Symmetrical 10-Gbps on HFC is Possible, But Only with Big Changes in Business Model

Symmetrical 10 Gbps on a hybrid fiber coax network is possible, researchers at Cisco believe. But what is possibly in technology terms would also require a major shift in business model, essentially doing away with linear video as we now know it.

There are many important assumptions, however. The new full-duplex capability is not backwards compatible with DOCSIS, and much depends on how much former video bandwidth can be repurposed for internet data, as well as how much operators want to spend to extend network bandwidth beyond the now-standard 806-MHz upper limit, to about 1.2 GHz.

The newer frequency plans that would allow more capacity (upstream and upstream) are are not easy to achieve without replacing nearly all active gear in the distribution network. The full 10-Gbps duplex mode literally requires removing all amplifiers (active elements) beyond the optical node.

That is significant. Full 10-Gbps duplex is likely to require a move to a “passive” optical network that removes all RF amplifiers from the network. Though copper plant would still be used to reach customer locations, that copper would be “passive,” with no active elements in the series.

Consumer terminals also would have be changed to handle the new frequency plans. And key decisions about reducing video bandwidth would also have to be made, to free up more bandwidth for internet bandwidth.

There is, in other words, “no free lunch.” To upgrade beyond 1 Gbps to 10 Gbps, video bandwidth would have to be reduced. That implies either an end to the “hundreds of channels” video menu or a way of switching video “on demand,” for each customer. Both those decisions would be highly disruptive to the present business model, and would not be undertaken lightly.

That is analogous to what AT&T has done with its linear video delivery and on-demand access. Essentially, AT&T is offloading linear video to the DirecTV network, freeing up nearly all the remaining bandwidth on the terrestrial network for IP services and bandwidth.

For cable operators to entertain the notion of symmetrical 10-Gbps service, video likewise would essentially have to be removed from the fixed network. For that reason, virtually nobody believes that choice is conceivable for the near future. Only a massive shift of its own customers away from linear video to on-demand video would allow a change that radical, and that is not expected in the near term (next five years).

Also, there is some thinking that linear video might still drive most of the video revenue for most cable operators as far out as a decade, as tweaks in the packaging continue to be made, adding more on-demand features to the linear packages. That “sell-through” model is fundamental for the cable TV business model, and is similar to plans offered by some telcos where the best prices for internet access require purchase of a fixed voice line.

So symmetrical 10-Gbps service on a hybrid fiber coax network seems possible, though not without massive changes (removing all amplifiers, changing consumer gear.

Internet of Things: 16% Revenue Growth to 2020

Global spending on internet of things (IoT) is slated to grow at a 15.6 percent compound annual growth rate (CAGR) between 2015 and 2020, to nearly $1.29 trillion in 2020 from $737 billion in 2016, according to International Data Corporation (IDC),  

Perhaps significantly, while 31 percent of that revenue will come from the sale of devices and hardware; 28 percent from services and 25 percent from software, 17 percent will be generated by connectivity services. In other words, growth in nearly every part of the ecosystem.

In 2016, manufacturers (for operations, asset management, maintenance and field service) will have invested $178 billion, transportation entities (largely for freight monitoring) about $78 billion and utilities (largely for “smart grids”) about $69 billion.

Consumer IoT purchases, the fourth largest market segment in 2016, will become the third largest segment by 2020.

Connected vehicles, smart buildings,insurance, consumer applications such as “smart home,” healthcare and retail all will be leading areas of growth through 2020.

source: IDC

Services a Bigger Part of Video Conference Partner Sales

As you would expect, an October 2016 survey of video conferencing channel partners shows that channel partners believe the fastest-growing part of the business is services, not product sales or installation services.

Recurring services are said to represent half of total revenues. In the past, product sales have been the biggest revenue driver. With the shift of supply to cloud services, that increasing share of services would not at all be surprising.

That shift to services has been the trend in the larger value added reseller and systems integration businesses for some time, even prior to the cloud shift, and a broad trend in most other businesses as well, where services and software have become key parts of product value.  

The survey indicates that about 75 percent of channel partners sell cloud or managed services.

Microsoft Skype for Business is said to be the product with the strongest overall customer interest and was rated much higher than in 2015.  

