All Technology Might Require Trade-Offs and Prudent Usage

Mobile phone use and Wi-Fi can have health effects, some studies have found. Such studies have been conducted on many types of non-ionizing radiation, for decades.

Non-ionizing radiation includes exposures such as electromagnetic fields (EMF) produced by power lines, radio frequency energy used in microwave ovens or emitted by cell phones, and solar ultraviolet radiation. Whether such exposure is dangerous, or not, has been argued for decades.

Prudent usage is the advice sometimes given for using any products that product non-ionizing radiation.  

Some have argued such potential effects are reasons for not deploying new mobile networks. Others have argued users simply have to be conscious of potential risks and adjust usage accordingly.

As with nearly all technologies, risks and rewards have to be balanced. There are some risks associated with automobiles and airplane travel, for example, and most us can balance the risk of using or not using those technologies.

Flying in an airplane does expose passengers and crew to more solar radiation than is experienced at ground level. So people have to balance such risks with the benefits of flying.

That is not a bad way to balance other risks as well. Be prudent.

Are IoT Subscriptions the Upside from 5G?

“If you don’t believe in IoT growth, there’s no point in investing in 5G,” Hatem Zeine

Founder and CTO of Ossia has said.

Perhaps the biggest opportunity for communications service providers in the 5G era is internet of things services beyond connectivity. Though it will be far from easy, the trick is to take valuable and essential solutions that might formerly have been sold as “products” and turn them into subscriptions.

Of course the value will continue to be “outcomes” of value to buyers: lower cost, higher output, less waste, higher product value, faster time to market, higher revenue or higher profits.

The point is that the business upside from IoT is not sensors or even insights gleaned from sensor data. The value comes from ability to change business processes in ways that cut costs or boost revenues and profits. And that means participation in IoT subscription services.

Many observers say subscriptions are the new growth frontier for many, if not most, products.

Turning products into subscriptions (everything as a service) is a big business shift many believe is irresistible. Automating the process of buying staple products or discretionary products Is a way to lock in repeat business. And some would note that 41 percent of all consumer purchasing is repeat business.

Of course, telecom has always been sold as a subscription, which does raise questions about how relevant that “everything as a service” trend might be, and where there are additional opportunities for communications service providers.

In most cases, the answer is that service providers win by offering more subscription products as part of their core offerings. Mobile video services provider a good example. The innovation is not the “subscription” revenue model; that is the legacy format, after all.

Instead, what is new is participation in the new business as a distribution channel.

Communications providers have some experience with turning products into services. Hosted business voice (hosted IP PBX or hosted IP telephony) provides a recent example, where a recurring subscription replaces a customer’s need to own and manage a business phone system.

Smartphones often are functionally subscriptions, not “products.” Even if consumers actually buy their devices, they often do so as two-year payment plans. And as support for many devices now routinely lasts for only three years, for many consumers “ownership” of a smartphone resembles a “phone subscription.”

By some estimates there are at least 2,000 subscription-based consumer product businesses in operation, selling food (Blue Apron and HelloFresh), grooming products (Dollar Shave Club and Harry’s), beauty supplies (Birchbox and Ipsy), and clothes (Stitch Fix and Trunk Club).

In principle, the substitution of “hosted PBX” or “business phone functions as a service.” Historically, telecom companies sold such services as “Centrex.” These days, both incumbent telcos and third parties sell “business phone functions as a service.”

U.S. Consumers View "Choice" in New Ways

Ever since the advent of satellite-delivered programming, choice has been the core value linear video subscriptions have offered. But value now has become an equally-big issue.

Some 90 percent of U.S. residents polled by Morning Consult say that the most important factor when deciding to subscribe to a TV or streaming service is cost.

Some 56 percent say cable TV is "unaffordable" and 47 percent say the same about satellite, while just 17 percent deem streaming unaffordable.

But the real issue is value. Those same respondents also say they object to paying for channels they do not watch, and prefer to buy only channels they actually watch. On the other hand, consumers also say they value services with quantity and quality of shows.

source: Morning Consult

So “choice” has a new meaning. Choice once meant having scores to hundreds of programming choices, not three broadcast TV stations. Increasingly, choice now means “paying only for what I choose to watch.”

