Many Spectrrum Sharing Approaches are Coming

PTC’s Spectrum Futures conference, examining the role of spectrum-based services to provide Internet access to the people of South Asia and Southeast Asia, was held in Singapore Sept. 10-11, 2015

Attendees included  mobile service providers, infrastructure providers, long haul service providers, regulators, app providers and in-region academics and trade associations.

They spent two days engaged in active discussions on a range of hot topics ranging from digital inclusion to business models; the role of mobile, satellite and unmanned aerial vehicle networks, long haul and cloud computing roles; new ways of releasing, managing and expanding spectrum.

Though some expected a narrow discussion of spectrum policy, many attendees said they were surprised that the conference took a comprehensive view of all the many changes that will shape our ability to deliver affordable Internet access.

Spectrum Futures (plural) always has been based on the premise that many different spectrum platforms will be part of the set of solutions enabling Internet access.

Many people hear the word “wireless” and think mobile. But the range of spectrum-based Internet access is much broader than that, including fixed wireless, satellite, Wi-Fi and new platforms such as balloons or unmanned aerial vehicles.

That was why Chris Weasler, Facebook global head of spectrum policy, talked about the role of unmanned aerial vehicles in bridging a gap between fixed access and satellite access across the region.

Significantly, Weasler pointed out that Facebook sees unmanned aerial vehicles as providing a wholesale backhaul service for mobile operators, something also noted by several other speakers, including Mariah Shuman, O3b Networks regulatory counsel and Vaibhav Magow, Hughes Network Systems regional sales director, Asia Pacific.

Use of new high throughput satellites was highlighted by Cyril Annarella, Kacific Broadband Satellites executive director. Content delivery networks using satellite was the subject of remarks by Vern Fotheringham, V-Satcast executive chairman.

H Sama Nwana, Dynamic Spectrum Alliance executive director, also noted that mobile networks likewise never would cover 100 percent of potential users. That is why the Dynamic Spectrum Alliance promotes use of TV White Spaces, for example.

Spectrum sharing in many forms, including 4G and 5G mobile networks, was discussed by Alex Orange, Qualcomm director of government affairs, Johan Adler, Ericsson VP and Heikki Kokkinen, Fairspectrum CEO.

Jeffrey Yan, Microsoft director of technology policy, looked at spectrum sharing in the context of TV White Spaces, as did Hemant Mallapur, Saankhya Labs engineering VP and Peter Stanforth, Spectrum Bridge CTO.

Moreover, the local “access” is but part of the changes coming in the Internet ecosystem, which is virtual at the app level, but becoming more virtual at every network level as well.

That is why Anup Changaroth, Ciena director of portfolio marketing, talked about software defined networks, or Bill Barney, Reliance Communications India Enterprise CEO and CEO of Global Cloud Xchange, talked about the role of networks supporting cloud computing.

Damien Spillane, engineering director for Digital Realty echoed many of those same themes, pointing out that modern apps and software are served up at data centers, even when consumed by mobile device users.

Since most computing now is “computing at a distance,” Qian Zhong, TE Subcom managing director, Sean Bergin, APTelecom president and consultants Jualin Rawle and Paul McCann talked about the role of undersea networks in supporting end user Internet access.

Professor Rekha Jain, IIMA-IDEA Telecom Centre of Excellence executive chair, illustrated why Spectrum Futures exists at all: the huge challenges of overcoming the digital inclusion divide in India.

Rajan Mathews, Cellular Operators Association of India executive director, pointed out the huge challenges faced by mobile Internet Service Providers in business model and spectrum access areas.

Likewise, Chaucer Leung, Hong Kong Office of Communications assistant director, talked about different ways of managing scarce spectrum resources, including spectrum sharing.

The role of applications was covered by Woro Indah Widiastuty, Indonesia Ministry of Communication and Information Technology senior advisor, Wan Faisal Wan Hassan,  Axiata Malaysia AVP.

The coming importance of Internet of Things and over-the-top apps and services was highlighted by Robert Pepper, Cisco VP, Haris Kremo, Toyota InfoTechnology Center researcher and Raakesh Menon, Telstra senior segment manager.

