Monday, July 17, 2017

Verizon Counts on Millimeter Wave to Lead 5G Capacity Race

Verizon is not the only tier-one mobile service provider pushing fast into 5G. But it has very-specific reasons for wanting to do so. Having been the first U.S. mobile provider to launch the Long Term Evolution 4G network (Sprint earlier had opted for WiMAX), Verizon now finds it has pushed revenue opportunities just about as far as it can with 4G.

Verizon, additionally, given its large subscriber base, is generally recognized to be capacity challenged, in terms of spectrum assets, compared to other key competitors who have more spectrum and fewer customers.

So Verizon has huge motivation to lead in 5G, both to crank up revenue opportunities and also to add capacity that, in the U.S. market, will come from new millimeter spectrum of various types.

And Verizon arguably has a lead in such spectrum resources, in some cases. That especially is true for millimeter wave assets.

Still, in the 4G area, Verizon is capacity constrained at the moment, and seems to be angling for dominance in 5G assets instead.

T-Mobile US, citing new tests conducted by Ookla, says its network in early 2017 now is faster than Verizon’s, after essentially being in a tie with Verizon in 2016. T-Mobile US also says its 4G network coverage now is better than Verizon’s LTE coverage as well.

That poses a “brand promise” problem for Verizon, which always has claimed to have “the best” network.




Enterprise Executives Have High Hopes for IoT

Though of course we might all be wrong, and enterprise managers with us, enterprise internet of things almost uniformly believe IoT will improve service operations, increase visibility into operations, enable new business models, and create new product and service offerings.  

Boeing workers now use IoT wearables and augmented-reality tools on wiring-harness assembly lines, which has resulted in up to 25 percent improvement in productivity, McKInsey reports.

Some 98 percent of executives surveyed by McKinsey reported that most companies within their industry include enterprise IoT initiatives in their strategic road maps.

Also, 92 percent of survey respondents believed IoT would have a positive impact over the next three years, either by improving operations or by allowing companies to develop new products with embedded IoT capabilities.

Some 62 percent of respondents believe that enterprise IoT’s impact will either be very high or transformative.

But just 48 percent said that company leaders either strongly supported or were directly engaged in IoT initiatives.

When asked which department would benefit most, 40 percent of survey respondents cited service operations and 30 percent chose manufacturing.

For service operations, respondents believed that enterprise IoT would produce the most value in three areas: diagnostics and prognostics, predictive maintenance, and monitoring and inspection.

In manufacturing, the top use cases were resource and process optimization (for instance, improving yield, throughput, or energy consumption), asset utilization, and quality management.



Is "Telecom" a Stable Segment of the Equity Market?

One way of looking at the traditional telecom segment of the total public market is that it is, in some ways, too small to constitute a “sector” in its own right, like transportation, industrials or health care, especially when considered on a “single country” basis.

Consider the U.S. market, which essentially consists of AT&T, Verizon, CenturyLink, T-Mobile US, Sprint, and a handful of other firms with significant market capitalization.

Some funds include a wider basket of companies, on a weighted basis. But most of the market value is driven by a handful of firms. Verizon, for example, has a market cap of about $177 billion. AT&T has a market cap of about $223 billion.

CenturyLink has a market cap of about $13 billion. Sprint is worth perhaps $35 billion. T-Mobile US is worth about $50 billion.

Comcast is valued at about $186 billion, but the access business is valued at perhaps 61 percent of that, or perhaps $113 billion. Charter is worth about $92 billion.

The point is that including fixed network, mobile and cable TV providers as a single market, nearly all the market capitalization is held by seven firms.

Going forward, we might expect not only further consolidation, but also a shift in revenue towards “applications” revenue (video entertainment networks, studios and enterprise apps related to internet of things). At least for the moment, it does not seem that truly-significant additional market cap will be generated by cloud computing or hosting, devices.

Equity analysts often follow a larger basket of firms and industries called “telecommunications, media and technology.” That might not only offer enough diversification to create a more-stable “segment,” but also likely represents the future of the former “access” segment as well.

