What Mobile Niche is Left for New LightSquared to Conquer?

Charlie Ergen appears to be right when he quips about bandwidth being valuable because they aren't making any more of it. Ergen personally was paid about $1.5 billion to relinquish his claims on LightSquared, because of debt he owned in the company.

Now LightSquared asked the FCC to transfer spectrum licenses to the entity to be known as New LightSquared, allowing a new company to try and build a successful business.

But New LightSquared still needs to figure out what lucrative new niche remains unfilled, and try and fill that spot in the ecosystem before a combination of mobile operators, satellite operators, cable TV companies and Wi-Fi-based service providers essentially fill all those unmet needs.

The original business plan was to "re-purpose" satellite frequencies to support terrestrial mobile operations. That plan came undone when claims of signal interference with GPS devices was raised, successfully, an an objection.

It remains unclear whether the new company will try some other form of terrestrial service, without using the GPS-infringing frequencies, or revert back to its old business plans for mobile satellite service.

Ivan Seidenberg, a former chairman of Verizon Communications Inc., and Reed Hundt, a former Federal Communications Commission chairman, have joined the board of New LightSquared, so we might find out whether it is possible to create a successful business out of LightSquared spectrum.

Is there yet a viable niche for a mobile communications service, at a time when terrestrial mobile networks so dominate most communications and new services substantially or completely dependent on Wi-Fi are operating.

There are specialized Long Term Evolution and other networks that specialize in supporting trucking, oil industry and other vertical niches, for example, though some think New LightSquared will go with some sort of niche, vertical market strategy.

Will Mobile be a Full Substitute for Fixed Internet Access in 10 Years?

As crazy as it might seem today, standard mobile networks might in a decade be full substitutes for fixed network access, in terms of delivered commercial bandwidth. If the assumption is that fixed networks might deliver bandwidth up to 1 Gbps or 2 Gbps, then it might be quite instructive to note that suppliers are working to commercialize small cell access systems delivering bandwidth between 2 Gbps and 10 Gbps.

The point is that If you have access to enough spectrum, at high-enough frequencies, plus sophisticated antenna technology, and only need to transmit at close distances, extraordinary bandwidth--fully matching fixed network bandwidth--is possible.

Nokia Networks has shown the ability to transmit mobile signals at 10Gbps peak rates over the air at 73 GHz using Nokia mmWave gear at the Brooklyn 5G Summit, jointly organized by Nokia Networks and NYU.  

NTT Docomo and Nokia Networks earlier had shown the ability to transmit at 2 Gbps rates in the 70 GHZ band, using Nokia Networks mmWave technology, in an indoor setting.

“Utilizing higher frequency bands including millimeter wave  is key to deliver extremely high performance in 5G,” said Seizo Onoe, NTT DOCOMO CTO. “We believe that high-frequency spectrum shall be used not just for small cells as a means to complement the existing network, but also for building solid area coverage through coordination with existing lower frequency bands.”

IoT, Big Data, Cloud Computing are One Trend Pointing to Next Era of Computing

It increasingly is going to be hard to separate the Internet of Things from cloud computing from big data, since the value of all those sensors and apps will be the ability to pluck trends and meaning from a bewildering amount of raw sensor data.

Think about Waze, the social driving app that crowd sources the observations of drivers about traffic, for example.

The sensors now are smartphones, but the value is the insight about traffic slowdowns and jams. That requires use of sensors (smartphones as the “things,” in this case), the global positioning satellite system, the Waze and Google Maps apps, the cloud computing infrastructure and the ability to process tons of data in real time.

If you wanted to start looking for leaders in the next era of computing, you would do much worse than to look for firms that will dominate the horizontal roles in IoT-centric computing.

IoT Requires Lower Latency, Probably Fog Computing

The Internet of Things is going to add so many connected devices, appliances and sensors that the architecture of computing to support IoT operations will necessarily have to rely on more edge processing than has been useful up to this point.

Both latency issues and the sheer volume of data generated by all those devices will require more distributed computing closer to the edge, instead of the relatively more centralized computing that has been typical of cloud computing.

At least as some envision it, fog computing would pre-process raw data using an edge server, before forwarding a summarized set of data to cloud data centers.

So aside from additional bandwidth, latency considerations will become more important as IoT services, devices and applications proliferate.

In a real sense, the objective for fog computing is to produce latency more like that of a LAN than traditionally has been associated with cloud computing.

Is AT&T Wrong about DirecTV?