Spectrum Futures deliberately chose to emphasize all of the changes--in the whole value chain--that soon will shape the Internet access business across the region. Attendees learned about 5G mobile networks, new access platforms, the key role of shared spectrum and how core networks will change.

One key reason for that approach to spectrum-based access is that, to a growing extent, Internet access and Internet apps and services have become virtualized and software-enabled.

As a concrete example, Internet access no longer can be understood as “fixed” or “mobile” but as a service that increasingly uses any available local access. That is what Wi-Fi offloading is all about, for example.

The conference was opened by Stephen Ho, PTC president, as well as Anthony Rossabi, Telx EVP and Sharon Nakama, PTC CEO. The event was managed throughout by PTC conference coordinator Jacie Matsukawa.

Among the innovations already being planned for Spectrum Futures in 2016 is a major workshop on all the key methods of spectrum sharing that represent the next wave of spectrum licensing globally.

Some North American Service Providers are Under Stress, Says Zacks

The U.S. telecommunications industry now faces intense pricing competition and spectrum crunch, according to analysts at Zacks. Mobile operators no longer can expect to grow by adding lots of new smartphone accounts, for example.

Regulatory barriers also are an issue. Zacks cites Federal Communications Commission net neutrality rules as one additional source of industry headwinds.

But it might be pricing pressures that are most troublesome. “The U.S. telecom market continues to witness intense pricing competition,” Zacks notes, driven principally by T-Mobile US and Sprint, the two weaker carriers among the top-four U.S. suppliers.

On the video services front, the subscription TV industry faces “severe competitive threats from low-cost online video streaming service providers,” Zacks says.

The net neutrality law  announced on Feb 26, 2015 classified high-speed broadband (Internet) as a public utility under Title II of the 1934 Communications Act, instead of the less-regulated approach taken under section 706 of the 1996 Telecom Act.

“Importantly, the latest regulations will be applicable to both mobile and fixed broadband networks,” Zacks analysts said.

The reclassification means the “FCC can now strongly regulate the ISPs,” said Zacks.  

Some comanies might be under more pressure than others. Rogers Communications, Telus, Telefonica, Time Warner Cable and BCE are examples. Time Warner Cable and BCE carry a Zacks “strong sell” rating while the others are rated “sell.”

High debt levels and large financial leverage ratios are the concerns. For that reason, many service providers will be focused on improving their balance sheets, financial discipline and free cash-flow generation.

Verizon, AT&T Take Different Stance on 5G: That Comes as No Surprise

Verizon and AT&T do not always take the same approach where it comes to technology strategies.

Verizon, recall, has tended historically to move faster when a next generation network is coming, while AT&T tends not to move so aggressively. That was true for FiOS and Long Term Evolution.

Those fundamental approaches--well illustrated by each firm’s approach to next generation access networks--already is on display in the fifth generation network area.

Verizon is moving faster to test what must be called “pre-5G” in 2016, with some commercial deployment, in some form, by 2017. AT&T takes a more measured approach, as it also did with its fiber to node fixed network and fast follower approach to LTE.

There is more to AT&T’s measured approach than simply not wishing to cannibalize the value of 4G. It simply is not AT&T’s approach to be the “first” to deploy the next generation of any access network.

One can argue that Verizon’s move to fiber to home networks has not clearly paid off as expected, although most might agree that Verizon’s early move into 4G LTE was far more successful.

The point is that the differences between Verizon and AT&T where it comes to embracing the next generation of access networks is deliberate, and linked to each firm’s core strategy.

Verizon’s marketing is that it virtually always tries to operate the “best” network. So Verizon typically is driven to build and operate the “best” network, with retail prices generally at the higher end of the market.

AT&T nearly always tries to balance performance with capital investment and the business model, balancing quality and value.

"Broadband" Now is Subjective

There is no single global standard for “broadband” or “high speed” access, although such matters once were a matter of global standards. These days, the definitions are subjective.

For analysts at Ovum, “broadband” means a minimum speed of 10 Mbps.

For the U.S. Federal Communications Commission, “broadband” requires a minimum of 25 Mbps. Regulators in each country might propose a different number.

