5G Will Quite Different from 4G

Will fifth generation networks be a “network of networks” or “heterogeneous network” rather than a single air interface on the model of 3G or 4G. That would be a big shift.

Traditionally, the difference between one generation of mobile networks and the next has been the air interface protocols. Now Ericsson thinks the key differentiator will be the ability to flexibly operate a virtual network that integrates many different air interfaces, protocols, frequencies and network types.

At least in part, Ericsson takes that view because of some differences between past next generation networks and future networks, namely the differences in speed and spectrum.

In the past, new mobile generations are typically assigned new frequency bands and wider spectral bandwidth per frequency channel (1G up to 30 kHz, 2G up to 200 kHz, 3G up to 5 MHz, and 4G up to 40 MHz).

The problem is that physical availability of spectrum usable for longer-range mobile apps is growing limited. And spectrum means bandwidth. 

At least so far, with the 4G standard calling for peak rates of about 1 Gbps, 5G will have a tough time offering “faster speed” as its distinguishing feature.

That means suppliers will be looking at battery life, coverage and throughput flexibility and the ability to match apps and device requirements in an affordable way.

Some new spectrum will be made available. Spectrum in the 900 MHz, 1800 MHz, 2100 MHz and 2600 MHz bands will be used for new LTE networks and HSPA network capacity upgrades.

LTE deployments using 700 MHz and 800 MHz spectrum will be added as well.

Small cell deployments will play a vital role in high-capacity hotspots, and the spectrum for that could come from the 3500 MHz band, where there is as much as 400 MHz being used for fixed broadband wireless access and satellite services, Nokia Siemens Networks has said.

All of that points up the importance of spectrum sharing and other new methods of creating new bandwidth.

Unlicensed bands such as 5 GHz or 60 GHz will offer additional traffic offload options for best-effort traffic of less critical applications without quality requirements.

The result is that up to 1.5 GHz of spectrum can be made available within this decade, Nokia Siemens Networks believes. At least 1 GHz of that will be traditional exclusive spectrum, while new spectrum-sharing techniques can unlock more spectrum for mobile broadband.

So there are lots of good reasons why Ericsson thinks a 5G network will be quite different from earlier mobile network generations.

In addition to phones and PCs, game controllers, TVs and other devices people use, there will be millions of machine-to-machine devices and sensors also supported by the 5G network. And the point is that no single network is best for all apps and devices.

“The long-term outcome of this trend is what we refer to as 5G: the set of seamlessly integrated radio technologies” that collectively, integrated seamlessly, will represent a fifth generation of wireless networks, Ericsson argues in a white paper.

One huge assumption is that there will be a massive increase in the number of devices that must communicate. In the future, the roughly five billion human-centric connected devices are expected to be surpassed between 10-fold and 100-fold by communicating machines including surveillance cameras, smart-city, smart-home and smart-grid devices, and connected sensors.

So there is a massive scale issue: a transition from five billion devices to 50 billion or perhaps even 500 billion connected devices.

A thousand-fold increase in required bandwidth is the other huge assumption. Beyond 2020, wireless communication systems will have to support more than 1,000 times today’s traffic volume, Ericsson also argues.

But bandwidth requirements will vary. It is possible many M2M apps and devices will not require lots of bandwidth, while consumer apps might require hundreds of megabits and some shared-use locations will require gigabits.

Likewise, latency and reliability requirements will vary as well. So it will make sense to match requirements to network segments and capabilities to match use cases to cost and network requirement parameters.

So 5G might be radically different from earlier generations of mobile networks. First of all, should 5G develop as Ericsson foresees, it will be the first network that actually is a network of networks, not a single air interface. The complexity of such an undertaking also suggests 5G will not arrive in fully-formed fashion as soon as typically is the case for mobile networks, which tend to be replaced about every decade.

Orange Expands "Smart Parking" Effort

Orange has teamed up with Streetline, a U.S.-based company that provides smart parking solutions, to develop a set of connected services embedded in the vehicle or dedicated to drivers. 

With 1,300,000 regulated parking places in France, the smart parking market is very promising," said Nathalie Leboucher, Head of the Smart Cities Programme at Orange.

Parks Associates projects that by 2017, 17.6 million consumers will subscribe to embedded connected vehicle services such as General Motors’ OnStar and Chrysler’s UConnect Access.

