Wednesday, November 6, 2013

LTE Capex Shifts to Software

The cost of mobile site hardware has become almost irrelevant to operators deploying Long Term Evolution, argue analysts at Maravedis-Rethink. Not only are base station costs crashing, but investment is shifting to software and operating expense.

Spending on radio hardware equipment by the top 100 LTE operators will only rise by 4.2 percent to $22.4 billion in 2013, according to Maravedis-Rethink.  

By 2018 base station costs will have fallen to just 15 percent of mobile operator network capex, compared to about 33 percent in 2012.

In part, that change will be propelled by the shift to small cells, which are expected to help mobile service providers reduce the cost of delivering data by 75 percent compared to conventional macrocell networks.
That architectural shift will affect capital investment as well. Small cell radio investments will account for $12 billion in spending in 2018, while servers to run cloud-based radio access networks will add $2.63 billion, according to Maravedis-Rethink.

Software defined networking (SDN) will be a growing investment driver as well. By 2018, 62 percent of tier-one Long Term Evolution carriers will be supporting virtualized networks.
Software already represents as much as 70 percent of modern communications network capex, and SDN will further that trend, potentially allowing mobile service providers to reduce costs by running more functions in software, rather than in network elements.

Gigabit Connections Will Be Commonplace by 2020, Really

Predictions always are difficult, under the best of circumstances, because researchers cannot really account for the unexpected, principally unexpected developments that analyst Nassim Taleb refers to as black swan events.

And it now appears all predictions about the typical U.S. Internet access speed, or its pricing, are becoming less reliable as the market becomes more unstable, in what many would consider a very good way.

You might argue Google Fiber, with its symmetrical gigabit service, accelerated the trend. Others might argue that the historic rate of growth of typical Internet access speeds would have suggested gigabit networks would arrive.

The point is that activity leading to higher speeds is happening on a faster scale. Since the Google Fiber launch, many other major ISPs have been committing to, and deploying, higher speed networks. AT&T and CenturyLink are among them, each committing to new gigabit networks in some markets where competition now requires it.

Separately, existing suppliers of gigabit services recently lowered prices from the earlier $300 a month level to match Google Fiber pricing of $70 a month, or come close, at $80 a month. Obviously, Google Fiber now creates the pricing umbrella.

Now the Los Angeles City Council, which has been looking at ways to provide a metro Wi-Fi network providing free service to residents, has decided to explore creation of a new citywide gigabit network.

The Council now apparently will issue a request for proposals for vendors willing to fund and build a fiber to the home reaching every home and business in Los Angeles, with wholesale access requirements as well, to be funded entirely from private sources.

The network would be required to offer free access at rates between 2 Mbps and 5 Mbps, but would be allowed to offer paid service at speeds up to a gigabit per second.

At the same time, new suppliers, seeing new business opportunities in the “heterogeneous networks” trend, are attempting to create new public Wi-Fi networks.

Gowex, a Spanish firm that already provides Wi-Fi networks in more than 80 cities globally, wants to combine public Wi-Fi and private access Wi-Fi services from mobile operators and businesses to create seamless mobile data coverage for consumers in New York, N.Y., and hopes to expand beyond New York later.

Called We-2, the new service will launch in December in New York with an initial network of more than 2000 Wi-Fi hotspots across New York,  with plans to further expand aggressively across the busiest corridors of Manhattan, Queens and The Bronx.

The company also hopes to create We-2 Wi-Fi hotspot networks in more than 300 cities by 2020.

The business model is what makes the initiative different from Fon.

Apparently, We-2 will be a network created and sold to mobile service providers who want Wi-Fi offload capabilities.

The larger point is that most existing predictions about how fast the typical U.S. Internet access connection will be, or what it will cost, are going to be wrong if they do not account for the actual pattern of supply growth we already have seen.

And that pattern suggests growth of two or three orders of magnitude, which would put a typical connection of today (perhaps 15 Mbps) at perhaps a gigabit by 2020 (two orders of magnitude growth in seven years), would simply be in keeping with past trends.

