Auto Industry to Follow Path of Telecom Industry: Mature Product Life Cycle

It might provide small comfort, but the telecom industry is not the only market facing maturity and therefore declining sales for legacy products.

The National Automobile Dealers Association (NADA) said that U.S. car sales would likely begin to decline in 2017 after threatening new all-time sales records in both 2015 and 2016.

A report by the U.S. Public Interest Research Group points out that Millennials are less car-focused than older Americans and previous generations of young people, and their transportation behaviors continue to change in ways that reduce driving.

Between 2001 and 2009, Millennials made four percent more trips on public transportation, walked 16 percent more, and rode their bikes 27 percent more. Driving trips declined by 15 percent.

Because there will be less demand, it eventually will take four younger consumers to replace the auto spending of just one present baby boomer customer, the auto dealers association has predicted.

That contraction might have today’s automakers casting about for new lines of business to pursue, much as telecom service providers have been doing.

Many of us, 30 years ago, would have been hard pressed to envision a world where underlying demand for telecom or automobile products dropped, instead of growing.

Spectrum Trading Might Mean Less Demand for Additional Spectrum

Mobile service providers typically have several ways to solve any particular business problem. Consider spectrum or capacity resources. They can reduce cell diameters, which effectively increases frequency reuse opportunities.

They can use more-effective radios, offload traffic or acquire new spectrum. They also can shape retail prices to encourage more-efficient usage on the part of consumers, or shift to newer and more bandwidth-efficient networks.

The newest tool is spectrum sharing, in a number of potential forms. At the simplest level, mobile operators can agree, where lawful, to share use of spectrum resources. As always, use of any one of the tools reduces the need to use additional tools, to some extent.

If mobile service providers trade spectrum, they may not have to acquire so much new spectrum, which in turn should lower demand for new spectrum in upcoming spectrum auctions in India, according to credit rating agency Fitch Ratings .

That is, of course, if the firms do not run afoul of government rules about the maximum amount of spectrum any single provider can lease.

Fitch Ratings believes the top three telecom operators--Bharti Airtel, Vodafone and Idea Cellular--will acquire additional spectrum from smaller telcos.

Reliance Communications and Reliance Jio, the latest entrant in the mobile market, appear to have agreed to widely share 800-MHz spectrum in most of India’s markets.

Spectrum trading might also be the triggering event for market exits by smaller firms, as trading rules seem to allow smaller firms to transfer spectrum licenses to other mobile operators.

That might include Tata Telecom, Videocon Telecom and Aircel Limited.

Bharat Sanchar Nigam Limited and Mahanagar Telephone Nigam Limited might be able to raise revenues, as they own rights to 900-MHz spectrum.

On the other hand, rationalizing the spectrum market will be limited in some significant ways.

The rules prevent any mobile operator from use of  more than 25 percent of available spectrum in any one circle (market).

Also, the business model must incorporate new additional taxes on the revenue derived from traded spectrum,  over and above the existing spectrum charges.

Spectrum sellers also will have to pay an additional one percent  fee on the traded spectrum's market value.

The other issue is the necessity of paying “market value” for any traded spectrum acquired at below-market cost prior to 2010.

Reliance Comm, Reliance Jio Spectrum Sharing Illustrates SharingTaxonomy

As expected, Reliance Communications and Reliance Jio Infocomm will announce a finalized deal to share mobile spectrum supporting fourth generation networks (4G) over most of India.

The deal will allow Reliance Jio to provide better coverage, while reducing Reliance Communications debt burdens.

The deal enables Reliance Jio to offer 4G services over the 800 MHz band, representing 10 MHz of 4G spectrum, across 10 circles in Mumbai, UP-East, Orissa, Madhya Pradesh, Bihar, Assam, Northeast, Haryana, Himachal Pradesh and Jammu & Kashmir.

You might say the Reliance Communications deal with Reliance Jio is among the simpler forms of spectrum sharing that now includes Wi-Fi, TV white spaces and eventually other forms of sharing, such as allowing new commercial users access to licenses held by government entities, without clearing the existing users.

