Unlimited Usage Plans Reshape AT&T, Verizon "Average Speeds"

A widespread shift from fixed-usage buckets to unlimited use should, all other things being equal, boost consumption. And that is what appears to be the case, according to Ookla tests of mobile internet access performance in the first half of 2017.

At the same time, overall speed increased about 19 percent overall. “During the past 12 months, improvements in technology and usage of available network spectrum led to a 19 percent increase in average mobile download speeds in the United States,” Ookla notes. “All four major carriers have boosted download speeds, but not all carriers are improving equally and not all areas of the country are seeing the same benefits.”

In its recent tests, average downstream speed grew to 22.69 Mbps, on average. Average upload speed over mobile improved four percent to 8.51 Mbps.

T-Mobile US clocked the fastest speeds, followed by Verizon Wireless.

source: Ookla

One would expect the greatest impact of increased usage to occur on the AT&T and Verizon networks, since Sprint and T-Mobile US already offered unlimited access plans.

That is what the Ookla data suggests. “Our data shows that in the case of Verizon and AT&T, the percentage of test results with the lowest-end download speeds (those under 5 Mbps) shot up compared to the period before these unlimited data plans were widely available.”

Both T-Mobile US and Sprint are seeing the opposite effect: year over year, there were fewer instances of performance “below 5 Mbps.”

But usage on the AT&T and Verizon networks might not be due to actual congestion, but efforts to prevent congestion. Both firms say they might throttle maximum speeds after some amount of monthly usage by any single account.

Both Verizon and AT&T say unlimited customers may experience reduced speeds if customers exceed 22 GB in a month and the cell site is congested. That could explain the greater percentage of AT&T and Verizon accounts experiencing slower overall speeds.

So the AT&T and Verizon networks may not be saturated; just throttling heavy users.

source: Ookla

How Will UAVs Operating Beyond Line of Sight Be Controlled?

Eventually, unmanned aerial vehicles are going to operate commercially, beyond line of sight, which means a relatively low-cost flight control system has to be created.  Some believe Wi-Fi can accomplish the task, while others believe mobile networks make more sense.

In other words, a parallel air traffic control system, optimized for UAVs, will have to be created.  

Alliance for Telecommunications Industry Solutions (ATIS) naturally argues mobile networks are best optimized for such purposes.

One certainty: the Federal Aviation Administration will be involved, which means all sorts of considerations around flight safety will be foundational, and link reliability cannot be an issue, no matter which radio approach is taken.

Satellites are used to control large drones travelling great distances, but some might argue cost is likely to be an issue for small industrial and retail UAVs.

source: www.expouav.com

How Big a Deal Will Wholesale Be, in the 5G Era?

Wholesale is likely to emerge as a key revenue stream for 5G services, especially using the virtualized capabilities of core and edge radio networks to enable end-to-end private networks by third party customers.

The whole point of operating virtualized networks (network functions virtualization) is to support rapid and easy creation of network services and features, almost on-demand, for internal and external customer purposes. In the 5G era, that will include “network slicing.”

Network slicing allows the creation of customized virtual private networks to support mobile operator offers or wholesale opportunities to support third party applications.

source: www.wballiance.com

And such wholesale opportunities might develop as quite an important revenue source. About 44 percent of industry executives surveyed by GSM Intelligence believe operating as a “platform provider” will be the “primary role” for a 5G network, in both business-to-business and business-to-consumer” realms.

About 41 percent believe the primary role in the 5G era will be as a digital service provider, which might have both wholesale and retail aspects.

Likewise, 31 percent of respondents believe third parties will partner for neutral host services. Another 26 percent believe third parties will partner with 5G operators to offer their own services.

source: www.gsmaintelligence.com

source: www.gsmaintelligence.com

How Big is Service Provider IoT Opportunity?

How big is the Internet of Things opportunity for mobile operators? One has to be careful when big numbers are thrown around.