Notably, even large Internet service providers often are unable to accurately forecast how much bandwidth their own networks will require. For example, in a March 2011 presentation AT&T projected that data volumes would grow by eight to 10 times between the end of 2010 and the end of 2015.

That forecast appears to be based on an expectation that volumes would roughly double in 2011 and then increase by a further 65 percent in 2012.

Instead, AT&T in 2012 revised that projection to 40 percent annual growth. Now, 40 percent annual growth is significant. It means bandwidth consumption doubles about every two to three years.  

But annual bandwidth growth of 50 percent a year would be well within historical ranges, on an aggregate basis, in terms of long-haul bandwidth consumption. But policies and end user behavior can change the demand curve.

Some would suggest users learned to shift consumption to Wi-Fi, that lighter users unexpectedly had lighter usage profiles and that end users learned to modify their behavior in ways that reduced overall consumption or demand.

If demand grows at that level (doubling every two to three years), it is obvious that supply also has to grow to match consumption, all other things being equal.

And though it might seem improbable that typical purchased speeds could reach the gigabit level by 2020, that is indeed likely, based strictly on past precedent.

In August 2000, only 4.4 percent of U.S. households had a home broadband connection, while  41.5 percent of households had dial-up access.

A decade later, dial-up subscribers declined to 2.8 percent of households in 2010, and 68.2 percent of households subscribed to broadband service.

In other words, from 2000 to 2012, the typical purchased access connection grew by about two to three orders of magnitude in about a decade.

“Why would a consumer pay for a gigabit connection?” has been a reasonable question, given the costs and expected revenues.
Increasingly, that is the wrong question to ask. The relevant question is “why would a consumer want to buy an Internet access connection?” Speed grows, by about two to three orders of magnitude, every decade.

So “speed” is not the most relevant question. Speed grows. The question is the value of an Internet access connection.

Based on history and demand for access to the Internet, plus the dramatic compression of prices, gigabit connections will be common in 2020.

Tuesday, November 5, 2013

Los Angeles Wants Bidders for a New Fiber to Home Network Serving all Businesses and Homes

The Los Angeles City Council has been looking at ways to provide a metro Wi-Fi network providing free service to residents.

But the Council now apparently will issue a request for proposals for vendors willing to fund and build a fiber to the home reaching every home and business in Los Angeles, with wholesale access requirements as well, to be funded entirely from private sources.


The network would be required to offer free access at rates between 2 Mbps and 5 Mbps, but would be allowed to offer paid service at speeds up to a gigabit per second.

The issue is whether any entities want to take on the challenge of doing so, and overbuilding AT&T, Time Warner, Verizon, Cox, and Charter Communications, all of which offer triple play services in some parts of the city.

According to Steve Reneker, general manager of the Los Angeles Information Technology Agency, the network could cost  $3 billion to $5 billion.

C Spire, the Mobile Company, to Build Fixed Gigabit Networks in Mississippi

C Spire Wireless (formerly Cellular South), the Mississippi-based mobile service provider, now will build gigabit fixed networks for Internet access, video and voice services to several cities and towns in Mississippi.

Internet access will be available for $80 a month, $100 a month for combined Internet and home phone, $140 a month for Internet and digital TV, and $160 a month for the entire package.

Batesville, Clinton, Corinth, Hattiesburg, Horn Lake, McComb, Quitman, Ridgeland and Starkville were selected from 33 cities and towns who submitted applications to be the first to get gigabit access from C Spire.


That C spire Wireless is making a move into fixed access networks for the first time tells you something about the perception of opportunity in the gigabit networks business. 

EE Launches Beta of LTE-Advanced, Supporting 300 Mbps

U.K. mobile service provider EE has activated what it calls “the fastest 4G mobile network in the world” in a portion of London in a beta format, with commercial launch expected in mid-2014.

The network runs the LTE-Advanced air interface, capable of reaching 300 Mbps, initially covering London’s Tech City, and is the first live activation of new LTE spectrum acquired by EE during the recent LTE spectrum auction.