Among the other general categories of spectrum sharing--aside from simple business deals--are methods based on geography, time and coordinated sharing.

Geographic sharing is going to develop as a method of allowing commercial users access to spectrum licensed to government entities, in areas where the government does not generally need to use the spectrum.

Another commonly considered type of sharing is temporal sharing. In this case, two or more users would share access to the same band of spectrum in the same geographic area, but at different times.

That will be the case for expected new arrangements in the U.S. market in bands such as 1695 MHz to 1710 MHz and 1755 MHz to 1850 MHz, as well as 3.5 GHz, for example.

Sharing based on time division can be either predictable or random.

Under a predictable temporal sharing regime, one user agrees not to transmit during particular pre-defined times to accommodate the other user’s services.

Unpredictable or random temporal sharing occurs when the secondary user may have to stop using the specific spectrum on short notice or without warning.

Coordinated sharing involves multiple users accessing the same band of spectrum in the same geographic area at the same time. Wi-Fi has been the best example.

The two potential mechanisms for coordination are databases and cognitive radios. TV white spaces is an example of a service based on use of databases to control interference.

Cognitive radio networks or devices automatically detect devices in its vicinity and coordinate usage in response.

Uncoordinated rule-based sharing generally is the way unlicensed spectrum is used.

Intel to Support Ericsson Nokia Narrowband LTE for IoT

Intel Corporation is supporting Ericsson and Nokia development of Narrow-Band Long-Term Evolution (NB-LTE).

The new platform is designed to support Internet of Things (IoT) applications requiring low power consumption extended battery life, low bandwidth consumption and compatibility with fourth generation Long Term Evolution networks, rather than using second generation networks that are being phased out.

Intel is aiming to supply NB-LTE chipsets beginning in 2016 that will enable slim form factors.

Some say the industry has to learn from the experience of LTE when designing fifth generation network standards so there is less need to “retrofit” the network for new specialized applications.

So far, LTE has had to be adapted for voice support, content delivery and now narrowband IoT apps as well.

The new NB-LTE platform also illustrates the choices industry and suppliers must make when big new opportunities--and networks to support them--are in the developing stage, and when there are rival proposed standards.

And rival options there are, including a Huawei Technologies system called Cellular IoT, LoRa and SigFox, for example.

Other special-purpose networks developed in the past to support industrial and utility networks likely will be pitched as well.

The outcome is hard to predict at the moment, but there are precedents in the consumer electronics business for “winner take all” outcomes. In the past there has been some coexistence of a few mobile platforms, although 4G, which began with a couple of flavors, has emerged as the first truly universal mobile standard.

But IoT wireless networks could be less uniform, at least for a while, given the newness of the market and the mix of specialized industrial and commercial applications as well as mass market consumer apps.

There will be more pressure for a “winner take all” single standard for consumer IoT, but more room for some amount of heterogeneous approaches in the enterprise and industrial verticals.

Google Fiber Competes with AT&T, CenturyLink, Comcast, Time Warner Cable, Not Verizon

If you look at where Google Fiber presently is operating, and where it is looking to expand, Google’s major competitors are AT&T, CenturyLink, Comcast and Time Warner Cable. In other words, two of the three largest telcos, and both of the biggest cable TV companies, plus Cox Communications.

Conspicuously missing: Verizon Communications.

source: Google Fiber Blog

Spectrum Policy is About Aligning Supply and Demand

One theme never too far from the surface, when spectrum sharing in any of its forms was the subject, is the nearly-immediate turn to issues of supply and demand. That was very much the case at the Pacific Telecommunications Council Spectrum Futures conference held in Singapore Sept. 10 and 11, 2015.

Speakers almost reflexively mentioned blockages, inefficiencies and barriers to the supply of capacity to users at affordable prices, as well as barriers to unleashing end user demand, no matter what technical issues were being discussed.