Internet of Things represents a US$1.8 trillion in global revenue for service providers by 2026, according to Machina Research. That does not mean service providers will earn that much revenue themselves. The $1.8 trillion almost certainly includes the total ecosystem activity, much as “e-commerce” includes the retail value of goods sold, but not direct revenue or profit for any single part of the ecosystem.

Having not read the full study, and without knowing the methodology,  it is hard to say whether the $1.8 trillion includes the full value of all exosystem sales (likely, in my opinion) or something more important for communications service providers, namely mobile participation in connectivity, applications, devices and platform revenue streams.

My guess has to  be that the forecast represents Iot ecosystem revenue, not service provider revenues.

It is hard to see how service provider IoT revenues could be as big a market as $1.8 trillion, simply because global mobile revenues in 2012 were about $1.2 trillion. In fact, GSMA estimates total industry revenues will only be about $1 trillion in operator revenue in 2020.

There is no way IoT, in 2026, generates more revenue than the entire global mobile industry in 2017.

source: machinaresearch.com

The research also indicates that the Americas region will account for an estimated US$534billion, or approximately a third of the total revenue.

Mobile IoT networks are expected to have 862 million active connections by 2022 or 56 percent of all LPWA connections, Machina estimates.

By segment, consumer demand for connected home will be US$441 billion, consumer electronics will be US$376 billion) and connected car technologies will represent US$273 billion in activity.

However, other areas such as connected energy look set to reach US$128 billion by 2026 as a result of local governments and consumers seeking smarter ways to manage utilities. Similarly, revenues from connected cities are forecast to reach US$78 billion by 2026, Machina Research sys.

Mobile IoT networks are expected to have 862 million active connections by 2022 or 56 per cent of all LPWA connections.

source: Machina Research

source: Machina Research

source: machinaresearch.com/

IoT is crucial, strategic and necessary if the global mobile industry is to replace expected lost revenues from voice and text messaging, as well as slower growth of mobile data services and device revenue.

But IoT will not be as big a connectivity revenue stream as some believe. Success really hinges on mobile service providers becoming key suppliers in other areas of the ecosystem as well.

Is "Mobile-Only" Business Model Sustainable?

Does the future belong to “integrated” service providers that own both mobile and ubiquitous fixed network assets? It is possible, in the 5G era. The reasoning is fairly simple: 5G “requires” dense small cell networks where the trunking network (backhaul) is the key cost, not the radio network.

Even before that happens, in some regions, such as Western Europe, “market share of mobile-only telcos in Western Europe dropped from 40 percent to 20 percent of the total mobile market revenues,” according to Detecon Consulting.

There are signs of strain elsewhere as well. As strong as account growth is in many emerging markets, J.P. Morgan equity analyst James Sullivan is “bearish on wireless stocks in emerging markets.”

The problem, he argues, is precisely the amount of growth, which is fueled by an aggressive focus on account growth, irrespective of profit margins, plus the cost of supplying mobile data, relative to revenues.

But asset restructuring (mergers that reduce the number of suppliers) could make a difference, Sullivan argues.

source: Detecon

If the prediction that fixed network ownership is crucial for 5G, most mobile-only service providers will be challenged, as the cost of leasing access to support dense small cell networks will be challenging. Consider the sort of fiber deep network Verizon is building, extending the fiber trunking network almost literally “to the light pole,” or “every other light pole.”

Few, if any,  mobile-only operators can afford to build such networks. Few likely can acquire a tier-one fixed network capability and in many cases, regulators will bar mobile-only operator consolidation.

In one sense, an integrated operator might have two sorts of advantages. Mobile offers lower retail customer service costs and a growing role as a full substitute for fixed networks. But fixed network ownership allows lower trunking costs.

“Mobile operators, not required to support legacy services, require approximately one-eighth the care staff and receive half as many inbound calls per customer compared to wireline network operators,” say researchers at Detecon. So mobile access is a way to drive down operating costs, at the same time that fixed network ownership allows lower-cost trunking.  

And though it remains to be seen, 5G-based fixed wireless to support gigabit internet access might well be the most-important new revenue source available to some 5G operators, along with mobile entertainment video.