It is not hard to find critics of the business strategy AT&T has in buying DirecTV. Subscription TV is a mature business, in decline, even if DirecTV is a well-run company throwing off lots of cash flow.

Critics say the other satellite provider, Dish Network, also sees the danger inherent for a satellite video provider, and is itself potentially aiming to become a mobile service provider, in some way. Dish Network CEO Charlie Ergen has said that, if  he were entering the subscription video entertainment business today, he might well not use satellite for delivery.

Instead, he’d do something like Sling TV, an over the top, Internet-delivered service.

AT&T has argued it gains a nationwide video footprint, adds scale efficiencies in its purchasing of content and creates a national triple play or quadruple play capability (video, Internet access, mobile voice and messaging).

Some of us would say those are helpful, but not decisive. Instead, DirecTV is an important tactical move. First of all, AT&T alway has grown primarily by acquisition.

So DirecTV grows free cash flow and revenue.

But what if the gains are not necessarily permanent? No problem. Nothing is permanent, for any service provider. In the meantime, AT&T gains needed free cash flow, while it is in the process of building the new lines of business to replace declining voice, messaging and eventually video revenues.

Transitions matter, especially for large firms such as AT&T that have been through large transitions before, such as the shift from long distance voice to mobility as the strategic growth driver.

But those transitions can take a decade to play out fully. During the transition, cash flow matters.

Gigabit Speeds Don't Improve Experience, Content Delivery Networks and Caching Does

According to a study by Mike Belshe, “if users double their bandwidth without reducing their Round Trip Time (RTT), the effect on Web browsing will be a minimal improvement (approximately five percent).”

“However, decreasing RTT, regardless of current bandwidth always helps make web browsing faster,” Belshe argues.

Faster local Internet access connections do help, up to a point. After about 10 Mbps, no single user is likely to see much improvement, if at all, in page load times, for example. The U.S. Federal Communications Commission and U.K. Ofcom agree: beyond 10 Mbps per user, experience is not measurably improved--if at all--by faster Internet access speeds.

Bandwidth (in Mb/s)	Page Load Time via HTTP
1	3106
2	1950
3	1632
4	1496
5	1443
6	1406
7	1388
8	1379
9	1368
10	1360

Although there is a considerable jump in the early bandwidth speed increases, the returns as the pipe gets bigger continue to diminish until they are almost negligible.

The important observation is that the measure of a digital experience isn’t just--or primarily--about the speed of download.

Latency, or round trip delay, is more fundamental, beyond a minimum amount of access speed.

That is one reason so many large application providers use content delivery networks that place content closer to end user locations, in principle improving round trip delay.

Shockingly, and all marketing claims notwithstanding, end user experience of Internet apps is primarily a matter of latency, not access bandwidth. That is because "non-network" sources of delay generally represent an order of magnitude more impairment than local access speed, or even all network delay, taken together.

Connecticut Cities and Towns Ask for Gigabit Speeds; Are Likely to Get Most of What They Want

A gigabit Internet access network serving “targeted commercial corridors as well as in residential areas with demonstrated demand is the goal sought by a consortium of 46 Connecticut cities and towns.

In the end, the municipalities are likely to get what they want, either because incumbents step up, to protect their existing businesses, or because new suppliers, able to operate with lower operating costs, enter the markets.

That doesn't necessarily mean a full potential gigabit at every location. Functionally, the communities will get what they want when anchor institutions and enterprises can buy a full gigabit or even hundreds of megabits per second and consumers in neighborhoods can buy hundreds of megabits per second.

The immediate value of such speeds is most clear for large organizations with lots of users. Individual small businesses or consumers cannot actually gain much.

For incumbents, skinnier profit margins are likely, one way or the other. For at least some would-be attackers, it might be possible to gain entry into the Internet access market.

But a fierce response might be coming. In that instance, the municipalities will succeed in their goal of stimulating investment in faster Internet access. Comcast, which operators in Connecticut, already has said it will upgrade virtually all of its networks to gigabit speeds by the end of 2016.

Whether other major Internet service providers will go that far, or not, is not yet clear. But it would be reasonable to suggest upgrades to hundreds of megabits will be forthcoming, especially where the municipalities really want it: commercial corridors and some residential neighborhoods willing to pay more for higher speeds.

Ignore for the moment the fact that, today, speeds available per user beyond 10 Mbps have negligible to zero additional utility. That is a matter of science. “Gigabit” is about marketing, perceived economic advantage for communities or states and perceived advantages for anchor institutions.

A betting person would guess those demands will be rather swiftly met by firms that face clear threats.