The whole point of shared spectrum, said Robert Pepper, Cisco VP, Peter Stanforth, Spectrum Bridge CTO and founder, H Sama Nwana, Dynamic Spectrum Alliance executive director and others, was to wring maximum usefulness out of available spectrum.

And that requires new ways of thinking. Where always in the past interference avoidance was the issue, using new tools we can essentially operate with a more-relaxed approach to interference issues, said Jeffrey Yan, Microsoft technology policy director.

A statement easy to misunderstand, Yan and others pointed out that devices and databases can be used to dynamically adjust network access, as required, to avoid interference.

Regulators, on the other hand, agreed that spectrum sharing, in many forms, is the future, if also pointing out they do not yet have formal enabling legislation in place, for even a few of the potential forms of spectrum sharing, noted Woro Indah Widiastuty, Indonesia Ministry of Communication and Information Technology senior technology adviser.

Chaucer Leung, Hong Kong Office of the Communications Authority assistant director, agreed, while noting cross-border coordination would be fundamentally important, something regulators from Vietnam and Cambodia said was also important in their areas.

In other cases, even when there is intent to release new spectrum, it simply takes too long, said Wan Faizal Wan Hassan, Axiata Group Berhard AVP.

In other cases, inefficiency has been built in because of fragmented spectrum allocations that chew up much potential usable bandwidth in the form of guard bands, for example, something Rajan Mathews, Cellular Operators Association of India executive director, noted.

That is why Spectrum Futures was organized on the principle of “business impact” of policy, technology and practice.

The bottom line is that connectivity to the Internet will generally be spectrum-based across most of the world, and especially so in South Asia and Southeast Asia. Real though the blockages might be, no policy matters can be divorced from end user demand or supplier economics.

Even when discussion formally was centered on licensed or license-exempt approaches, command and control decisions versus flexible allocation, everything came back to aligning the ecosystem so supply can be rapidly increased to meet demand.

And requirements can be stringent, many noting the context of end users who really cannot afford to pay too much to get Internet access. One example, end user ability of pay of about $2 a month.

When Faster Networks are a Problem

Most people would not consider faster networks to be a problem, instead likely seeing them as a solution. In some ways, faster networks actually might be seen as a problem.

That can be the case in markets where expensive investments in infrastructure cannot earn an adequate financial return.

“In developed countries you have landline, satellite, cable TV, government and mobile networks. In India we have one network, the mobile network,” said Rajan Mathews, Cellular Operators Association of India director general.

You might not think fast-arriving fifth generation networks, for example, are an issue. But India’s mobile operators only now are trying to recover investments in 3G and making more outlays for 4G.

In essence, 5G makes those investments less robust, as another upgrade will be required. To make matters worse, Indian mobile operators pay infrastructure prices that are 30 percent above world levels, said Mathews.

One more bit of evidence of the principle Mathews illustrates: Wide Open West, a U.S. provider of triple play services, is boosting Internet access speeds to 300 Mbps, for residential and business customers.

Generally speaking, that is not going to be the main trend in India and other markets across South Asia, Southeast Asia or Africa.

There, improvements will come from mobile and other spectrum-based networks (fixed wireless, satellite, Wi-Fi) and not improvements of the fixed access network.

The point is that the supply of access facilities is vastly more robust in the markets where WOW operates, compared to the situation in India.

Existing residential speed tiers featured 30/5, 60/5 and 110/15 Mbps service. Business speed tiers of 8/1, 30/5, 60/5, 110/15 Mbps also had been available.

The 300 Mbps service is available in Southeast Michigan (Detroit), Columbus, Ohio, and Cleveland, Ohio now.

Service will be made available in Chicago, Evansville, Ind, Pinellas (St. Petersburg), Fla., Auburn, and Huntsville, Ala. on September 15.

100% of Nigeria Users of Facebook Do So on Mobiles

You often hear is said that “mobile is the Internet.” It happens often to be literally true.