Provider
Market Cap
AT&T Inc.
223.049B
Verizon Communications Inc.
177.796B
CenturyLink, Inc.
12.577B
Shenandoah Telecommunications Company
1.421B
Consolidated Communications Holdings, Inc.
0.9B
Frontier Communications Corporation
1.1B
Cincinnati Bell Inc.
0.7B

Trunking Fiber Decisions Now More Complicated

For the most part, fixed network internet service providers rightly have focused on access bandwidth (what is delivered to the end user or customer), and based distribution network decisions on what is necessary to deliver bandwidth at the network edge. For most legacy telcos, that has meant more fiber to home or fiber to curb (fiber deep, the only question being “how deep?”).

Cable operators, assuming use of copper media as the end-user connection, mostly have focused on ways to drive more fiber into the network, but without going “all fiber.”

As the need for small cells has become clear, all ISPs are asking different questions. Even if all trunking network decisions still are based on assumptions about end user bandwidth, the decisions are more complicated.

Even if all assume consumption is going to keep growing, at faster rates than in the past, so that both access bandwidth and trunking resources must increase, there now are more ways to supply that demand.

In some markets, the mobile network remains the “only” way to supply most of the demand. In other markets both fixed and mobile networks are potential suppliers. In a few markets there also are alternative facilities (cable TV networks), in addition to mobile and fixed. Also, 5G will add another option--fixed access--from the mobile platform.

In recent years, the ability to offload traffic from mobile to Wi-Fi access has been crucial. Going forward, the range of choices will grow. And that means more decisions.

Cable operators, for example, long have believed their distribution networks, and even consumer bandwidth, would become more valuable in the small cell era.

In part, that is because they can use their existing networks to support Wi-Fi access to mobile services.

Also, the thinking has been, the hybrid fiber coax networks have significant bandwidth available at the edge that could prove useful for supporting new small cells beyond consumer users at home. How the market develops, and how soon, will determine the extent of that value.

In principle, cable operators could provide wholesale trunking services for small cells, to third parties. Just how effective that strategy could become will be determined by where small cells are needed, the bandwidth those small cells must support, and how many such sites are needed.

The best scenario for a cable operator is “lots of small cells, but relatively light bandwidth demand,” as that supports maximum reuse of already-deployed capacity. The tougher scenarios are “high demand, few locations,” as that business case means potential customers can afford to  install new trunking fiber directly.

A similar sort of thinking now underlies the strategy Verizon uses to deploy its distribution fiber. The “One Fiber” architecture assumes a single trunking network that supports small cells, enterprise customers and consumers with gigabit bandwidth services, both fixed and mobile.

The difference is that the immediate driver is “fiber deep” trunking to support small cells (potentially many), that also has enough spare fibers to then support business customers. The small cell locations might then also be leveraged to support gigabit internet access for consumer customers, using radio drops.

Much depends on “how” that distribution fiber has been, or is, deployed. Extra dark fibers in cables will matter. The ability to use different colors of light will matter. The cost of overlaying new fibers will matter. The nature of demand (how many simultaneous users, for which apps) also affects thinking about the number of small cells, where they are located, and how much backhaul therefore is needed.

Up to a point, the more distributed, and the more numerous the small cells must be, the more optical fiber could be required. That is especially true for high-demand urban locations.

Beyond a certain point, highly-distributed demand means less need for distribution fiber.  In a very-highly-distributed consumption scenario (individual users in rural and many suburban locations, less fiber might be needed, since the density of demand is not so high, for any single user.

The example is gigabit 5G, as end user smart phones are among the best examples of highly-distributed consumption, but will be supported on a per-device basis at gigabit levels. In many use cases, the standard mobile network will suffice.

Similar observations can be made about consumer consumption at many home locations. Consumers who switch to Wi-Fi at home might mean ISPs are not required to deploy too much additional distribution fiber, beyond that needed to support gigabit fixed access.

The point is that decisions about trunking fiber arguably are more strategic than decisions about access fiber, since multiple “access” drops are feasible (coaxial cable, fixed wireless, direct use of the macrocell network.

Sunday, July 16, 2017

Amazon to Federate All Other Messaging Domains?