The international research firm predicts 47 percent of all new vehicles sold in the U.S. will have embedded mobile communications by 2017.

[FR] Orange Business Services and Streetline... by orange_business

"Law of Big Numbers" is a Key Telco Innovation Challenge

Innovation is critical to telco survival, most observers would tend to agree. If key legacy revenues are declining, new revenue sources must be found. Where to look for such new revenues is a key issue, though.

Nor is it easy to find big new revenue sources, in the communications or any other big business, where the law of large numbers is at work. Basically, a firm generating large revenues cannot easily find big new revenue sources that significantly impact total revenue.

After looking at 3,500 new service launches since 2009, Ovum concludes that “many operators miss the big picture, exaggerate the threat from over-the-top (OTT) players, and misunderstand the broader benefits of innovation,” says Emeka Obiodu, Ovum principal analyst.

Some executives might disagree with some of those conclusions. In four years' time, telco text messaging revenue will decline on average by around 40 percent across Europe and the Middle East, according to senior execs surveyed by STL Partners.

Mobile voice isn't that far behind, with a 20 percent decline predicted. That hardly qualifies as “an exaggeration,” one might argue.

Ovum implies that telcos were too selective when choosing partners and overburdened their partners with unrealistic revenue expectations. That is largely a structural problem.

A service provider with $20 billion to $100 billion annual revenues is not helped much by new lines of business that throw off annual revenues less than $500 million to $1 billion. The “unrealistic” revenue expectations largely are driven by the fact that organizations with large revenues cannot “move the revenue needle” with large new revenue streams.

Ovum also emphasizes the importance of prioritizing innovations that exploit the centrality of operators’ networks. Whatever service provider executives might have thought in the past, the advice to look for new services that build on the network and its users seems a generally accepted point of view at the moment.

“No matter how much telcos try to diversify, their primary role will always be as carriers of voice, messaging, and data traffic,” says Obiodu. Doubtless most service provider executives in the telco world would agree. It perhaps is not so clear that cable TV operators or satellite providers necessarily agree so much.

Other studies suggest telcos already have gotten that message. The approach currently pursued by the majority of respondents (64 percent) to an Accenture survey can be defined as renovation, or a more limited, incremental approach based on line extensions.

As one example, AT&T post paid customers are paying a new 61 cent a month “administration fee” that will raise $512 million a year in revenue ($7.32 per year per post paid customer), on a base of roughly 70 million customers.

To be sure, that is what most people would consider a consumer-facing innovation, but does make the point.

The amount of money AT&T makes from that 61-cent charge will be roughly equal, every month, to the amount of gross revenue Verizon Communications fixed network operations makes from all small business customer operations every month.

That is a practical example of the ways large telcos most easily can create new $1 billion annual revenue streams, namely by building off things they already do.

Generating $1 a month in incremental revenue from 70 million customers creates $840 million a year in incremental revenue.

Softbank to Invest $16 Billion at Sprint

Softbank Corp. plans to invest $16 billion in Sprint over the next two years, mostly to support Sprint's Long Term Evolution network, more than doubling the investment Sprint has been making on its own. 

After the two-year surge, spending is expected to stabilize at about $6 billion annually. 

Softbank also believes it can cut $2 billion to $3 billion annually, based on increased purchasing volume for items such as smart phones and base stations.

Whatever else might happen, the SoftBank purchase of Sprint already has vaulted SoftBank into third place globally for mobile revenue.

"No Good Reason for Smart Phone Profits"

In what has to be one of the most astounding statements ever made by the chief executive officer of a company, about his business, Motorola Mobility CEO Dennis Woodside reportedly has said his company intends to drive down prices for Android devices.

That might not be too big a surprise. Perhaps the more astounding statement is that  "there's no good reason anyone should make huge margins selling smartphones," Woodside said. 

To be sure, price disruption is not unusual in the Internet ecosystem. Many firms have tried to disrupt pricing in a market. But that normally is a strategy employed by attackers, not incumbents. 

Of course, the difference in this case is that Motorola Mobility is fully owned by Google, which has different motivations than the owners of virtually all other handset suppliers. 

Smart phone profits have become a bigger issue recently, as margins seem to be under pressure, with more earnings difficulties  expected. 

The problem is similar to that of tablets, where greater competition is leading to commoditization, with falling profit margins. 