Facebook points out that 2.2 million Kenyans now use Facebook every day, and 4.5 million each month. In another example, 7.1 million Nigerians use Facebook daily and 15 million are active every month.

Almost all these people are coming to Facebook on a mobile device. That includes literally 100 percent of Nigerian monthly users and 95 percent of Kenya’s monthly users.

Overall, Facebook’s active user population in Africa has grown 20 percent to 120 million in June 2015 from 100 million in September 2014.

More than 80 percent of these people access Facebook from their mobile phones.

Some observers might still believe some as-yet-undiscovered “killer app” is needed to drive consumer adoption of the Internet. At least, one hears such comments from time to time, in the context of thinking about how to rapidly boost use of the Internet in many developing countries.

Others might counter that the use cases already are clear enough. But there often are cases where people have not yet had a chance to use apps that will drive demand for Internet access, or other cases where some creativity about prices and packaging has not been fully pursued.

Count Facebook among those who do not worry about whether people will find value in Internet apps content, services and capabilities.

The Reason Verizon is Betting on Mobile Video

Sometimes, the numbers just dictate the strategy. So it is with Verizon's new ad-supported mobile video service, Go90. With many consumer products, the most-important customer cohorts are the younger cohorts, as they signal shifts in demand and behavior.

So it is with viewing of video content. The pattern suggests consumption is moving away from PCs and TVs and onto mobile screens. 

As always, execution will matter. But the numbers suggest "mobile," not simply "over the top," is a trend with legs.


source: Wall Street Journal

Facebook Unmanned Aerial Vehicle for Internet Access Will Fly This Year

“It may not be obvious that Facebook has anything to say about spectrum,” said Chris Weasler, Facebook and Internet.org global head of spectrum policy and connectivity, at the Pacific Telecommunications Council’s “Spectrum Futures” conference in Singapore.

But Facebook has a direct interest in the number of humans connected to the Internet. And among current problems is the slowing rate at which new users are coming online.

In 2010, the rate of adoption growth was 14 percent,” said Weasler. In 2014 the rate dropped to less than seven percent.

“People can’t afford it, or just don’t know why it is relevant,” Weasler said. That was, in large part, the thinking behind Internet.org, the organization working in various ways to connect the two thirds of the world that does not have Internet access.

Facebook also operates a “Connectivity Lab” that earlier had developed the Open Compute Project. And many would note that Facebook acquired Ascenta, an aerospace technology company with expertise designing and building high-altitude long-endurance (HALE) aircraft.

The lab now has built, and will test this year a new unmanned aerial vehicle designed to provide Internet access in the gap between fixed networks on one end and satellite on the other. “We think we can provide 10 Gbps of capacity over a 100-kilometer diameter area.

Significantly, Weasler said the UAV was designed to operate with a wholesale business model, such as by providing backhaul to mobile cell towers. At the upcoming World Radiocommunications Conference Facebook and others will be proposing an exploration of several potential frequency bands at which such a service could operate, long term. Those include the 10.95 GHz to 11.2 GHz band, 11.45 GHz to 11.7 GHz, 21.4 GHz to 22 GHz, 24.25 GHz to 28.35 GHz.

Do People Want Quad Play or Just Discounts? And Does it Matter?

U.S. cable TV operators might have different opinions, but John Stratton, Verizon EVP and president of operations, is skeptical about the marketing value of the quad-play bundle, as much as telcos and cable companies in Europe and cable TV operators in the U.S. market seem to believe in it.

To be sure, everyone would agree that consumers often respond to savings obtained when they buy a bundle of services. That is the essence of the “single bill” argument: consumers see value in the price savings, more than a physical single bill for all of the services.

Drawing on its own experience, Verizon finds that consumers do not necessarily see the value of a full bundle of fixed network and mobile services.

"In our experience, beyond a bottom of bill dis count, we did not see a compelling case or the buyer moving in one direction to consolidate those services because they serve very different needs," Stratton said.