Ovum also argues that, in addition to a download speed of at least 10Mbps, broadband  requires a “stable and reliable network that delivers content with a wait time of no more than three seconds.”

Ovum also sees non-technical attributes as important, including “outstanding customer service that can resolve most customer issues at the first point of contact.”

By adding quality of service mechanisms--including those which are not technology related--Ovum shows the new world we are in.

We no longer can uniformly describe what “broadband” is, as an experience or product.

BSNL Boosts Internet Access to 2 Mbps in India

Bharat Sanchar Nigam Limited (BSNL) is boosting fixed network broadband Internet speed to 2 Mbps, up from 512 Kbps and 1 Mbps, starting October 1, 2015.

The 2 Mbps speed will be available for 1 GB or higher consumption plans and it will be throttled to 512 Kbps after subscribers reach their usage caps.

The telco currently has nearly 10 million broadband subscribers with some 10 percent in rural India.

The upgrade might suggest how expensive it is, and how difficult it is, to provide high speed fixed network service in India.

Estimates made by the Pacific Telecommunications Council’s “Insight” project suggest a typical voice service costs about $3.49 a month, while Internet access might cost as much as $20 a month for a 2-Mbps service.

Fixed network Internet service adoption remains in low single digits.

No Surprise: 69% of Consumers Blame Mobile Operators, Tower Companies for Call Drops

Indian telecom service providers and tower companies are primarily responsible for the deteriorating quality of service, including call drops, an ETTelecom poll finds.

Perhaps the only surprise is that the percentage is “only” 69 percent. Subscribers to any telecommunications or video entertainment subscription will blame the access provider for most problems related to the use of the service, even when the problems actually are caused by end user devices or other causes essentially outside the service provider’s full control, history suggests.

Fully 69 percent of the respondents to an online poll believe mobile service operators and tower companies are responsible for growing instances of call drops and worsening quality of service.

As in the enterprise services business, consumers are going to expect “one throat to choke.”

There is plenty of finger pointing. Governments say mobile operators are not investing enough. The Association of Unified Telecom Service Providers of India and the Cellular Operators Association of India say mobile operators cannot put towers where needed because of opposition from landowners or the public, as well as high right of way charges.

It perhaps is surprising that 19 percent of poll takers believe state governments and local municipalities are accountable for taking restrictive measures that hurt call quality, while 12 percent  blame citizens and resident groups.

In my experience, no survey of consumers taken in the United States has found that high a degree of blame aimed at government.

Some 37 percent of those polled did say that mobile operators need to invest more to fix the problems.

There are close to 550,000 mobile towers in India and industry analysts estimate another 100,000 such sites would be required over the next one to two years to cater to surging data usage, apart from voice services.

Will 5G Reduce Wi-Fi Offloading? Probably Not

There are many ways to quantify the importance of Wi-Fi access. One is the sheer volume of traffic carried over mobile, fixed and Wi-Fi access networks (Wi-Fi is fixed access). It has been clear for years that Wi-Fi importance is growing.

By 2016, more than half of all traffic from mobile-connected devices (almost 14 exabytes) will be offloaded to the fixed network by means of Wi-Fi devices and femtocells each month, according to Cisco.

By 2019, 54 percent of mobile data access will happen using Wi-Fi.

Source: Cisco VNI Mobile, 2015

Some have speculated that Wi-Fi offload will be less relevant after 4G networks or 5G networks are in place. After all, if every device has access to as much as 1 Gbps to 10 Gbps data rates, why offload? Retail bandwidth costs are one compelling reason.

As most users understand, the cost of consuming data on a mobile device is much higher than when using a fixed network.

Retail mobile Internet access costs vary, but might represent retail end user charges of between $7 per gigabyte and $15 per gigabyte.

The per-gigabyte cost of a fixed network connection is more statistical, and depends on how much data a given account consumes in a single billing period.

But fixed network costs in U.S. markets can be as low as a dollar a gigabyte or even less.

In other words, mobile data can cost seven to 15 times as much as a similar amount of fixed network access. Using Wi-Fi, on the other hand, can represent nearly zero cost for a user.