Integrating video conferencing with persistent collaboration spaces, the newest conferencing and collaboration category in our survey, was rated the lowest of the available survey options.

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source: Wainhouse Research

Cable a Bust in Mobile, Google Coming in, Dish out, Legere Predicts

T-Mobile US CEO John Legere predicts big changes in U.S. mobile market are coming in 2017, although cable TV operator success in the mobile virtual network operator space will fizzle badly. In fact, Legere flatly rejects selling capacity to U.S. cable operators to support such MVNO operations. That might be a safe enough rejection of a big new customer, as the big U.S. cable companies already have said they will use Verizon as their wholesale partner.

Predicting cable failure also is an indirect slap at competitor Verizon, and not a prediction many others would make so boldly. It is true that cable operators have acquired and sold spectrum;  entered major partnerships with Sprint in the past and studied (in one case actually launched) mobile or wireless businesses. So it is true that, historically, cable has not figured a way to be relevant in mobile, though it claims to have such relevance in wireless (cable homespot networks).

Still, Legere does believe one new application provider will make a big effort in the U.S. mobile market sometime in 2017, with Legere’s personal belief being that it will be Google making the move. As T-Mobile US already is a major supplier to Google Fi--Google’s existing Wi-Fi-first mobile service--he might be basing that on requests T-Mobile US has had for additional capacity or wholesale services in 2017.  

Legere also believes Dish Network, with its trove of mobile spectrum, will cease to exist as an independent entity in 2017. That implies a belief that Dish will be acquired, and the most logical candidate, many believe, is Verizon, which needs more spectrum. If that seems fanciful, consider that some are speculating (in other words, dealmakers are trying to stimulate) that Verizon and Comcast could merge. That deal would likely require such huge divestitures of fixed network assets (and to whom) that Verizon would effectively cease to be a fixed network services provider.

Verizon might actually entertain that notion, but antitrust issues would be huge. Comcast already has enough share of the fixed services market that it could not easily pass the historic screens regulators have used to limit the size of any single firm in mobility or fixed services. The easiest way to avoid violating that screen is to divest all Verizon consumer fixed assets. Who the buyer might be is the issue, even if Verizon were to agree to divest.

Likewise, Softbank might hope to make another run at acquiring T-Mobile US. The big hurdler last time was excessive market concentration, using a standard antitrust tool. That noted, telecom service provider markets tend to be highly concentrated over the long run. The issue is how to promote competition under such circumstances.

It remains to be seen whether a minimum of two providers is enough to sustain robust competition over the longer term. Many would argue the evidence tends to suggest long-term robust competition with just two providers is difficult to sustain. Three suppliers seems a minimum.

The U.S. market looks to be unsettled under almost any combination of scenarios. Even if Sprint and T-Mobile US somehow were to gain approval to merge (leaving three roughly equivalent-sized mobile leaders), Comcast, Charter Communications and likely Google would have to be accounted part of the competitive mix.

All things considered, it would appear there is a greater chance of disruptions in the mobile space than in the fixed network space in 2017. And there is just as certainly little chance the U.S. mobile market will be anything but dynamic for the foreseeable future.

Will V2V Survive Contact with 5G and Wi-Fi?

Automakers and mobile service providers have had differing views about how to supply vehicle-to-vehicle communications, but 5G could settle the matter. Car manufacturers, working with the the National Highway Traffic Safety Administration, have been developing V2V communications for about a dozen years.

In fact, V2V proponents have been arguing with Wi-Fi interests about allocation of new unlicensed spectrum in the 5.9-GHz range that is intended to support V2V systems. And mobile carriers have good reason to argue that 5G will be a better choice by the time V2V is supposed to start being widely deployed.

Already, Audi, BMW and Daimler have formed an association with Qualcomm, Huawei, Ericsson, Intel and Nokia to study the potential of 5G networks for vehicle-to-vehicle communications.

In Europe the 5.875 GHz to 5.905 GHz frequency band is set aside for transport safety applications. V2V also is known as VANET (vehicular ad hoc network).

