1,000 Times More Mobile Bandwidth Inevitably Requires Core Network Virtualization

A business as complicated as telecommunications necessarily leads to “silos” of knowledge, since nobody can understand “everything.” That is applicable to mobile Internet access as well.

In other words, what we think is required for supplying more bandwidth to end users on 4G and 5G networks requires understanding how core networks must change.

By 2018, 62 percent of Long Term Evolution networks  will support the Network Functions Virtualization (NFV) specifications. Virtualized networks, in other words, are becoming an integral part of mobile access functions.

To vastly increase available bandwidth, many tools are needed, ranging from new spectrum and small cells to Wi-Fi offload, better antenna technology, better radios, spectrum sharing and virtualized networks.

source: 3G 4G Small Cells blog

TRAI Weighs Call Drop Penalties

Most consumers likely assume some of their mobile device calls will be terminated unexpectedly. That is why people have developed an unwritten protocol for dealing with such events: call back.

In India, the designed performance for mobile network dropped calls is two percent, or less, in any given monthly period.

It appears to some observers that this limit is rather often violated. Tests conducted by the Telecommunications Regulatory Authority of India found call drop rates as high as 17 percent, and often in the dour percent to five percent range.

So TRAI is looking at possible new penalties on mobile service providers whose networks routinely violate the quality of service rules.

Most people likely assume the service provider is at fault for excessive or bothersome call drops, and that is true: the network operator controls design of the network. So more investment, one way or the other, is going to happen.

No network ever is designed to handle any conceivable amount of traffic. Instead, networks are built statistically, to handle what we used to call demand “at the peak minute of the peak hour of the peak day.”

Demand in excess of that designed capacity will result in inability to use the network, temporarily.

But apps and devices, and demand from other users at peak hours also can cause call drops.

Still, mobile network dropped calls are mostly the result of network issues, ranging from radio coverage to radio interference between neighboring cells, capacity constraints, antenna issues or spectrum shortages.

Most of those issues are in turn can be remedied by installing more cell sites. The problem with that is the opposition to installation to cell towers, a common problem everywhere.

TRAI argues that since network infrastructure rose by 4.6 percent in 2013 to 2014, while  minutes of usage grew by 6.8 percent, that “investment has not kept pace with the usage.”

“Thus, prima facie, it appears that lack of investment in network infrastructure by the wireless access providers may be one of the main reasons for the problem of call drops,” TRAI argues.

So TRAI is considering new rules that compensate consumers for dropped calls, including credits of airtime or money.

One suggestion is that customers not be charged for calls that disconnect within five seconds, and not for the last increments of calls that drop after a session has been initiated (not charging for the last minute of a call, for consumer on per-minute billing, for example).  

Some "Digital Inclusion" Policies Will Fail

“Digital inclusion” has some elements that service providers and governments can affect. But there are many parts of the “digital inclusion gap” that are the result of rational end user choices (even if we disagree with the choices).

The other notable caveat is that reluctance to buy fixed network high speed access often is a choice made because other more satisfying or relevant choices are seen as available.

As some consumers choose not to buy fixed network voice because they can use mobile, or do not buy linear video services because they can buy Netflix or watch YouTube, so some consumers choose not to buy fixed network high speed access.

That is important because such “choices” are just that, and not evidence of some failure on the part of governments or service providers.

Since those are consumer choices, no amount of effort to stimulate usage--education campaigns, marketing or the like--is going to move consumers to act. They do not wish to buy.

In the United Kingdom, for example, 15 percent of adults did not have household access to the internet in the first quarter of 2015.

About 44 percent off the adults without home broadband did not think they needed it, while 22 percent said they did not want to own a computer.

About 21 percent found the retail cost too high. Another 20 percent of non-adopters said that they were “too old” to use the internet. About  17 percent did not believe that they had the knowledge or skills to use it.

That said, most households--85 percent--do buy fixed network broadband. About 12 percent of homes rather firmly do not wish to buy. Over half of non-users do not think there any advantages to their being online.

source: Ofcom

LInear TV Continues to Slowly Erode

LInear TV subscribers continue to drift slowly away, with the big current problem being potential new subscribers forming new households. In other words, current subscribers slowly are abandoning the service, while significant numbers of potential new customers are choosing not to buy at all.

Some 83 percent of all households nationwide subscribe to some form of linear TV service, according to Leichtman Research Group (LRG).

The percentage of households that subscribe to linear TV services is down from 87 percent in 2010, though up from 81 percent in 2005, LRG says. That suggests adoption has climbed.

Were the number of U.S. households stable, that would be the case. But households have grown by more than 4.5 million units. So the percentage of households buying service has dropped.

The declines come principally from two trends. Current subscribers are dropping service, while new households being formed by younger consumers are refusing to buy the product.

Just about every metric suggests weaker demand from current buyers, and much lower demand from potential new buyers.

Among TV households that do not currently subscribe to a pay-TV service, 17 percent paid for a service in the past year, while 70 percent of non-subscribers last subscribed over three years ago, or never subscribed to a pay-TV service.

Overall, about 2.5 percent of TV households paid to subscribe to a service in the past year, but currently do not, compared to 1.5 percent in 2010, and 2.3 percent in 2005.

In households using a TV, 12 percent of homeowners do not subscribe to a linear subscription TV service, compared to 23 percent of renters.

Some 21 percent  of those who moved in the past year do not currently subscribe to a linear video service, compared to 12 percent in 2010.

Fully 63 percent of non-subscribers buy a subscription video on-demand service.

Some five percent of all households are linear service  non-subscribers, with both an SVOD service and an over-the-air  antenna.