The EE 300 Mbps 4G network will be rolled out across London throughout 2014, but initially will provide Wi-Fi style access, as devices supporting LTE-Advanced will not be available until mid-2014.

Routers and dongles are expected to be first to market, with LTE-A-enabled smart phones following a few months after.

SFR, France's second largest mobile carrier, also is testing LTE-A, and has reported real-world download speeds in the region of 175 Mbps and, like EE, it's using carrier aggregation with the 1800 Mhz and 2.6 Ghz bands.

As part of the beta launch, some firms in Tech City will use CAT6 Huawei routers to support mobile Wi-Fi connections.

LTE-Advanced works by bonding channels. In this case, EE uses 20 MHz of 1800 MHz spectrum and 20 MHz of 2.6 GHz spectrum.

Monday, November 4, 2013

Spanish Firm Building Private Wi-Fi Offload Network in New York City

Another Spanish firm wants to build new networks from Wi-Fi networks, both private and public, and will test the idea in New York, N.Y.

Gowex, which says it already provides Wi-Fi networks in more than 80 cities globally, wants to combine public Wi-Fi and private access Wi-Fi services from mobile operators and businesses to create seamless mobile data coverage for consumers.

Called We-2, the new service will launch in December in New York with an initial network of more than 2000 Wi-Fi hotspots across New York,  with plans to further expand aggressively across the busiest corridors of Manhattan, Queens and The Bronx.

The company also hopes to create We-2 Wi-Fi hotspot networks in more than 300 cities by 2020.

The business model is what makes the initiative different from Fon.

Apparently, We-2 will be a network created and sold to mobile service providers who want Wi-Fi offload capabilities.

“We are giving operators the chance to improve mobile data access for the customers and offload traffic from congested networks,” said Carlos Gomez Vendrell, CEO We-2.

The idea is not new. Cable operators in both the United States and United Kingdom have considered creating wholesale Wi-Fi networks whose customers would be mobile service providers, not end users.

A Business Model for Licensed Wi-Fi Spectrum? Globalstar Thinks There is One

Is there a business model for repurposed satellite spectrum that was purchased by a firm that entered bankruptcy? Globalstar aims to find out, and has asked the Federal Communications Commission for permission to repurpose its mobile satellite spectrum for Wi-Fi.

The twist is that Globalstar wants to create a capability for private Wi-Fi services it could monetize, such as supporting the Amazon “Whispernet” delivery of Kindle content.

Amazon presently uses the AT&T mobile network for such purposes, and Amazon probably rightly assumes it could save money if there were an alternative supplier eager to create such a network for a single enterprise customer.

By using a privately-managed network, Amazon presumably would gain more control over quality of service, for example.

That would seem to be the thinking behind Globalstar’s interest in terrestrial “low-power” service (TLPS), an air interface it could use to support such a private Wi-Fi network.

Precisely what “low power” means is a question, since a terrestrial network would still have to be built.

Globalstar argues that the typically lightly-used or unused adjacent unlicensed spectrum would mean a new TLPS network could be created using existing mobile cell tower sites, far outstripping the actual “low power” coverage area of standard Wi-Fi.

Specifically,  Globalstar wants to use its former satellite spectrum to support “low-power” Internet access services using its licensed spectrum at 2483.5-2495 MHz, as well as adjacent unlicensed spectrum (which can be used for Bluetooth or Wi-Fi) in the 2473-2483.5 MHz band, pursuant to the applicable technical rules for unlicensed operations in that band.

To put it mildly, nobody ever has using licensed spectrum for Wi-Fi services.

Separately, Globalstar has asked for permission to build a Long Term Evolution network in both the S band (2483.5-2495 MHz) and L band (1610-1617.775 MHz) “over the longer term.”

As part of the proposal, Globalstar says it will provide 20,000 free access points to public and non-profit schools, community colleges and hospitals in the United States.

Globalstar also says it will provide mobile satellite services free of charge to customers in federally declared disaster areas following natural or man-made disasters for the duration of the disaster.

Presumably the backhaul network would use Globalstar’s satellite capacity, and the ground stations might be co-located with existing mobile tower networks.

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