Are Handset Subsidies Good for Consumers?

Are handset subsidies “good” or “bad” for consumers who choose to buy service plans featuring bundled devices? A study by the Organization for Economic Cooperation and Development tries to answer the question.

Perhaps not surprisingly, the answers are nuanced.

In some cases, where one or more operators allow for the possibility of purchasing the smart phone device independently from a bundle, there is a higher total cost for consumers over three years.

For those countries where both bundled and “bring your own device” options exist, such as in France or the United States, the report concludes that the bundled option (with discounted smartphone) was, on average, between $10 and $20 a month more expensive than the BYOD option.

“This is not unexpected,”  a new OECD report shows. When service providers bundle or subsidize a device over time, they essentially are loaning the customer money. The difference in cost over three years essentially represents the cost of credit.

Practices that promote transparency, such as the use of handset purchase by unbundled monthly instalments, can have a positive impact on both consumers and the ecosystem that exists around smartphones, the report suggests.

This report also concludes that, in broad terms, service pricing is only slightly affected by the presence of bundled discounts for popular smart phones.

But the report also notes there are other forms of consumer benefit, irrespective of the possibly higher cost of bundled devices, over three years.

Bundled devices are beneficial, and promote smart phone use, by removing high upfront payments that are a deterrent.

Consumer lock-in is not an issue when regulatory authorities enforce maximum periods for contracts after which customers are entitled to have their handsets “unlocked”, do not permit devices to be locked or ensure there are procedures for early termination of service contracts.

The report does not that there is some evidence that when one mobile service provider provides subsidized devices, and others do not, the non-bundling carriers suffer marketplace damange.

In Spain, Telefonica and Vodafone, the two operators with the largest market share, decided to remove handset subsidies in February 2012 (Cinco Dias, 2012).This action was not followed by Orange (Spain) which gained market share from Telefonica and Vodafone during the first half of that year.

Possibly as a result of this experience Vodafone reintroduced what it described as a short term special offer, which included the price of a handset, at the end of July 2012.

TDS Fiberville: One More Way Google Fiber Has Changed U.S. Internet Access

TDS Telecommunications Corp. now is using a “Fiberville” concept to introduce social inducements for potential customers of its new optical fiber access network, apparently inspired by Google Fiber’s pioneering use of the “Fiberhood” concept to identify early adopter populations.

TDS is expanding its fiber access network in Concord, Tenn. and parts of Knoxville, Tenn. The Fiberville concept offers benefits for potential customers who pre-subscribe. The offers and discounts include free whole-home installation, when any neighborhood qualifies for Fiberville status.

If 15 percent of residents in a neighborhood sign up before a deadline, each of the pre-subscribed homes is eligible for a free lifetime upgrade, including either high-definition programming or Internet speed.

TDS has divided these new fiber-served areas into neighborhoods, each of which has the opportunity to become a “Fiberville” by having residents pre-register for TDS TV.

Neighborhoods with high TDS TV pre-registration rates will qualify for Fiberville status and will receive exclusive offers and discounts.

As did Google Fiber, TDS has created a web site that allows potential buyers to track their neighborhood’s progress toward Fiberville status on the new TDSfiber.com web site.

Aside from showing it is possible to use social principles to improve initial takeup of new high-speed access services, Google Fiber more importantly is likely responsible for faster and more extensive deployment of higher-speed Internet access networks by competitors.

Tizen Travails

Mobile service providers are starting to shift more marketing support to mobile operating systems other than Apple iOS or Android, trying to gain a bit more leverage over suppliers of devices using either of those two operating systems. 

Tizen, the Linus-based operating system backed by Samsung and Intel, has been considered one of the new OS alternatives in the mobile handset business, but there are some signs its backers are rethinking the value of a new operating system that has not yet attracted a wide range of application support.

These days, an OS to a great extent can be successful only to the extent it can create a robust developer community, able to supply lots of popular applications. It doesn't appear Tizen has been able to do so. 

So there is new thinking about new interest in Android, especially on Intel's part. And Firefox and Windows Phone are contending as well for what most expect will be the number-three spot in mobile operating system share. 

"Law of Internet Bandwidth" Has Since 1998 Suggested 1 Gbps by 2020

In April 5, 1998, Jakob Nielsen projected that Internet access bandwidth was on a growth path to reach 1 Gbps by 2020, growing about 50 percent a year.

