What Qualifies as "All Fiber" for an Access Network?

Commercial disputes between competitors and partners are not unusual. But one dispute over marketing claims in the access business is unusually stretched. U.S. cable TV operator Cablevision has sued to prevent Verizon from claiming its FiOS service is “all fiber.”

The reason for the lawsuit is that Verizon uses coaxial cable for in-house signal distribution.

Cablevision has for many decades been viewed as a cable TV firm that goes its own way. When virtually all the rest of the industry was pushing for use of the 1310 nanometer optical window for optical fiber systems, Cablevision pushed for 1550 nm.

Earlier, when the rst of the industry saw satellite as a direct competitor, Cablevision was interested in satellite distribution. When it recently got into the “mobile” business, it did so using a “Wi-Fi only” approach all other service providers have eschewed.

So being different is not new for Cablevision.

Some observers might say the Cablevision lawsuit is disingenuous in a technology sense, however much sense it might make as a tactic in a marketing war. No other company has literally argued that FiOS cannot properly be called an “all optical” access system.

As any knowledgeable engineer will attest, whatever the access medium (airwaves, optical fiber or copper), the actual local connection always will use either radio (Wi-Fi) or some copper medium.

The reason is simply that no consumer device actually can accept a native optical connection.

TVs, radios, PCs, game players, cell phones, tablets, home security systems or any other connected device are unable to connect directly to an optical interface.

So it actually is disingenuous to conflate the access network with the in-home network. Not only are they separate logical, functional and legal entities, but it is literally impossible to connect any optical  facility directly to any end user device.

So “no network” could ever, in such a sense, ever be called “all optical.”

In a strict sense, “access networks” of all types are about the portion of any network that connects any single location or subscriber to the core network, typically between any location or customer and a central office, headend or cell tower.

The network beyond the cell tower, headend or central office is the “transport” network.

So the character of an access network properly concerns only that portion of the network between the customer location and the node (central office, mobile tower or headend) that aggregates traffic before it is send to the transport network.

In-home networks are traditionally and properly considered the “in-building” or local distribution network, never the access network. Ownership is one key distinction. The service supplier owns the assets all the way up the customer termination interface.

The customer owns the internal distribution network. It is the difference between the public access network and the private local area network.

Cablevision’s lawsuit, as they say, is “without merit.” Access networks are one thing; transport and in-building networks quite another.

Deutsche Telekom Reiterates: It is a Seller of T-Mobile US

About the only long-term uncertainty surrounding T-Mobile US is which other company eventually will move to acquire it. If the most fundamental decision a company can make is whether it is a strategic seller or buyer, Deutsche Telekom is a  strategic seller, having indicated years ago its intention to exit the U.S, market.

A future secondary consideration is whether an eventual buyer itself is a strategic buyer or seller. Some would consider Dish Network, a potential T-Mobile US buyer, as itself an eventual strategic seller.

And though, as the adage has it, “at the right price every asset is for sale,” many other potential buyers are strategic acquirers. That would include any number of application firms or Comcast.

Deutsche Telekom says it will consider any partner that can improve profitability at T-Mobile US.

"But it is our duty to go on improving the return on T-Mobile US," he added. "If we find a partner who will help us to do so, we will obviously consider it," said Deutsche Telekom Chief Executive Tim Hoettges.  

Connected Car Signaling, Not Bearer Traffic, Will be an Issue

Mobile network planners necessarily must grapple with problems fixed network architects traditionally have not faced, namely the mobility of users across the network. In other words, even if radio locations are fixed, usage is more dynamic than on a fixed network.

For that reason, signaling overhead is a bigger part of mobile network planning than of fixed network design and management.

A recent Qualcomm study of  smartphone application traffic in background mode illustrates one element of the problem. That study found some news applications generate four to six requests per hour, compared to social networking applications which generate one to four per hour, and location based applications which generate two to three per hour.

Bandwidth isn’t so much the issue as the signaling operations. A specific weather application might connect for less than three seconds, uploading less than two kilobytes of data. So it isn’t the bearer traffic; the impact comes from use of radio resources to create and tear down a session.

Social networking applications connected for two to four seconds and uploaded one to three kilobytes of data.

If nothing else is done (and obviously, something will be done), connected cars at rush hour could double data traffic double in certain cells, researchers at Machina Research say. And the issue there might be similar: intensive signaling, more than actual bandwidth consumption.

The study, commissioned by analytics company TEOCO, predicts a 97 percent increase in data traffic over the next decade, caused primarily by connected cars.

Some of you would not be surprised by a prediction of 100 percent increase in traffic, on any network, at any site, over a decade.

What the study intends to highlight is the specific new demand created solely by the connected cars.

By 2024, Machina Research predicts “machine-to-machine” mobile network connections increase from 250 million in 2014 to more than 2.3 billion worldwide.

Obviously, all those new devices, an order of magnitude more, would produce, all other things being equal, an order of magnitude additional demand. But the usage profile might be notable for its difference from human-used smartphones, tablets and PCs.

M2M applications and services will account for just four percent of overall network traffic in 2024, Machina Research predicts.