"The incentives we saw running across were very elusive so it's not at all clear to us that those combinations made sense," Stratton said. "In terms of the need to have a broad footprint of quad play assets, we don't see that as essential.

Verizon’s experience is not necessarily unusual. U.K. mobile operator 3 still is not completely convinced consumers in Europe want to buy a quadruple play bundle. Other U.K. mobile operators likewise have found that what consumers want are discounts.

Whether that is a desire for a bundle, or simply discounts, is the issue. And if that is the case, Verizon, which sees itself as a “premium” brand, would not be so happy about a marketing practice that is essentially discounting.

To be sure, one has to filter all comments from all executives. No executive ever argues its customers want something it cannot yet easily sell them. But Verizon does own facilities for mobile and triple play services, so that is not the issue.

source: Solon Strategy

The point is that leading mobile and telecom firms continue to disagree about the value of the quad play. On one hand, bundling is a classic “economies of scope” strategy, where providers sell more things to an existing customer base.

What Verizon largely is looking at is that triple play bundling, so far, mostly has been a packaging and discounting technique. Verizon really doesn’t like discounting.  

Shock! Verizon Says it Will Launch Commercial 5G Service by 2017

Now this comes as a bit of a shock: Verizon Wireless, which has been very quiet in public about fifth generation (5G) networks, suddenly has come into the open, and with an aggressive potential timetable.

One Verizon executive says Verizon will begin field trials of 5G technology within the next year, with plans for start of commercial service, in some form, in 2017.

If you recall the introduction of Long Term Evolution (LTE) 4G, you remember that the first emphasis was on mobile data access, not phones, simply because suppliers had not yet produced them in mass quantities, and one initial early adopter segment were users who wanted much-faster access for their personal computers.

Since it is highly possible the full set of 5G standards will not be fully ratified by 2017, Verizon might be in a pre-5G mode, operating a commercial service that will appeal most to some user segments whose business cases are insensitive to use of a “pre-standard” but largely compliant deployment scenario.

That apparently sudden commitment to very-early 5G commercial deployment likely was quite deliberate, and not in any way a rushed decision.

Those of you with some knowledge of Verizon history will recall the major bet Verizon made on fiber to the home (FiOS), as well as its aggressive embrace of fourth generation mobile networks.

Though some might argue Verizon has seen greater financial returns from the mobile network modernization than from FiOS, prompting what some argue was a “U.S. lead” in 4G commercialization, rapid adoption of what it believes to be a superior technology platform is very much part of Verizon’s understanding of its position in the U.S. market, and its basic strategy, which is to lead in the area of platforms and platform-based quality.

Roger Gurnani, chief information and technology architect for Verizon, said he  expects "some level of commercial deployment" to begin by 2017”. That's far earlier than the time frame of 2020 that many in the industry have pegged for the initial adoption of 5G technology.

Other mobile providers also have said they will launch commercial service as well.

So Verizon isn't alone in its early embrace of 5G. South Korea hopes its wireless carriers can deploy a trial 5G network in 2018, in time for the Winter Olympics in Pyeongchang.

Japan hopes to have a 5G network running in time for the 2020 Summer Olympics in Tokyo. The Chinese government, meanwhile, has also pushed for the aggressive deployment of 5G technology.

For some of us, the importance of those initiatives is far greater than simply the early deployment of the next generation of mobile networks. After all, the global mobile business launches a new next generation network about once a decade.

If you date LTE commercialization to 2009, then 2019 would be about the time that the next generation network was mass deployed.

You might doubt Verizon can move that fast. It has done so in the past, though. When it said in 2008 it was going to commercialized 4G LTE, Verizon launched service in 2010.

So using its own 4G launch as the start date, 10 years would be 2020. But Verizon might think there are reasons to move faster. Leadership in marketing wars can't be discounted.

But the range of new apps and network-based features expected to happen will be so vastly different that Verizon might want more time to get such apps developed on its platform.