Up to this point, Law of Internet Bandwidth has proven quite accurate.

Nielsen plotted access speed starting with 300 bits per second in 1984, and updated the data through 2010 when Nielsen was using a 31 Mbps cable modem service.

Extrapolating just a bit further, one reaches 1 Gbps by 2020.

EE Launches LTE, Promising 48 Mbps to 60 Mbps Speeds

EE is launching Long Term Evolution fouth generation service in twelve U.K cities on the 4th of July, 2013, at speeds EE says will at double current LTE speeds offered elsewhere in Europe, typically ranging from 24 Mbps to 30 Mbps.

That implies EE 4G network speeds of between 48 Mbps and 60 Mbps, "faster than mobile networks in the United States and Japan, and equal to the best in South Korea," EE says. 

The faster services, made possible because EE has doubled the amount of spectrum available for the 4G network, will initially be available in Birmingham, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Liverpool, London, Manchester and Sheffield.

EE got permission from Ofcom, the U.K. regulator, to use some existing 1,8 GHz spectrum for 4G, before other service providers are able to deploy new 2,6 GHz 4G spectrum won in the recent U.K. spectrum auctions. 

Speeds up to 300 Mbps could be possible after EE adds its new 2.6 GHz spectrum.

EE Launches LTE, Promising 48 Mbps to 60 Mbps Speeds

EE is launching Long Term Evolution fouth generation service in twelve U.K cities on the 4th of July, 2013, at speeds EE says will at double current LTE speeds offered elsewhere in Europe, typically ranging from 24 Mbps to 30 Mbps.

That implies EE 4G network speeds of between 48 Mbps and 60 Mbps, "faster than mobile networks in the United States and Japan, and equal to the best in South Korea," EE says. 

The faster services, made possible because EE has doubled the amount of spectrum available for the 4G network, will initially be available in Birmingham, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Liverpool, London, Manchester and Sheffield.

EE got permission from Ofcom, the U.K. regulator, to use some existing 1,8 GHz spectrum for 4G, before other service providers are able to deploy new 2,6 GHz 4G spectrum won in the recent U.K. spectrum auctions. 

Speeds up to 300 Mbps could be possible after EE adds its new 2.6 GHz spectrum.

Sometimes "Just a Little Bandwidth" is Quite Valuable

Though gigabit networks now have assumed a higher profile on policy and ISP agendas in some markets, the real challenge in many other markets is making "just a little bandwidth" available to billions of people with no Internet access. 

O3b Networks says it has successfully place four new satellites into orbit, part of a fleet of eight satellites to be placed into “medium earth” orbit. That means the satellites will not be “geosynchronous,” or constantly transmitting from a single location above the earth.

And though its marketing emphasizes "fiber" capacity arguments, no satellite fleet can match optical fiber backhaul capacity or access speed.

But that isn't really the point. In many cases, it is the ability to provide what we might call "just a little bandwidth" that is important, especially where people have no Internet access.

The advantage of the MEO approach is latency performance, since the roundtrip distance between earth stations and satellite, and back to earth, is far less than for a geosynchronous satellite. A geosynchronous satellite has 500 millisecond latency. Ob3 says it will have latency of about 150 milliseconds.

When the network is completed, O3b satellites will provide Internet backbone connectivity between 45 degrees north and 45 degrees south latitude, covering roughly 70 per cent of the world's population, especially in the global south.

The current business model calls for sales to distributors rather than end users, so O3b will be a “backhaul” provider.

As with any satellite service, aggregate bandwidth does not indicate what amount of capacity will be available to any single distributor or location. That is partly a matter of buyer desire (how much bandwidth can I afford to buy?) and transponder limits.

As one example, O3b has sold capacity to an ISP in the Democratic Republic of Congo, providing an aggregate 500 Mbps of capacity for the whole nation. What isn’t clear is whether this means 500 Mbps distributed across all potential access points, or 500 Mbps at each of the contracted distribution points.

O3b will provide higher satellite bandwidth than has been available before, and that is a good thing. But the new capability probably will get other people thinking about what else might be possible in the near term and medium term, using satellite and other network platforms.

It is in some real ways as big a challenge to get megabits to places with no access, as it is to get a gigbit to places that only have access to megabits.

