U.K. Mobile Ops Get Permission to Refarm 3G Spectrum for 4G

Though it might not have immediate implications, U.K. mobile service providers will be able to “refarm” their 2G and 3G spectrum for Long Term Evolution 4G, without applying for specific permission to do so, under new rules promulgated by regulator Ofcom.

Previously, only EE (and 3, which purchased some spectrum from EE, but has not yet been able to deploy that spectrum) had been given permission to conduct such redeployment operations, though all the major operators won new spectrum in the LTE auctions as well.

Under an Ofcom rule, EE was allowed to repurpose its 1.8GHz GSM frequencies in 2012, allowing EE to launch LTE before its rivals could acquire spectrum and build new networks.

The current 900 MHz and 1800 MHz licenses held by Vodafone and Telefónica

permit the use of 2G and 3G technologies.

The 1800 MHz licences held by EE and 3 now allow use of 4G technologies as well as 2G and 3G.

The new move by Ofcom moves away from the specific licensing rules that specified not only the purposes for which spectrum could be used but also which technologies (air interfaces) could be employed as well.

The new rules are more flexible, and allow carriers to make business choices about how to deploy networks, rather than being restricted to specific network options.

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.