So initial service, on something less than full national deployment for every segment, with a robust set of end user devices and rich set of applications, would be expected on about the time frame planned by Korean, Japanese, Chinese carriers and Verizon.

What is more noteworthy is that 5G appears well on the way to becoming more than a mere radio interface for mobile operators. It seems 5G will represent part of a major shift in the design and operation of core networks, with major new classes of applications, potential new business models and competitive implications for other access networks and providers.

The stunning advances in latency performance and bandwidth, while sure to grab the headlines, obscure those other vast changes.

For service providers, the full suite of changes might represent the start of a new era of programmable networks and services that move far beyond bandwidth on demand.

For users of those networks, the most profound differences might not be experienced directly by people, but by organizations operating many different kinds of sensor networks, or applications and business processes that benefit from real-time telemetry.

Satellite Industry Revenue Will Grow at about One Percent Annnually to 2024

Euroconsult estimates that the number of sites using  satellite backhaul nearly doubled from 2009 to 2014, reaching almost 19,000 sites, and projects that the number of sites will climb to approximately 37,000 sites by 2025.

According to Euroconsult, capacity revenues from cellular backhaul in fast growing economies could reach over $1 billion by 2025, up from around $550 million in 2014, corresponding to a six percent compound annual growth rate over the ten-year period between 2014 and 2025.

According to Euroconsult, the satellite  industry posted a revenue growth rate of 4.3 percent between 2010 to 2013 with 2013 showing clear signs of slowdown as grow was just two percent.

Sales in 2014 were flat at $12.3 billion.

While the market structure of the satellite industry remains concentrated with the top four operators generating 63 percent of industry revenues, it has become increasingly fragmented at the bottom, says Pacome Revillon, Euroconsult CEO.  "Nine new operators have emerged over 2010–2014; within the next four years, ten operators should enter the market by launching their first satellite."

Satellite industry revenues are expected to grow at a CAGR of one percent over the next 10 years, reaching over $12.3 billion by 2024.

Capacity revenues for mobile backhaul will be highest in Asia.

The research firm also projects a 14 percent compound annual growth rate (CAGR) of  traffic carried, reaching 150 Gbps by 2025.

IP Transit Prices Fall 14% Annually

IP transit is a case of  “different quarter; different year; same story.”

According to TeleGeography, median 10 gigabit per second Ethernet (10 GigE) port prices across key global transit markets decreased an average of 14 percent compounded annually between 2012 and 2015, and 22 percent in the past year.

The median 10 GigE port price in London, which serves as a critical international traffic hub for Europe, Africa, and parts of Asia, fell 16 percent compounded annually over the past four years to reach $1.00 per Mbps per month in the second quarter of  2015 and is among the lowest in the world.

Median prices in both Los Angeles and Miami, which serve as traffic hubs for Asia and Latin America respectively, fell 14 percent per year to $1.20 per Mbps per month.

Prices have fallen much less, and transit is more expensive, in regions that still are largely dependent on long-haul links to Europe or the U.S. to gain access to international connectivity.  

To the extent that long haul pricing is based on distance, that pricing disparity is understandable and logical, if not welcome by buyers.

10 GigE IP Transit Prices & Price Declines

Source: TeleGeography

For example, in São Paulo, where most Internet traffic is ultimately exchanged remotely in Miami, the median 10 GigE port price fell only five percent compounded annually between 2012 and 2015 to $16 per Mbps per month.

Service in Sydney, for which a significant amount of Internet traffic is exchanged in Los Angeles, costs $18 per Mbps per month for a 10 GigE port.

As content gets pushed closer to the end users, port prices should fall faster, as less distance will have to be traversed. So IP transit prices will keep falling.

Call Drops a Problem, But Billing and Broadband Seem to be Bigger Issues in India

About 6.5 percent of consumer complaints filed with the National Consumer Helpline in India in July and August of 2015 suggest call drop and network issues are problems for users of India mobile services.

But complaints about slow or “not working” Internet access represented an even bigger source of complaints. And billing issues were commonly reported irritations as well.