapping devices at the ends of the network, as is possible on an optical or hybrid fiber coax network. 

But we are approaching an era where that ability to create a transparent transport medium is possible. As that happens, standards should be crafted to allow upgrade processes that are analogous to the ways optical networks or Ethernet are upgraded: by swapping out transceivers at the network edges. 

Granted, international standards bodies seem to intent on creating 6G on the old model. What happens after 6G might be quite different. 

5G is Like Ethernet or Optical Transceiver Progress: No Less, But Mostly No More

It is clear why infrastructure suppliers tout all the new features 5G can provide, compared to 4G: it helps such firms sell their products. It also is obvious why mobile operators tout 5G: it helps them convince regulators to commit additional spectrum (capacity) for use by mobile operators. 

None of those motivations are inherently troubling. But consumer end users probably are thinking--at least early on--that there has been too much hype, even if, at some level, the actual value of 5G seems pretty obvious, if somewhat pedestrian. 

One obvious reason for consumer ambivalence about 5G is that, in the early days, performance has been so varied. When using low-band spectrum, 5G experience is barely differentiated from 4G, if there is any experiential difference. 

Then there is the natural decrease in experienced performance for any new network that becomes more highly loaded. Any new network will operate quite fast if there are few users on the network. As scale is obtained, average speeds will tend to slow. 

Finally, no new mobile generation has immediately produced all the new and exciting potential new apps and use cases that are possible. All that takes time and ecosystem development. We might argue that many expected 3G use cases only developed on 4G networks. The same might happen with many anticipated 4G use cases, which will be commercialized only on 5G networks. 

But that also implies that many touted 5G use cases will not arrive until later, as well. 

In a larger sense, we should ignore the hype. Home broadband providers no longer heavily promote “new use cases” and “new apps” as key features of their ever-faster networks. To be sure, internet service providers are likely to emphasize the quality advantages of faster networks for video streaming or multi-player games. 

But most gigabit and faster networks do not improve any single user’s experience beyond a certain point, other than to assure that enough bandwidth is available for each app running at the same time. 

Instead, the value of faster connections is the ability to support multiple devices and users on a single connection. No single streaming instance or even online multiplayer games actually require gigabit capacity. 

At this point, the value users have come to expect is simply “faster speeds” or “more capacity.” 

Mobile networks, at least for consumers, essentially wind up with the same approach, but without the “multiple user” advantages. Value lies in supplying enough bandwidth to support the user’s apps on the mobile device. 

And, as always, “more capacity” always is needed as developers start designing their apps on the assumption that plenty of bandwidth is always available. 

For mobile operators and infra suppliers, the value of 5G is lower cost per bit, as was the case for 4G. 

Device density, lower latency, network slicing and lower energy consumption also have implications for enterprise use cases and operating costs in general, to be sure. But the mobile business is built on consumer users, even as enterprise use cases potentially exist. 

5G value for consumers is analogous to the value of higher-speed home broadband networks: more capacity (speed). For home broadband accounts, the advantage is user experience when multiple users and devices are supported. 

For mobile users the value is user experience on a single device, but also, for some, the ability to use the mobile connection as the replacement for home broadband. 

Even in the absence of new use cases and apps, faster is better. Mobile next-generation networks are the equivalent of new generations of Ethernet, boosing speeds from 1 Mbps to 10 Mbps to 100 Mbps to gigabit ranges. 

Mobile next-generation networks are the equivalent of transceiver improvements for optical networks. In the end, the value is faster speeds and higher capacities. App development and use cases follow. 

But the real value for consumers is pretty basic: faster networks. By now, people understand why they need faster speeds.

Is Liberty Global Investment in Vodafone Anything More than a Good Investment?

Liberty Global has purchased a five-percent stake in Vodafone, but says the investment is not a first step towards a takeover. Some might find the investment odd in some ways: Liberty owns half of Virgin Media O2, a major Vodafone rival in the United Kingdom. 

It is not immediately clear whether that will be the case longer term, some point out, but Liberty often buys minority stakes in firms without seeking control. More so than for most companies, Liberty Global is interested in making money, not “control.”

Liberty Global long has had a policy of taking minority stakes in a wide variety of companies--some 75 or so at the moment--across content, technology, and infrastructure, including stakes in ITV, Televisa Univision, AtlasEdge, Plume, and the Formula E racing series.

But the buy might simply be “opportunistic,” as Liberty Global executives say, a bet on a higher stock price once restructuring deals happen. Hostile intent is not an obvious driver. 

Vodafone and Liberty are partners in owning Ziggo in the Netherlands and Vodafone purchased Liberty Global assets in Germany, Hungary, Romania and the Czech Republic in 2019.

Why Some Want "No More Mobile Generations"

Some now wonder why mobile network generations cannot more fully resemble the ways optical fiber transceiver development and Ethernet standards increase capacity over time. As optical transceivers moved through 1 Gbps to 10 Gbps to 40 Gbps to 100 Gbps, and Ethernet boosted speeds from 10 Mbps to 100 Mbps to 100 Mbps, some argue the mobile infra platforms should likewise be able to gradually change out and upgrade transmission active elements in a more graceful way. 

Name	IEEE Standard	Data Rate	Media Type	Maximum Distance
Ethernet	802.3	10 Mbps	10Base-T	100 meters
Fast Ethernet/ 100Base-T	802.3u	100 Mbps	100Base-TX 100Base-FX	100 meters 2000 meters
Gigabit Ethernet/ GigE	802.3z	1000 Mbps	1000Base-T 1000Base-SX 1000Base-LX	100 meters 275/550 meters 550/5000 meters
10 Gigabit Ethernet	IEEE 802.3ae	10 Gbps	10GBase-SR 10GBase-LX4 10GBase-LR/ER 10GBase-SW/LW/EW	300 meters 300m MMF/ 10km SMF 10km/40km 300m/10km/40km

source: Lantronix 

So as Ethernet standards move through variations that allow faster speeds and greater capacity, or fiber to X networks improve by swapping gear at the ends of the network, some believe the mobile industry would benefit from a more-scalable platform, as infrastructure cost climbs. 

The difficulty would seem to be that mobile networks--at the access level--are inherently shared while fixed networks often can be designed as dedicated networks. The key difference is that fixed networks can dedicate capacity where mobile networks must share capacity at the access level (actual subscriber locations and devices). 

Network slicing is a move towards dedicated capacity, but likely does not scale well enough to permit fully dedicated resources for most customers and devices. 

Perhaps one might propose an extensible version of 5G that simply adds more spectrum support, and somehow manages to extend device density, latency performance and other capacity-increasing moves as allowing wider channels, adding more-robust channel aggregation and other moves that allow 5G to evolve more on the pattern of optical transceivers and Ethernet.