Where the traditional maxim has been “I want what I want, when I want it,” the new mantra might be “I want only what I want, when I want it.”

source: Morning Consult

source: Morning Consult

Main Trend in Video Always is "More Choice"

Even if the initial impetus for the cable TV business was signal access (bringing metro market TV signals to distant areas unable to receive the signals off air), the more-recent growth since the advent of satellite-delivered programming in the mid-1970s is “greater programming choice.”

“Choice,” in those days, meant “access to more channels and genres.” These days, “choice” means “ability to buy only the channels I want.” The former trend drove adoption of linear subscription video. That latter drives over the top subscription video.

source: Brightcove

Whether you look at linear video or any form of over-the-top streaming, the value proposition always is about "more choice."

Value is the other big issue, now. Potential customers want greater value, which tends to mean lower prices per subscription.

How Much Share Will Fixed 5G Gain?

To mobile substitution we now have to look to fixed wireless substitution for networks built using cabling of some sort (hybrid fiber coax, fiber to home, fiber to cabinet, all copper).

As always, opinions vary about the potential amount of substitution, in urban or rural markets, with the greatest skepticism about impact on rural markets. In many cases, that is because of signal propagation characteristics of millimeter wave spectrum in such bands as 28 GHz and 39 GHz.

It is reasonable to suggest that many believe lower-frequency signals in the 3.5-GHz band might be more important in rural areas, as 3-GHz and 5-GHz frequencies already are used by fixed wireless providers in rural areas.

Analysts at CoBank are in the camp that believes millimeter wave spectrum will not have very much impact on rural internet access, and also believes fixed wireless using millimter spectrum will be less successful than Verizon estimates.

Still,  others might note that, in urban and suburban areas, even using skeptical estimates, Verizon alone might be able to take significant market share from other internet service providers using cabled approaches.

In the first five years or so, such gains might only represent share gains between 11 percent to 18 percent, in the areas where Verizon builds fixed wireless networks. In substantial part, such skepticism is founded on transmission distances that might range from 500 foot  to 1,000 foot cell radii.

To be sure, skepticism on the part of many observers, such as rural telcos who rely on cabled approaches, is to be expected. After all, fixed wireless is yet another alternative to existing telco or cable TV networks.

CoBank analysts believe the general absence of cable TV operators from the ranks of bidders for new millimeter spectrum indicate those firms are not worried about millimeter wave spectrum approaches. If they were threatened, CoBank analysts argue, cable operators would be bidding for spectrum, either to deny the use of such spectrum to would-be competitors, or to use the platform themselves.

Some of us would disagree with that logic. For institutional reasons, cable executives have disliked running services over any platforms they do not own, with a strong preference for HFC whenever possible. Already looking at use of leased facilities to support their early mobile efforts, cable executives might resist adding more one platform, especially if they conclude the revenue upside is limited.

Cable operators also seem to favor lower-frequency bands, such as 3.5 GHz, in part for reasons of cost, in part for reasons of signal propagation.

Nor would cable operators be able to simply “warehouse” spectrum very effectively, on a long term basis. “Use it or lose it” is the standard policy for new spectrum awards. And even if cable operators wanted to warehouse 28 GHz or 39 GHz spectrum, lots of other spectrum in the millimeter bands will be released for commercial use, and much of that spectrum will be available on an unlicensed basis (or licensed on a no-fee basis).

source: CoBank

The other issue is the extent to which 5G mobile networks might emerge as similar substitutes for cabled network access.

In 2015, about 20 percent of U.S. households used mobile as the exclusive method for accessing the internet, according to the National Telecommunications and Information Administration.

source: NTIA

As you would likely guess, lower-income households tend to do so at greater rates than higher-income households. But even in the highest-income households, 15 percent use mobile as the exclusive form of internet access.

source: NTIA  

Small Cells and Millimeter Wave Spectrum are Key to 5G Cost

Though it is likely 5G infrastructure costs will rise for some service providers, costs might rise very slightly for many, and could be lower for some. Some fear capital investment could be double to triple the levels of 4G. By other estimates, 5G will require just four percent higher capital investment than did 4G.