The thing about proposed new network standards is that delay tends to reduce or eliminate relevance, as newer platforms inevitably arise, often the most-powerful new platforms being able to leverage investments already made for some other purpose. So Wi-Fi, created to support in-building local distribution of traffic, now has emerged as a key building block for mobile communications.

Some would argue that V2V now faces too many obstacles to prevail, simultaneously having to fight off the Wi-Fi industry and facing rival platforms offered by the mobile industry, both of which arguably will have deployment economics working in their favor.

High-volume chipsets originally created to support either Wi-Fi or mobility (4G and 5G) can be leveraged to support new vehicular communications, while both Wi-Fi and mobile will have the advantage of in-place networks that have other revenue models. That will make easier the task of creating a vehicle-to-vehicle communications network.

Google's autonomous vehicle research, for example, might suggest that by the time a critical mass of vehicles equipped with the proposed V2V system has had a chance to be created, alternatives will have arisen, especially if those alternatives do not require ubiquity, but can be deployed on a “point” basis, incrementally, as users see value.

Already, some features that V2V might support already are being deployed on vehicles (lane change alerts, automatic braking, automatic parking) that might otherwise be seen as features of a new V2V system.

Given a choice between a proprietary, government-lead system moving slowly and an open, market-pushed alternative that “creeps in” as an “oh by the way” feature of systems with other value, many of us would argue the market-based system wins.

92% to 93% of U.K. Mobile, Internet, Voice Marketing Spend is Wasted

All the effort expended on marketing of mobile, fixed network voice and fixed network internet to small and medium-sized businesses in the United Kingdom might be directed to a potential “switcher” market as small as six percent to seven percent of the entire customer base, in any single year.

In fact, less than 60 percent of all SMBs in the United Kingdom, and between 41 percent and 47 percent of SMB survey respondents have never--never ever--switched from one service provider to another, a survey conducted on behalf of Ofcom found.

Only around 15 percent to 17 percent of respondents reported they had switched service providers in the last two years.

source: Ofcom

That seems an unusually-low amount of churn. Some argue that major mobile operators have annual churn as high as 40 percent.

source: S. Saravanan

Compared to other consumer services, mobile services do seem to have a higher rate of churn, compared to banking or utility services.

source: S. Saravanan

Churn rates in the software as a service business, by way of comparison, also are high, with annual churn rates as high as 58 percent a year in the SMB space.

source: KIssmetrics

Is 5G the "Next Big Thing?"

It is hard to deny the widespread opinion that 5G is the next big thing for a wide number of industries from consumer electronics to telecom; healthcare to transportation. Those hopes are likely to take longer to emerge than many believe. Some are even skeptical that there is any need for 5G, or business models that work. To be sure, there was skepticism about 4G as well

There was, in the case of 3G and 4G, a real element of build it and they will come thinking. In fact, supporters “hoped” that the faster speeds would lead to creation of new applications and revenue streams, even if nobody was sure which apps and revenues sources actually would develop.

In fact, some might argue that cost savings, in the the form of lower costs per bit, was the actual driver of 4G. On the other hand, one might well argue that 3G did succeed in making the mobile web a useful consumer experience, while 4G made consumption of video a useful and widespread consumer reality.

Many would argue the possibility that 5G really will be different, in the sense that it is being purpose built to support internet of things applications, that might not--in fact often do not need--the vast increases in bandwidth 5G will enable. Instead, it is the lower latency that will be the key enabler of some new IoT applications.

Not to be ignored, either, are the other changes in networking that will come with 5G, though logically distinct. Those key trends include network virtualization, which will lead, over time, to lower cost networks and a vast increase in ability to create on-demand bandwidth and specialized network features on a virtual basis.

Also, 5G might be the first mobile network that embraces use of unlicensed spectrum and shared spectrum in an extensive way. In fact, some leading mobile service providers (cable companies and other upstart mobile carriers) will rely heavily on use of unlicensed spectrum to support their business models.  

So 5G might well be the next big thing, because it also is happening at the same time, and building on, network virtualization, while underpinning a huge new potential wave of growth based on smart devices and systems of all types.

For the mobile industry, 5G, it is hoped, will fuel the next great wave of industry growth, beyond services and apps used by people, and based on services and apps used by machines.