Internet of Things might ultimately prove more important, but only over a decade or so. Fixed wireless and mobile video will generate immediate cash flow.

Deep Fiber Yes, FTTH Maybe No

It is safe to say that "fiber deep" access networks are going to be essential in the U.S. access market. What is not clear is the actual deployment pattern, the required magnitude and the timing.

By some estimates, as much as $130 billion to $150 billion in additional optical fiber deployment in the access and distribution networks to support U.S. 5G and allow telcos to compete with cable TV operators, over the next five to seven years.

Some of us doubt that will wind up being the case, at least not over the five to seven year timeframe. There are several reasons. First, and most compellingly, there are rival strategic claims on available capital.

Service providers also must make strategic acquisitions to gain scale and also move up the stack into the applications and platform spaces. Tier one providers that have made big acquisitions have to pay down debt from making those deals.

Stranded assets are another issue. In the facilities-based U.S. market, any tier-one fixed network service provider has to expect to strand at least 50 percent of newly-deployed access assets. No rational executive is going to invest billions, or scores of billions, knowing that half those assets will not generate revenue.

Consider “where” new optical infrastructure is called for, according to Deloitte.

According to Deloitte, $15 billion to $20 billion is required to support densification of the mobile networks (5G small cells).

Some $35 billion to $40 billion is needed to connect rural residents. About $60 billion to $100 billion is needed to bring fiber-to-home networks or other gigabit internet access speeds to residences.

Some might argue that the capital to support mobile network densification ($15 billion to $20 billion) is essential and affordable.

What is questionable, given the opportunity to use 5G-based fixed wireless, is the $60 billion to $100 billion in fiber to home, where half the investment will be stranded, and not generate revenue. This bucket of spending is questionable.

The $35 billion to $40 billion to support rural internet access likely will prove amenable to other solutions than fiber to the home, namely wireless in several forms, or mobile networks, using fiber trunking but not fiber to the home.

The point is that huge amounts of capital will be needed to make strategic acquisitions for scale; others for scope (moving up the stack); to pay down debt and then to invest in access networks and spectrum.

Under such conditions, no rational executive is going to strand so much capital in the access network. For that reason, one might argue that the $130 billion to $150 billion investment over five to seven years is too high. Faster speeds (hundreds of megabits to gigabits per second) can be supplied in other ways that are far more capital efficient.

Mobile Hopes for a Role in Autonomous Driving are Well Founded

Ride-sharing services are seen as among the precursors of a shift to autonomous vehicles. Autonomous vehicles, in turn, are seen as one of the primary use cases of promise for mobile service providers supplying internet of things communications.

So it might be noteworthy that a recent survey of riders and former riders in Austin, Texas does suggest that ride sharing does reduce auto ownership. If one believes that autonomous vehicles will appear first, at scale, for ride services and other retail and industrial transportation use cases, that finding is important.

source: ABI Research

source: Snook & Associates  

A group of researchers looking at the suspension of Uber and Lyft services in Austin, Texas conclude that such “transportation networking companies” actually do represent alternatives to other forms of transportation, and plausibly can lead to reduced auto ownership in urban areas.

“Our analysis finds that 42 percent of respondents who had used Uber or Lyft to make a trip prior to the suspension reported transitioning to another transportation networking company as the means by which similar trips were most often made after the suspension,” the researchers said. “A near equal proportion (41 percent) reported transitioning to a personal vehicle, while three percent transitioned to public transit.”

Those findings are partly notable for the finding that just three percent of former Uber or Lyft riders chose public transit as the alternative. Some 83 percent chose either a personal vehicle or another ride-sharing service.

The survey also suggests that individuals who substituted a personal vehicle for travel, instead of Uber or Lyft, were 23 percent more likely to make more trips than individuals substituting another ride-sharing service for Uber or Lyft.

Perhaps surprisingly, nine percent of respondents said they purchased an additional vehicle in response to the service suspension.

“These results suggest that TNCs may contribute to reduced car ownership and trip making,” the researchers suggest.