Perhaps the notion that SpaceXSI could create a meaningful facilities-based “fourth mobile operator” at reasonable cost is to compare what might be done to what Comcast already has done with its own Wi-Fi network.
Assume SpaceXSI is able to create a small-cell terrestrial network using existing SpaceX customer locations. In principle, this would allow SpaceXSI to use its low-band spectrum to replicate some of the features of a traditional cellular phone network, without much of the capital investment.
The analogy to Comcast is that Comcast also uses its fixed network broadband customer base as an “offload” network that reduces its wholesale costs, as data traffic is shifted from the mobile network to the “owned” home broadband network.
At least in principle, the installed base of Starlink customer terminals might be upgraded so that each also operates as a small cell transmitter for mobile phone service.
The possible upside is avoiding some building of traditional mobile phone network cell towers.
Yes, there are many practical issues, ranging from availability of phones able to use the terrestrial frequencies SpaceXSI owns; the extent of coverage that might be possible; what augmentation might have to be done to create a more-robust urban network (since most Starlink customers are in rural areas); the competitive response by the “big three” facilities-based mobile service providers; and the time and cost required to create all of that infrastructure, versus the revenue upside.
Still, the key principle remains common: both Comcast and SpaceXSI might replicate the features of a full-fledged mobile phone network at lower cost by leveraging existing assets.
The functional difference is that Comcast’s Wi-Fi is a capacity layer. It already supplies nationwide coverage using the Verizon network. But offload to its own network reduces the operating cost of buying wholesale capacity from Verizon.
A Starlink small-cell network would be a coverage layer, replicating the traditional cell tower network.
Comcast’s offloading is about profit margin and operating cost. SpaceXSI’s moves would be about reach: creating the basic network coverage for a terrestrial mobile network.
The business advantages and issues are different as well. Comcast offloads from rented capacity (per-GB wholesale fees to Verizon) to owned capacity. It only uses unlicensed spectrum for Wi-Fi access, so there is no capital specifically tied up in spectrum licenses.
SpaceXSI has purchased spectrum licenses, so in one respect it has a higher cost base than Comcast does.
Comcast’s costs to offload traffic are fairly low, whereas SpaceXSI will have a greater cost issue as its satellite capacity is more limited. Also, Comcast’s footprint is contiguous and dense. Starlink’s customer sites are scattered.
SpaceXSI also will have to concern itself with all regulations governing cell transmitter power levels, for example, something Comcast does not face.
Comcast’s model is economical because everything it uses is either free (spectrum) or already paid for (backhaul). Starlink’s version is more valuable per node because it provides coverage that doesn’t otherwise exist. But it is much more expensive to run and more heavily regulated.
At a high level, most observers would tend to agree with Comcast executives that the Xfinity mobile service gains advantages by shifting much mobile data traffic to the owned and operated Comcast fixed network. Even so, nobody outside Comcast really knows what the financial benefits and profit margins might be.
The larger questions for any SpaceXSI network coverage model based on using existing Starlink receive sites surround the business model: how much market share SpaceXSI might realistically expect to acquire; what its profit margin could be; what its capex and operating costs would be, whether its selection of phones would be commercially competitive.
But it is basically impossible to clearly quantify the advantages Comcast might possess in using its own fixed network for mobile data access, compared to either a full leased-access model or the alternative of creating a facilities-based mobile radio network.
It might be fair to assume Comcast mobile phone customers use Wi-Fi offload for as much as 90 percent of data traffic, on its owned network and other third-party Wi-Fi sites.
The central advantage is that Comcast can use a network it already operates to serve a substantial fraction of its mobile traffic. Verizon, AT&T and T-Mobile must generally provide mobile coverage through their cellular networks, including spectrum, radio equipment, towers, transport and core-network infrastructure.
What that implies for the business model is somewhat opaque. If Verizon's wholesale charges vary with traffic, shifting Xfinity customer data traffic onto Wi-Fi instead of cellular can avoid charges on that traffic. However, MVNO contracts can include per-line, minimum-volume and other charges, so the savings will not necessarily be proportional to the traffic shifted.
And, of course, Comcast can add mobile customers without having to construct a corresponding nationwide cellular radio network.
But it might be fair to assume that Comcast saves up to 80 percent on its data capacity wholesale consumption because it is able to offload much cell phone data traffic.
Of course, there are many other costs for operating the mobile phone business, so we cannot assume the overall savings are that high, compared to a standard MVNO approach.
And even looking only at wholesale charges, it is not clear what the savings magnitude might be. A carrier may charge a flat wholesale fee per subscriber, or sell pooled data, rather than bill every voice minute and gigabyte based on usage or consumption.
And the value of wholesale services covers quite some range of potential value that might have some bearing on how the wholesale access is priced, if a separation between “voice features” and “data access” features are evaluated. Hypothetically, that can take any number of forms.
Some features might be heavily attributed to “voice and messaging” services. Other features might be allocated more directly to data network features. In other cases a blended approach is feasible. Nobody outside Comcast or Verizon knows what the specific pattern might be.
The point is that data access offload might mostly affect the “wholesale data access” features, but not the “voice and messaging” features.
Verizon's wholesale wireless service illustrates the nature of these arrangements. A paper on Cost allocation of WCDMA and wholesale pricing for mVoIP and data services provides a formal framework for distinguishing service-specific costs from shared network costs.
If Comcast pays Verizon a largely fixed per-line wholesale fee, Wi-Fi offload may reduce Verizon's underlying resource consumption without reducing Comcast's bill proportionally. And Comcast’s operating savings might not be as high as some imagine.
Really “we don’t know” how much value Comcast derives from data access offload.
Still, assume SpaceXSI wants to avoid MVBO economics, and initially wants to solve an indoor coverage problem for current home broadband customers who might be enticed to buy a SpaceXSI mobile service.
Every Starlink home terminal comes with a Wi-Fi router, so a Starlink Mobile plan with Wi-Fi calling and data offload would need little new technology aside from compatible phones and radio transmitters working with SpaceXSI’s spectrum assets.
The real upside would be a licensed-band cellular radio in or beside the dish, so that a customer’s home becomes a femtocell or small cell.
Starlink does have a global advantage, though, as its network will eventually cover most of the earth’s surface. On the other hand, getting a comparable low-band spectrum globally will be a complicated and cumbersome prospect. It is a non-trivial endeavor!
No comments:
Post a Comment