If video entertainment goes "mobile" to any significant degree, video bandwidth is going to be an issue, since no mobile operator likely can sell bandwidth at $1 a gigabyte or less. The obvious solution is to encourage or even require consumption only on Wi-Fi connections.

So far, Wi-Fi offload is higher on 4G networks than on lower-speed networks.

The amount of traffic offloaded from 4G was 44 percent at the end of 2014, and it will be 57 percent by 2019 (Figure 19). The amount of traffic offloaded from 3G will be 49 percent by 2019, and the amount of traffic offloaded from 2G will be 46 percent.

                                      Mobile Data Traffic and Offload Traffic, 2019

Source: Cisco VNI Mobile, 2015

There also are ways to illustrate the importance of the 5 GHz band for Wi-Fi access, such as the explosive growth of 5-GHz access for smartphones, the premier Internet access device globally.

source: Wi-Fi Alliance

The point is that Wi-Fi access now is a fundamental building block for all smartphone business models.

IoT Standards Battle Pits Intel Against Qualcomm; Ericsson Versus Huawei

Standards battles are commonplace in the computing and communications business, given the business advantage firms believe--and sometimes do obtain--from getting their favored proposals adopted as actual standards.

So it is with specific Internet of Things communication protocols, differentiated from either fourth generation (4G) or fifth generation (5G) network standards that emphasize low power consumption, low bandwidth and long range.

On the IoT front, two major camps are contending, pitting Ericsson against Huawei and Intel against Qualcomm.

Ericsson, Nokia, Intel, Alcatel-Lucent, Samsung, ZTE and Cisco, plus Sprint and Verizon, support the narrowband LTE (NB-LTE) proposal.

On the other hand, Huawei, Qualcomm, Vodafone, China Unicom and China Mobile are part of  the group supporting a new IoT-optimized air interface in 3GPP Release 13, to get around the compromises required to repurpose LTE.

And then there are the low power wide area (LPWA) networks, such as Sigfox and Semtech, which some think could be incorporated into the 3GPP framework.

The Huawei Cellular IoT proposal builds on a purpose-built approach, aiming for $10 module cost and 10-year battery life.

Ericsson's Narrowband LTE (NB-LTE) proposal makes far greater use of existing LTE technologies.

Will EC Block Mobile Mergers in U.K. and Italy?

Will the European Commission disrupt planned mobile mergers in the United Kingdom and Italy? 

Some think that is a possibility, in the wake of the EC’s refusal to support a planned merger of Telenor and TeliaSonera in Denmark.

In Italy, Hutchison and VimpelCom have agreed to form a 50-50 joint venture combining their operations (3 Italia and Wind).

In the United Kingdom, there is the proposed acquisition of O2 by Hutchison. France is another market where there is local support for consolidation. But that runs against the possible EC trend of resisting mergers.

The European Commission refused to allow Scandinavian operators Telenor and TeliaSonera to combine their Danish operations, a move that would have reduced the leading number of providers in Denmark from three to two.

In fact, the European commission wants to see formation of a fourth provider in Denmark.

That is a continuing reminder that the most-important numbers in the global mobile industry arguably are “four” and “three,” the reason being the resistance of national regulators in North America and Europe to allow market consolidation from four leading mobile providers to three.

In other cases, regulators want to increase the number of national competitors from three to four.

The European Commission confirmed that “the discussions with the parties thus far were not able to fully address the Commission's competition concerns created by the proposed merger.”

"EU merger control has to make sure that company tie-ups do not lead to reduced innovation, higher prices or reduced choice for consumers and do not restrict competition in the internal market,” said Commissioner Margrethe Vestager, competition policy executive.

Regulations, Fixed Line Decline Drive 9% Fall in South Africa Communications Spending

South Africa’s aggregate spending on communications will fall about nine percent in 2015, according to analysts at Gartner.

“Regulations that imposed decreased rates for interconnection” and accelerating decline of fixed services revenue" are the reasons, said Will Hahn, Gartner principal research analyst.

In 2016, Gartner predicts, communications spending will grow about one percent.