“Anytime” by Amazon is a rumored new messaging app that essentially federates (makes interoperable) all other “friends” and groups. As was the case for email, it always has seemed inevitable that various messaging domains eventually would be unified (federated) so that anyone could reach anyone else, as is the case for email and voice.

If so, Anytime would appear to be the first to do so.

source: AFTV News

How Do You Get to 5G? Invest in Advanced 4G

Even if it represents the next-generation mobile platform, it is fair enough to point out that the constellation of new technologies 5G will build upon will in many cases be deployed to support advanced 4G networks.

In that sense, 5G builds directly on advanced 4G, in effect aggregating and reusing advanced 4G assets with a new 5G air interface.

Some observers will argue that “5G Evolution” networks already launched by AT&T are not really “5G.” It is in some ways a curious argument.

For starters, the name “5G Evolution” is proper: "evolution." All roadmaps for 5G, in fact, show that 5G will be built on precisely the technologies put into place for 5G Evolution, including LTE-Advanced technologies like 256 QAM, 4x4 MIMO, and 3-way carrier aggregation, all of which also will be used by 5G.

By the end of 2017, AT&T expects to deploy LTE-License Assisted Access and four-way carrier aggregation in certain areas of 5G Evolution metros. Those features also will be foundational for 5G networks.

source: Qualcomm
Small cells are also an important ingredient on our path to 5G, and AT&T is  installing small cells in Indianapolis. Those small cells use centralized RAN (C-RAN) architecture, allowing engineers to add capacity and improve efficiency for hundreds of cell sites quickly and simultaneously.

C-RAN is a key building block for AT&T’s software-defined network, which in turn is integral to 5G, and is part of the 5G Evolution plan.

The point is that 5G builds on advanced 4G, in a direct way.

When the 3GPP approved a “Non StandAlone” (NSA) version of 5G New Radio (5G NR specification,  the way was cleared for suppliers and mobile operators to deploy a version of 5G radio that uses the existing LTE packet core with a broader array of spectrum resources (legacy 4G and new 5G), including spectrum above 6 GHz, below 6 GHz and including LTE Unlicensed and Wi-Fi resources.

So  5G will use many different spectrum assets, aggregating all those assets (including 4G assets) and in early deployments. The air interface is 5G, but control plane functions and spectrum assets can leverage LTE-Advanced.

That is one way 5G will be introduced by building on existing 4G assets, aggregating LTE-Advanced assets with new spectrum resources, with the newer 5G air interface.

In that direct sense, 5G will build directly on advanced 4G.



Saturday, July 15, 2017

How Much New Revenue Will 5G Produce?

One often hears forecasts of 5G revenue, as one used to hear estimates of “4G revenue” or “3G revenue.” Such forecasts must be considered in context, as much of the next-generation platform revenue simply cannibalizes last-generation network revenue. That is especially true in developed markets, where there is little actual account growth.

In most developing markets, the actual incremental impact of 5G will be disguised, as subscriptions continue to grow significantly, as do mobile data accounts. So revenue growth comes from multiple sources, not solely from 5G.

The other “moving part” is that average revenue per user and account is dropping, in most markets. Eventually, in all saturate markets, that will matter, possibly or probably reducing total revenue.



That noted, 5G--it is hoped--will create some amount of incremental new revenue as well. For U.S. mobile operators, the biggest immediate test will be use of 5G to support consumer internet access in fixed mode. The bigger boost in revenue is expected to come from robust internet of things deployments, but that will take some time.

Use of mobile networks for fixed access has not been a viable business case in the past, but will be possible with 5G, in part because speeds will match fixed offers, in part because the cost of supplying “fixed network equivalent usage” will be possible at prices that also are comparable to fixed access prices.

The other attraction is that average revenue per location for a fixed account is virtually always higher than the ARPU for a mobile line, though not for some shared accounts.

The point is that 5G will produce some incremental new revenue, from new sources. But not all 5G revenue is “new.”

DIY and Licensed GenAI Patterns Will Continue

As always with software, firms are going to opt for a mix of "do it yourself" owned technology and licensed third party offerings....