Wi-Fi Role Could Change in 5G Era

Price and quality matter, where it comes to user behavior related to use of internet access services and networks. In markets served by 3G networks, consumers chose to use Wi-Fi access because it saved them money, and provided a better experience. In most 4G markets, though “saving money” remains important, “quality” generally is not a driver, as 4G tends to be faster than Wi-Fi.

In the coming 5G era, it is conceivable that the new mobile network will eliminate “saving money” and “better quality” as reasons to offload access to Wi-Fi. That would represent a huge change in consumer behavior. To be sure, Wi-Fi will still be important. But its value to internet access constituencies could very well change.

If, in the 5G era, and even in the present 4G markets, unlimited usage plans eliminate both the advantages of “saving money” and “better experience” when switching to Wi-Fi.

On the other hand, some suppliers, particularly those with significant Wi-Fi assets, might find they can use Wi-Fi infrastructure to lower their mobile service operating and capital costs.

Likewise, mobile operators might benefit from bonding mobile access with Wi-Fi, in the “old way,” where offloading reduces traffic on the mobile network. But that advantage might be most valuable when customers are consuming video content, negligible to moderate for voice and messaging or internet access.

Revenue Per Bit is a Big Problem

Observers might disagree about how big a problem revenue per bit has gotten to be on most mobile networks. But everyone would agree it is a significant problem, as revenue per megabyte or revenue per gigabyte is quite low. 

After operating and capital investment, some might question how profitable mobile broadband services are, in some markets. A few might argue that mobile broadband, in some markets, already loses money. 

Business of Value Added Services in New Mobile Era: From Strategy and Business Models to Services Development for Telecoms Operators from Ali Saghaeian

Deutsche Telekom Launches StreamOn Unlimited Media Usage Plan

Deutsche Telekom has launched StreamOn, a new unlimited usage plan for its German customers, who now will be able to watch video and listen to music without incurring mobile data usage charges.

Almost certainly inspired by the success of the U.S. unit’s experience with such plans, DT has signed up Amazon, Apple, Netflix, Sky, YouTube and Deutsche Telekom's own Entertain TV offering as partners.

As seems always to be the case when technology disrupts the boundaries between formerly-discrete industries (TV and radio broadcasting, cable TV, telecom, print, social networks, shopping), old regulatory concepts become unwieldy and nonsensical, as firms selling the same services labor under different regulations.

Cable TV firms, for example, are regulated differently from telcos; VoIP often is regulated differently from carrier voice; over-the-top streaming video is handled differently than broadcast media or print.

More significantly, over the long term, is that business models and consumer expectations of each product do not change, simply because the delivery method changes.

Consumers do not expect to pay for bandwidth--which is an essential requirement for broadcast TV, broadcast radio, or any network-delivered video or audio service--when consuming traditional media.

As traditional “television” and “movie” media becomes internet media, those consumer expectations are not going to change. So zero rating is a business requirement.

Also, networks face physical issues. Video is hugely more bandwidth-intensive, but revenue per bit is quite low. There simply is no way media business models work if, in the switch to internet delivery, consumers pay for bandwidth in addition to cost of content.

Revenue per bit matters, even if no consumer ever sees such metrics, nor do service providers normally track it.  

The revenue per bit problem is easy to describe. Assume an ISP sells a triple-play package for a $130 a month retail price, where each component--voice, Internet access and entertainment video--is priced equally (an implied price of $43 for each component).

Ignore other cost of service elements, such as marketing and content acquisition fees. In term of network usage, that would make sense if each constituent service “consumed” roughly equivalent amounts of capacity, or if retail charging was based relatively directly on consumed bandwidth, and not “perceived value.”

Use of network resources is unbalanced, though. Voice requires use of almost no bandwidth, while video consumers nearly two orders of magnitude more capacity, for each minute of use. Internet traffic is in between, with some apps consuming little capacity (email), some apps consuming a moderate amount of capacity (web browsing) while others are heavy capacity consumers (video).

So, by some estimates, where voice might earn 35 cents per megabyte, revenue per Internet app might generate a few cents per megabyte. Recall that actual revenue per megabyte is statistical: it hinges on how much a user consumes after paying a flat fee for the right to use bandwidth.

MulteFire: Second or Third Coming of Personal Communications Service?

Sometimes, past is prologue where it comes to ideas, platforms and services in the telecom industry. Back in the 1990s, for example, at a time when mobile service was not used by most people, and was expensive, it was thought there was a market opportunity for a new type of service that would be half way between cordless indoor telephone service and fully-mobile outdoor service.

That concept, known as “Personal Communications Service (PCS)” lead to the entry of Sprint and what became T-Mobile US into the U.S. mobile market, using 2-GHz spectrum. The original thought was that PCS would be a pedestrian speed network, supporting cell tower handoff at pedestrian speeds.

Later, Cablevision Systems Corp., which studied and then shelved the idea, eventually did launch a similar service, essentially mobile phone service using unlicensed Wi-Fi spectrum exclusively. Much as did PCS, it never took off.

In a sense, MulteFire is a second coming of the older PCS idea. PCS was conceived as a communications service used by people moving at pedestrian speeds, with session handoff. The CableVision implementation did not feature session handoff, but could be used anywhere Wi-Fi access was available (indoor at the subscriber’s home or at public Wi-Fi locations).