Some four percent of all households are linear TV non-subscribers, but do buy a Netflix style service and do not use an over-the-air antenna.

"Historically, consumers have gone in and out of the pay-TV category, primarily for economic reasons,” said Leichtman. “While the rate of those leaving is actually similar to a decade ago, those who are entering or reentering the market has decreased over time, and the industry is not keeping pace with rental housing growth."

Some Casual Observers Miss the Amount of Stress in Fixed Network Business

Some observers seem unclear about how the fixed network business model has changed over the past few decades.

During the 11-year period between 2002 and 2013, U.S. fixed network provider gross revenue and net revenue both had fallen by more than 50 percent compared to 2002.

Growth of the mobile business replaced those lost revenues, as did growth by acquisition for the largest providers.

Still, the fact remains: U.S. fixed networks have lost half their former revenue, and the ability to generate new revenues from the asset are difficult. In product lifecycle terms, the legacy fixed network voice product that has driven nearly all revenue is past maturity, and declining.

New services such as high speed Internet and video entertainment help, but telcos continue to badly lag cable TV providers in adding new customers.

"Over the past year, cable has accounted for 95 percent of the approximately 3,000,000 broadband additions," said Bruce Leichtman, president and principal analyst for Leichtman Research Group.

Telcos continue to gain market share in linear video, but the market also is shrinking.

The point is that glib analysis based on a “rich, monopolistic carrier” image sometimes interferes with analytical rigor.

The fixed network business model not only is challenged, it might eventually--in some cases--be challenged to the point of death. So far, one is hard pressed to note an instance of outright failure. But many firms, including some incumbents have had to declare bankruptcy, and some already have been reduced to being wholesale infrastructure providers, while other retailers reap the growth.

So some of us would say it is no surprise that firms such as Verizon Communications and AT&T are divesting rural fixed network assets, where it is possible to do so. Both firms might be willing shed even more assets, but the issue is buyer ability to finance such transactions.

The biggest former independent rural telcos--CenturyLink, Windstream and Frontier Communications--are themselves focusing on business customers for growth, and all three already have taken on huge debt to buy assets.

In the most-recent deal,  Frontier Communications is buying  Verizon’s local wireline operations in the three states.

These operations serve 3.7 million voice customers, 1.2 million video customers and 2.2 million broadband connections. Half of the network runs on high-quality fiber-to-the-home (FTTH) technology.

However, the company is yet to get an approval from the Texas Public Utilities Commission and the Public Utilities Commission of California.  The deal is likely to be closed in the first half of 2016.

The bottom line is that the fixed network business is challenged. Asset dispositions, sharp revenue declines and loss of market share all show that.

Add to that growing pressure on the high speed access (new lower cost competitors) and linear video fronts (shrinking market), and one would be on firm ground in suggesting that the fixed network business needs help, not hindrance.

To the extent that revenue has grown, revenue has shifted to mobile services and cable TV operators.

U.K. Small Business Internet Access Speed Requirement Will be 8.1 Mbps in 2015

There is a reason many tier one service providers consider the “small business” customer segment to be indistinguishable from the “consumer” segment: a huge percentage of small business accounts are, in fact, virtually indistinguishable from consumer accounts.

The Broadband Stakeholder Group (BSG), the U.K. government’s leading advisory group on broadband, recently predicted that median downstream demand for small business premises will rise from 5 Mbps  in 2015 to 8.1 Mbps in 2025.

In fact, as often is the case, consumer demand will vastly exceed “business” requirements.

The largest five percent of “small business” sites will see demand grow from 12.9 Mbps to 41.1 Mbps.

In fact, 79 percent of small businesses are single-person or one-employee entities. Only nine percent of firms have between five and 49 employees.

That has direct implications for the amount of bandwidth each buying location requires, as well as for sales and support by Internet service providers. Basically, sales to the 70 percent of small businesses that are sole proprietors has to be done using mass market channels, the same as for consumers.

The other issue is that requirements are not distinct from requirements for selling services to most consumers.

A good percentage of the expected bandwith consumption increase, in a few verticals, is driven by amenity Wi-Fi provided to customers, not internal use by employees.

More than 90 percent of firms have between zero and four employees, putting the 5 Mbps estimate in line with industry rules of thumb of under 1 Mbps per employee.

The largest one percent of 49-employee premises require 189 Mbps or more, for example.

Which industrial sector a company is in is also an important factor in driving bandwidth demands.

The typical business premise in the postal and couriers sector will need around 11 Mbps in 2025, while the typical location in the food and beverage industry will require 57 Mbps.

The majority of food and beverage location demand is driven by customer use of Wi-Fi rather than employees using the connection themselves.

The median upstream demand is 1.3 Mbps today and will grow to 2.7 Mbps.

This contrasts with demand at the largest five percent of firms with upstream demand of 7.2 Mbps in 2015, growing to 36 Mbps by 2025.

Some 67 percent of firms that are sole proprietorships  use fixed broadband, rising to 94 percent of businesses with 20 to 49 employees.

Half of the single employee businesses without fixed access report that they use mobile broadband instead.  

Overall,  65 percent  of small businesses use smartphones.

Verizon's AOL Acquiring Millennial Media

Verizon-owned AOL is acquiring Millennial Media, the mobile advertising platform. The move reinforces Verizon’s commitment to mobile advertising business, and also is among the relatively few Verizon operations that operates outside the United States, as well as within the United States.

SingTel is among other mobile firms with significant stakes in the mobile ad network and advertising services business.

The deal will give AOL a much bigger footprint in mobile advertising, with Millennial’s network covering some 65,000 apps and one billion active users globally in markets like the U.S. but also Singapore, Japan, UK, France and Germany.