But cost parameters are changing so much that some expect 5G capital investment might actually be less than 4G, even if the historic trend is that each next generation mobile platform requires incrementally more investment.

Korea Telecom says that, in its 5G deployment to support the recent Olympic games, the use of 28-GHz spectrum required small cells. But KT says that, compared to 4G, that meant four times the number of cells.

That sounds like a huge increase. In fact, it represents a shrinking of cell coverage radius only about 50 percent. And is well within historical changes in the mobile infrastructure business.

Since the earliest days of the mobile business, cell sizes have shrunk by perhaps three orders of magnitude.

source: ZTE

Through about 1995, for example, most of the increase in U.S. mobile capacity was driven by smaller cell architectures, not new spectrum. Since about 1996, new spectrum has played a bigger role in boosting mobile capacity. Still, the bigger share of capacity increases has been driven by use of smaller cells.

source: Science Direct

And some believe that even as new spectrum is added at high levels, the use of smaller cells might increase just as fast, even to support 3G and 4G networks, to say nothing of 5G networks.

source: Frank Rayal

The point is that it is hard to extrapolate clearly between infrastructure cost and the number of cell sites. But macrocells, which can cost $500,000 to $1 million each, are being reinforced with small cells that might cost as little as $1,000.

So even if most believe 5G investment will be higher because the reliance on small cells, to support millimeter wave frequencies, will drastically increase the number of new cell sites.

Also, all those cells will require backhaul, so estimates for spending on 5G backhaul likewise are higher than for 4G.

Others might not agree. Indeed, some argue 5G costs might well be lower than 4G, or might come at a slight premium. There are many reasons.

Small cells might only be needed in dense urban cores. Open source network elements, virtualization, better radios, use of unlicensed and shared spectrum or shared infrastructure will change the cost curve.

And small cells cost an order of magnitude less than macrocells. They might eventually, in volume, cost two orders of magnitude less.

The point is that the cost to build 5G networks might vary quite a lot.

Consumers Can't Tell You, Today, Whether They Want 5G

Steve Jobs, Apple co-founder, had some famous opinions about market research. One reason Jobs was skeptical about much market research is that it is impossible for a consumer to evaluate something that person has never seen, a reasonable enough assumption.

“People don’t know what they want until you show it to them,” he once said. “Our task is to read things that are not yet on the page.”

There is something of that happening when we take surveys of what people know and want from 5G, something they never have experienced, even if 5G arguably is similar in some ways to prior generations of mobile service.

A recent PwC survey, for example, found 46 percent of respondents were familiar with the term 5G, without prompting. So a majority of respondents presumably have no way of knowing what 5G is, or what it might mean.

The point is that some skepticism is warranted. People cannot make actual buying decisions about products they have not yet seen, touched, tasted, smelled or heard.

And, as often happens, respondents might be inconsistent about what they want most, and what they most are willing to pay to get.

Although respondents suggested reliability was the “most important” attribute, “faster speed” was the single change the greatest percentage of respondents indicated they would pay a higher fee to get.

source: PwC

Assuming that 5G delivers on its promise of faster speeds, around a third of customers indicated that they’d be willing to pay $5.06 more per month on average, versus $4.40 more per month for mobile customers, PwC says.

More would pay a premium for 5G if it provided “better quality video” on their mobile device. Some 29 percent of respondents suggested they would pay more for better video, compared to 25 percent of respondents similarly willing to pay more for better video on their fixed service.

The key caveat here is that most people do not know what the term 5G means. They have never had a concrete experience with 5G. They may not know they have to buy new devices. They have not been presented with a concrete offer. Nor have they been able to evalue better 4G services against new 5G offers.

Moreover, it is possible that the real value of 5G for new use cases will emerge most clearly on the enterprise side of the market, to support internet of things use cases, not consumer broadband. We soon will begin to test actual demand in the real world, and surprises could emerge.

People simply cannot make fully rational choices about products they have no experience with, with no actual pricing information, terms and conditions of use. Steve Jobs’ advice likely is warranted in that regard. People cannot tell you whether they want a product they have never seen.