So bandwidth consumption is not the problem so much as network resource management, which always is more complicated than comparable fixed network planning, since the nodes are stationary.

The study suggests a number of ways the management problems can be addressed, including the integration of capacity supplied by unlicensed networks and offload.

History suggests that awareness of the coming problem will lead to actions that prevent the problem from developing.

Internet of Things Probably is a "Must Have," Not a "NIce to Have" Category of Apps

There’s a very good reason companies such as Huawei are so focused on the Internet of Things, and why one major assumption about fifth generation mobile networks is that the next generation of mobile networks will be the first to intentionally feature performance helpful for some IoT applications.

Simply put, we soon will reach a point where nearly every human being who wants to use mobile networks already will have bought service, supporting multiple devices as part of the service.

So if revenue growth cannot be driven by services for people, IOT is really important, as it opens the door to selling service to connected machines and sensors.

In that sense, IoT is not a “nice to have,” but quite possibly a “must have” new class of services.

There's No Point in Regulating A Dying Business

Not that the decision will be popular in some quarters, but the New Jersey Board of Public Utilities has voted to  remove price regulation for basic home telephone service, businesses with single-line service, charges for residential connection and directory assistance.

Sowmyanarayan Sampath, Verizon Communications SVP of transformation says Verizon’s copper-based revenue is declining eight percent to 10 percent a year.

At that rate, the revenue stream disappears in a decade.

If you want to know why tier-one telcos want to decommission the old “public switched telephone network,” that is why.

Internet Access Drives At Least Half of All U.S. Communications Revenue

Just what percentage Internet access now represents, as a percentage of total U.S communications service revenues, is a bit difficult to estimate. Internet access could represent a low of 33 percent of total industry revenue, or as much as 66 percent, depending on one’s assumptions.

U.S. consumers spent $100 billion on Internet access in 2013, according to the Government Accountability Office. That figure might include both fixed and mobile access, plus Wi-Fi and other spending. Other estimates suggest mobile data alone hit $90 billion in 2013, however.

In June 2013, there were 70 million fixed and 93 million mobile broadband connections with download speeds at or above 3 megabits per second (Mbps) and upload speeds at or above 768 kbps, according to the Federal Communications Commission.

Assume an average fixed access price of $40 a month, or $480 annual revenue, and a mobile average cost of $30 a month, for $360 annual revenue.

That would imply $33.5 billion in mobile revenue and $33.6 billion in fixed Internet access revenue, amounting to $67 billion in total revenue. Analysts who reach higher figures might use higher assumed recurring service rates.

But some have estimated there were 180 million Internet access accounts in service in 2013, more than the 163 million cited by the U.S. FCC. Assume 57 percent of the accounts were mobile, while 43 percent were fixed. That implies 102.6 million mobile accounts and 77.4 million fixed accounts.

Using the $480 annual fixed revenue per account, and $30 annual mobile account averages, in 2013 mobile Internet access might have generated $37 billion, while fixed access might have created $86 billion, for a total of about $123 billion.

So we might reasonably conclude that Internet access revenues, including mobile and fixed accounts was about $100 billion.

If 2013 U.S. communications service revenue was about $300 billion, then Internet access accounted for 33 percent of total revenue.

Some estimates peg industry revenue at higher levels, but the percentage of fixed and mobile revenue probably doesn’t vary much.  

Mobile revenue in 2013 was nearly $200 billion. Analyst Chetan Sharma estimates 2013 mobile data revenue at $90 billion, a figure that undoubtedly includes messaging revenue, in addition to Internet access.

Still, data services would have represented about 45 percent of mobile segment revenue.

Likewise, hIgh speed access accounted for half of fixed network revenue in 2013. As a rough rule of thumb, it would be reasonable to estimate that, by 2014, about half of all revenue on fixed and mobile networks was generated by Internet access sources.

Another inference one might make is that the greatest value of higher-speed access is supporting multiple users, not better experience for any single user. The most bandwidth-intensive application for the typical user is high-definition TV or other streaming apps, at 5 Mbps to 8 Mbps minimums.

Add in business segment revenues--always heavily weighted to capacity sales--and data services undoubtedly drive much more than half of all service provider revenue.

Big Changes in Strategic Thinking

There is a good reason T-Mobile US CEO John Legere has been talking up both the value of deals with cable TV operators or Dish Network. It is the same reason Liberty Global Chairman John Malone believes a merger with Vodafone Group would be a “great fit.”

The new thinking by most service providers is that long term success requires ownership of both fixed and mobile assets to create the ability to offer big service bundles including voice, messaging, mobility, video and Internet access.

Vodafone, the world’s second-largest mobile-phone company, has in the past largely been a mobile service provider. Liberty Global has been a fixed network operator. But Liberty now says it wants to buy mobile networks, and already has done so in Belgium.

Some of that same thinking might underlie Altice’s purchase of U.S. cable TV company Suddenlink Communications. Altice is the second-biggest mobile service provider in France, and also is the second-biggest cable TV operator in France.

The new thinking is leading to novel behavior. For the first time ever, a significant European telecom company is getting into the U.S. cable TV business.  

And Liberty Global, which historically had eschewed ownership of mobile assets, now has reversed course.