It is not clear how MulteFire might develop, or which use cases prove to be sustainable. Some larger cable operators, such as Comcast, have huge deployed networks of Wi-Fi homespots that could provide a foundation for MulteFire networks spanning rather extensive geographies, even if call handoff might be a limitation.

But that is why most believe hybrid networks that can default to mobile networks are important. Google Fi, for example, uses a mobile-first model where users are connected first to Wi-Fi, then to either the Sprint or T-Mobile US network, depending on which network has the better signal at a specific location.

Even if we all know 4G as a mobile network standard, supporting mobile phone service, other new protocols, such as MulteFire, create the potential, for the first time, of 4G networks operated much as Wi-Fi networks are, using unlicensed spectrum and operating in indoor settings or as small cells.  

MulteFire is suitable for any spectrum band that requires over-the-air contention for fair sharing, such as the global 5 GHz unlicensed spectrum band or shared spectrum in the upcoming 3.5 GHz CBRS (Citizens Broadband Radio Service) band in the U.S. market.

Business models for networks running 4G LTE protocols in a private LTE mode might be likened to similar use of venue Wi-Fi. An enterprise might consider creating its own enterprise 4G network. There will be business model differences based on which spectrum is used. In the CBRS band, for example, a venue owner deploying MulteFire would have proprietary rights of a sort, being able to block other temporary MulteFire networks from being created by a user hotspot, for example.

Wholesale models, such as neutral host networks open for use by third parties, represent another new business model.

In some ways, MulteFire takes the old debate about whether Wi-Fi can replace licensed mobile networks to a new level. In the future, it will be possible to create 4G networks that operate exclusively using unlicensed spectrum, or in forms that bond licensed mobile spectrum with unlicensed Wi-Fi spectrum or other spectrum.  

MulteFire also is, in many ways, the latest iteration of any idea decades old, that there is room in the market for services that are someplace between full mobile and cordless telephone service.

Sometimes an idea is before its time, and demand or network infrastructures will not support the new ideas. We will see whether PCS is such an idea.

Is 5G Overhyped?

Is 5G overhyped? Yes. Is the hype unwarranted? In the near term, perhaps. Long term? The global communications business might well prosper or fail based on new revenue streams created by 5G. So, long term, the hype is totally warranted. 

Industrial Internet Consortium Releases IIoT Connectivity Model

The Industrial Internet Consortium has released an extensive white paper on its model for industrial internet of things connectivity. As you might guess, the connectivity model is designed for technology developers, and corresponds, in general, to the Open Systems Interconnect seven-layer model.

As some of us might note, there are business analogies. With the embrace of OSI, applications now are written to be independent of access media and network platforms; as well as independent of devices and operating systems, to a large extent. In such an environment, though there still remain vertical integration opportunities, the basic framework is openness.

But that also means business models are less amenable to “lock in” based on specific protocols, networks or access media. So it is worth noting that, above the  the “framework” layer (structured data) is the unnamed “business model” layer, where businesses with revenue models decide to use IIoT.

It is natural that ecosystem participants in the communications segments focus on “how” to achieve ubiquitous communications for IoT. Ultimately, as always is the case, business value will determine whether IoT is embraced, and therefore whether markets for communication services are created.

source: Industrial Internet Consortium

source: Industrial Internet Consortium

Does NFV Enhance or Replace Evolved Packet Core?

In many ways, network slicing features of coming 5G-compliant core networks builds on  evolved packet core (EPC), the current framework for providing converged voice and data on a 4G Long-Term Evolution (LTE) network. The 2G and 3G networks use a different architecture, using

circuit-switched networks for voice and packet-switched networks for data.

Evolved packet core uses Internet Protocol, which is simpler and media independent. Standards for EPC were developed by the Third Generation Partnership Project (3GPP) in early 2009.

As always is the case, networking professionals can disagree about whether NFV either “improves or replaces” the EPC. Perhaps most would argue that NFV extends and builds upon EPC.

It might be somewhat subtle, but CIMI principal Tom Nollte says network slicing (a feature of 5G-compliant core networks) could have an impact in terms of “eliminating the expensive evolved packet core infrastructure that handles mobility in 4G networks.”

Most would probably argue that NFV virtualizes the EPC function. But that is where the nuances are important. If EPC is virtualized, is that a functional replacement of EPC by NFV networks using network slicing? It’s subtle. It might be most accurate to say that virtual replaces physical in the area of EPC functioning.

source: 3gpp

EPC also separates the control plane from the user plane, where control network is separate from the actual payload data, a move intended to reduce costs and network overhead, while improving ability to scale networks more easily (and at less cost) by reducing the amount of active elements.

source: 3gpp

source: Affirmed Networks

The next evolution, many would argue, is network functions virtualization (NFV), a network architecture concept that uses “information technology” approaches to virtualize entire classes of network node functions, making them building blocks that can be connected or chained together to create communication services.

One way to look at such an NFV network is that the business case can drive the configuration of network capabilities for each specific application (at least to the extent the network can be customized for latency, security, geography, bandwidth or quality). Historically, the goal of every next-generation network was to create the ability for bandwidth on demand, something NFV builds on, but augments.

So it might be an irrelevant argument (“how many angels can stand on the head of a pin”), but virtualizing networks using network slicing and NFV might either been seen as “improving” existing network functions, or as “replacing” them.