In 2015, spending on data center products, enterprise software, information technology services and the IT category as a whole have fallen. Only spending on devices has grown.

But IT spending in South Africa is forecast to reach $26.6 billion in 2016, an increase of 5.1 percent from 2015, according to Gartner.

In 2016, IT spending in South Africa will return to growth. "Spending on devices will show the highest growth in 2016, up 13 percent from 2015, while spending on communications services will remain the highest overall — reaching $11 billion."

South Africa IT Spending Forecast by Sector (Millions of US Dollars)
	2015 Spending	2015 Growth (%)	2016 Spending	2016 Growth (%)
Devices	5,568	6.7	6,294	13.1
Data Centre Systems	635	-3.2	666	4.9
Enterprise Software	1,869	-1.0	2,042	9.3
IT Services	6,311	-5.0	6,544	3.7
Communications Services	10,949	-9.1	11,075	1.2
Overall IT	25,330	-4.3	26,620	5.1
Source: Gartner (September 2015)

What is Slamming U.S. ISP Capital Investment?

With the caveat that some will dispute the figures, the second quarter of 2015 showed major dips in capital investment by the largest U.S. Internet service providers.

AT&T’s capital expenditure was down 29 percent in the first half of 2015 compared to the first half of 2014, according to Hal Singer, Progressive Policy Institute senior fellow.

Charter Communications capex was down 29 percent as well. Cablevision capex shrank 10 percent while Verizon’s capex dipped four percent.

Skeptics might argue the capital contraction is deliberate: a signal to regulatory officials that taking the profit or growth potential out of the business does have predictable negative effects.

Some have argued the major ISPs were bluffing; that faced with rising threats from competitors, the major ISPs could not afford to take their foot off the accelerator.

There have been very few times when industry capex declined year over year. A dip happened In 2001, after the telecom and Internet bubble burst.

Spending also shrank in 2009, after the Great Recession.

In every other year save 2015, broadband investment has climbed. The 2001 and 2009 contractions, plus the 2015 slowdown, could have the same drivers: expectations of reduced future revenue and reduced growth.  

Singer argues the reclassification of Internet access as a common carrier service is the best explanation for the rare capital reductions.

Others might suggest virtualization and open source are reducing the amount carriers have to invest. Others might suggest mobile network investment is declining (though that obviously does not explain why cable TV capex also has dropped).

Honestly, I would not have been surprised if capex remained flat or dipped only slightly, as my assumption would have been that competitive pressures would not allow the big ISPs to reduce pace.

We will have to watch for what happens in the balance of the year and next year.

source: Hal Singer

source: Hal Singer

Cisco, Apple Optimize Apple Performance on Cisco Networks

Network neutrality, recall, only applies to consumer Internet access. So it is that Apple and Cisco have developed methods “to create a fast lane for iOS business users by optimizing Cisco networks for iOS devices and apps, integrating iPhone with Cisco enterprise environments and providing unique collaboration on iPhone and iPad.

That move is part of Apple’s strategy to increase its presence and value in enterprise computing and communications markets.

As part of the program, Cisco networks and iOS devices will be optimized so that they work together more efficiently and reliably, providing better performance, such as between iPhone and desk phone operations as well as Cisco collaboration tools such as Cisco Spark, Cisco Telepresence and Cisco WebEx.

Telenor, TeliaSonera Call off Denmark Merger

The most-important numbers in the global mobile industry arguably are “four” and “three,” the reason being the resistance of national regulators in North America and Europe to allow market consolidation from four leading mobile providers to three.

The latest example is the refusal of European Commission regulators to allow Scandinavian operators Telenor and TeliaSonera to combine their Danish operations, a move that would have reduced the leading number of providers in Denmark.

In fact, the EC wants to encourage the formation of an additional operator that would increase the number of competitors from three to four.

The European Commission confirmed that “the discussions with the parties thus far were not able to fully address the Commission's competition concerns created by the proposed merger.”

"EU merger control has to make sure that company tie-ups do not lead to reduced innovation, higher prices or reduced choice for consumers and do not restrict competition in the internal market,” said Commissioner Margrethe Vestager, competition policy executive.