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.

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.

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.

source: GSMA

source: Strategy Analytics

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.”

Will Pervasive Computing Shift Enterprise IT Spending?

No matter how you decide to characterize “computing” these days, as it becomes more pervasive, most computing simultaneously has more of an  “enterprise” character, even as the purpose of enterprise computing increasingly has been to serve “consumers.”

Most mobile apps rely heavily on cloud computing, for example, and much cloud computing supports content delivery to consumer devices, for example. Where in past decades “computing” supported internal enterprise functions, computing these days most often support consumer content delivery.

On the other hand, in the next wave of computing, though human users will continue to be a key focus, more computing will shift back to more-traditional “enterprise” applications, where the purpose of computing is to support internal organization functioning (industrial processes, health processes, vehicle control, traffic management).

Just how enterprise IT spending might shift will be an issue as pervasive computing is enabled.

source: Morgan Stanley

Worldwide information technology spending is projected to total $3.5 trillion in 2017, a 2.4 percent increase from 2016, according to Gartner, including a one percent higher impact due to currency issues.

IDC estimates global IT spending will grow by 4.5 percent in 2017 in constant currency terms, a significant improvement on last year’s growth of 2.5%, with stronger upgrade cycles for infrastructure and mobile devices leading the improvement in the second half of the year.

But IDC also estimates total IT spending at $2.1 trillion.

Asia/Pacific (excluding Japan) will post the strongest regional growth in IT spending in 2017, set to increase by eight percent in constant currency terms, followed by the United States at four percent.

China and India are both expected to post overall IT spending growth of 10 percent in constant currency terms in 2017.

IT spending growth will be weaker but stable in Western Europe (three percent), Canada (two percent), and Japan (two percent).

Worldwide IT Spending Forecast (Billions of U.S. Dollars)

	2016 Spending	2016 Growth (%)	2017 Spending	2017 Growth (%)	2018 Spending	2018 Growth (%)
Data Center Systems	170	-0.3	171	0.3	173	1.2
Enterprise Software	326	5.3	351	7.6	381	8.6
Devices	630	-2.4	654	3.8	677	3.6
IT Services	894	3.2	922	3.1	966	4.7
Communications Services	1,374	-1.3	1,378	0.3	1,400	1.6
Overall IT	3,396	0.3	3,477	2.4	3,598	3.5

source: Gartner

Will Global Telecom, Having Moved From Monopoly to Oligopoly, Wind Up a Duopoly or Monopoly, Again?

Those of you who remember the monopoly period of telecom have by now gotten quite used to how different a competitive framework really is. But some analysts predict we might already have passed the absolute peak of competition, in most markets, globally.

What follows is not so clear. It seems unthinkable that we ever can return to the old days of sanctioned monopolies. But we have gotten comfortable (or at least resigned to the situation) with marketplace-created oligopolies.

What might come next could be equally unsettling, if present trends (lower average revenue per user, subscriber saturation, more-expensive networks) persist, could be quite a change.

Simply, if the typical “telecom services provider” can earn less revenue, at lower profit, than presently is the case (or has been possible in the past), then consolidation is inevitable, to boost both revenue mass and allow higher sustainable profit margins.

The big challenge for policymakers then will shift to frameworks that promote investment and competition where there are far fewer suppliers able to remain in business.

Though it seems unthinkable, some executives within the U.S. cable industry, for example predict and favor the emergence of a single cable company with national scale. Regulators have opposed such a situation in the past, and have taken steps to limit the total market share any single cable company, or telco, can have.

And though it might seem equally unthinkable, if that single cable operator emerges, is there room in the market for two “telecom” operators with national scale? Might the new oligopoly consist of one big cable company and one big telco? In other words, might the former duopoly (of one cable company and one telco) become an even-bigger duopoly?

Where today one cable company and one telco--but not the same telco and cable company--compete in virtually every market, could consolidation produce a situation where the same telco and cable company compete across 90 percent of the U.S. market?

That would require a historic change in in thinking about permissible market share. Many observers would worry about the reduced competition. But it also is possible that competition migrates elsewhere in the ecosystem.

Some might argue that already is happening, as app and device providers take more share of the “telecom spend.”

source: Deloitte University Press

Such a development would not preclude the existence of many smaller specialists, even some with facilities. Firms serving rural areas and metro specialists might continue to exist. But the “access” function might become much more consolidated.

How much that could matter remains to be seen. If surviving service providers have moved “up the stack,” then perhaps much of the competition will occur there, and not at the level of access. Most executives at service provider organizations might be quite happy, were that to be the case, as it would means that their organizations indeed have moved “up the stack,” and earn much of their revenue from applications, platforms and services, not access.

Apparently Nobody Likes Dumb Pipe, ISPs or Customers

Apparently, nobody--customers or providers--is too happy with dumb pipe. “Customers rank internet as the line of service with the lowest return on their investment,” a study by InMoment finds. Internet access also “is the line of service with which they are least satisfied and least likely to recommend.”

North American customers also say internet is the line of service with which they are least satisfied and least likely to recommend. Streaming services sit at the opposite end of the spectrum, ranking highest among customers among the categories of internet access, subscription TV, telephone service, mobility and streaming video services.

In fact, InMoment says consumers tend to view their service providers as “the enemy,” the customer experience study by InMoment found.  

Beyond, that, “ the industry has become an unsympathetic target everyone loves to hate,” InMoment’s survey of 11,000 North American consumers suggests.

In fact, service  providers themselves “are still viewed as a necessary evil rather than lauded for providing much-needed services,”  InMoment says.

Generally speaking, one would expect satisfaction scores to rise over time, as unhappy customers desert, while relatively more-satisfied customers remain. That does seem to borne out by the InMoment finding. After two years, scores generally rise, even if. after a year, most consumers are less happy.

“Satisfaction decreases universally for the first time at the one year mark, no matter the line of service,” InMoment says. “The same pattern occurs with a customer’s likelihood to recommend.”

“Customers who have switched providers in the last year rate key areas of the end-user experience lower than those who have not switched providers,” the study finds.

source: InMoment