Scale Matters

The telecom business no longer is thought of as a natural monopoly, but retains the characteristic of a business where economies of scale matter. Were that not the case, dozens of networks would get funding in the local access business, for example, because the business case would be robust enough to support that level of competition.

In fact, economists and policy analysts at the Phoenix Center for Advanced Legal & Economic Public Policy Studies consistently have argued that the facilities-based access business is so scale intensive that only a few providers in each market can hope to make a business out of local access.

But there now are even more reasons why scale matters in the communications business. In many markets, revenue is flat or declining. Scale means the ability to grow, when organic growth is difficult.

Scale also means the ability to achieve greater economies of operating cost and some advantages in capital cost as well.

Under those conditions, scale is even more important, as it might make the difference between profit and loss, or a bigger profit compared to a smallish level of profits.

But scale also affects a firm’s ability to create or enter new markets, or create new applications. Only a large firm can hope to create an application business with enough users to sustain a good revenue opportunity.

Smallness, in other words, works against the ability to create compelling and profitable applications and services.

Our investment thesis is simple: scale matters," said Tribune CEO Peter Liguori.

Liberty Media Corp. John Malone, likewise says "the whole name of the game in the cable business is scale."

The only issue is how the need for scale will play out in other market segments.

Does Microsoft Make More Money from Android than Google Does?

How does Android help Google? In many ways, it is hard to demonstrate clearly. Google doesn’t charge device makers for using Android, so there is no direct licensing revenue stream.

Ironically, Microsoft gets a royalty on each copy of Android used, and can quantify what it earns from each sale of an Android device.

In fact, Microsoft makes more money, directly, from Android than Google does.

Royalties are the reason. Some estimate Microsoft earns $1 per Android device, from those manufacturers who have decided to pay Microsoft to avoid patent lawsuits. Others peg the costs higher.

If Microsoft earns an average of $8 per Android device, Microsoft would earn $3.4 billion in 2013 from Android device sales, assuming Microsoft gets royalties on half of Android devices sold globally.

By 2017, Microsoft could earn almost $5.9 billion from Android royalties. If Microsoft collected royalties on 75 percent of Android devices sold, by 2017 that could be worth over $8.8 billion.

Device makers don’t have to pay Google to use Android, but the majority are paying Microsoft, which holds patents over multiple technologies used by Android.

Microsoft has licensing deals with almost two dozen Android device makers, including Samsung, HTC, LG, and Amazon, as well as Hon Hai, the parent company of Foxconn and China’s ZTE.

Microsoft has said that 80 percent of Android devices sold in the United States and more than half of Android devices sold worldwide are covered by Microsoft licensing agreements.

But others would argue that Google never has intended to make money directly from the spread of Android.

A more reasonable answer is that Google expects to make money when people buy apps from Google Play, or use Google search or other apps.

But even that argument is true only some of the time. A good case in point is Amazon's version of Android, where Google Play Store is not available, even though Amazon uses a modified (“forked”) version of Android.

So some make the argument that Android’s share will not, in the end, help Google very much.

So why does Google support Android, if it gets no direct benefit? You might say the obvious answer is “advertising,” since Google's primary business is selling advertising.

To the extent that web services are distribution channels for ads, then Android is a distribution channel. Google's primary motivation for incurring the cost of creating and subsidizing Android is to ensure their services always have access to market.

Skeptics might argue that Apple wins, in the end, because Apple’s revenue model aligns application provider and Apple interests, while Android might, or might not, do so.

Some might point to data suggesting Apple users spend more money buying apps, or spend more time using the web and apps.

Flurry data shows that Apple users spend more time interacting with apps than do Android users, for example.

Some would note that Apple's App Store is generating $5.4 million a day in app sales for the top 200 grossing iPhone and iPad apps.

Google Play revenue, on the other hand, has been estimated at $679,000 for the 200 top-grossing apps.

On the other hand, the indirect value of Android for Google’s revenue prospects arguably is large, if hard to calculate directly.

Some argue that Android is important because Android users tend to make more extensive use of Google apps. In part, that is because each of the major operating systems tries to drive usage to ad networks and apps affiliated with the ecosystem.

So Google might be said to rely on the ndroid ecosystem to drive a certain portion of an expected 2016 $12 billion in ad revenue.