5G Will Happen; It Has To Happen

A few skeptics might argue that there is no need for 5G, or that the business model will not work or that consumer demand does not exist. That noted, the movement, globally, seems unstoppable, and for existential reasons. Whether 5G works out largely as planned (it actually produces new revenue streams, business models and applications), it is a gamble that must be taken.

In fact, for fixed network telcos, the odds of failure are growing, as revenue earned from investments increasingly is less than the capital investment.

source: The Economist

For that reason, there is a good reason for arguing that either capex or opex, or both must be reduced to match potential revenues earned by those investments.

In fact, the importance of cash flow, rather than other traditional measures of “profit,” indicate the shift. In past years, it was mostly unprofitable startups whose progress was measured in terms of cash flow.

But the big issue is simply that, with all existing revenue sources flat, diminishing or poised to become flat and diminish, the broad telecom industry must find big new revenue sources to replace those being lost, or face decline, if not death.

Since 5G is being purpose built to support new applications (internet of things, machine-to-machine communications, connected cars, fixed line replacement), it is a necessary gamble on the ability to create and sustain big new businesses in those areas.

There can be no certainty, at this point, about the degree of success. What there is certainty about is that doing nothing risks industry failure. So 5G is going to happen. It has to.

Did SingTel Acquire Amobee in 2012, 2013 or 2017?

Did SingTel acquire Amobee in 2013, buy Amobee in 2012 or make the acquisition in 2017? Apparently, “fake news” (which, to be honest, has seemingly always been part of the press agency business) is alive and well, since "news" of that acquisition is being publicized in 2017, when the deal actually happened in 2012. Odd.

Whatever the odd reason for apparently announcing, in 2017, a deal that was previously announced in 2012, the Amobee deal is the direct precursor of what Verizon Wireless is attempting to do with AOL (and possible Yahoo). Amobee is a digital advertising platform, an ambition AOL has had, as well.

That strategy sometimes is contrasted with AT&T’s more direct investment in content and content delivery. Arguably, either approach targets a different part of the same ecosystem.  

Globally, broader entertainment and media revenues are expected to rise at a compound annual growth rate (CAGR) of 4.4 percent between 2016 and 2020, from $1.7 trillion in 2015 to $2.1 trillion in 2020, according to PwC. Those figures include the broader internet advertising business, internet access, broadcast TV, theatrical distribution, newspaper and magazine industries, plus some business-to-business categories not relevant to the consumer video subscription business.

Looking strictly at the TV and video segment, revenue is expected to rise from $121.4 billion to $124.2 billion in 2020 (0.5 percent CAGR). Those revenues include video on demand (VOD) and over-the-top (OTT) services.

Mobile advertising represents 34.7 percent of total Internet ad revenue at $20.7 billion in 2015 and projected to rise to 49.4 percent by 2020. But the rise in mobile video Internet ad revenue will be the most remarkable, from $3.5 billion in 2015 to $13.3 billion in 2020 (30.3 percent CAGR), driven by growth of mobile video consumption.

Verizon’s ambition to create a position as the default for U.S. advertisers that do not want, for whatever reason, to use Google or Facebook for mobile advertising requirements.

source: Business insider

No Global Consensus on 5G Early Use Cases, But Fixed Wireless Will be Key in North America

There is no global service provider consensus about which 5G applications will be important, early on. In fact, one survey conducted on behalf of Ericsson found no agreement on the killer app for 5G, though obviously there was a majority who believed mobile broadband would be among the key uses. Nor is there agreement on whether consumers or business users will drive the early adoption.

Fixed wireless will be the lead application in North America and South America, says Glenn Laxdal, CTO and head of strategy at Ericsson North America.

Laxdal says a mixture of direct fiber and wireless will be used to balance performance and cost in the access business. Also, Ericsson’s tests show a higher antenna point results in significantly better performance and lower path-loss. When aiming for delivered 5G fixed bandwidth of 100 Mbps, a six-meter high radio will reach 350 meters, containing 100 to 120 homes. If antenna height is increased to 12 meters, the signal will propagate 500 meters and potentially reach 200 homes.

In some markets, likely including the United States, where 5G spectrum is likely to be available in lower bands as well as new millimeter wave regions (28 GHz and 39 GHz), 5G is likely to be useful in some scenarios for coverage, and it other cases for capacity, even if 5G typically is thought of as a capacity tool.

Fixed wireless is not expected to lead the commercial deployment of 5G in other regions, though.

In Europe, operators expect new revenue models and apps to drive adoption.

In North Asia, mobile broadband will be the lead app.

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.