More Millimeter Wave Spectrum for Mobile Operators?

A frequent prediction about mobile bandwidth demand is that 1,000 times more capacity will be needed. How that can happen is the issue.

A rough list of solutions suggests that about 10 times more capacity will be gained by new bandwidth allocations, another 10 times increase will be gained by changes in network architecture and a final 10 times improvement will be gotten from applying better signal processing, using better antenna solutions and other operational efficiencies.

So the Federal Communications Commission now is looking at whether 24 GHz spectrum can be released for mobile communications applications, part of an overall effort to free up more licensed, unlicensed and shared spectrum for communications applications.

The Notice of Inquiry occurs at the same time that Google has asked for permission to test communications across different high-frequency spectrum bands, including millimeter-wave systems operating in the 71 GHz to 76 GHz band and the 81 GHz to 86 GHz range.

Ironically, as networks get faster, consumers respond by consuming lots more data, as well.

Long Term Evolution 4G networks have a rather predictable impact on mobile data consumption: the amount of data consumed each month grows, compared to data consumption on 3G networks.

In fact, some studies also suggest that access to LTE networks also increases use of Wi-Fi.

A study of Android smartphone users by Devicescape, conducted over six months, found that 4G LTE users consumption of Wi-Fi and mobile data doubled, compared to data consumed by 3G users.

On average, 4G smartphone users consume 2.1 times more mobile data per month and twice as much Wi-Fi than their 3G counterparts.

This is due to the fact that 4G customers use their mobile device about 40 percent to 50 percent more than 3G users and consume richer content. Also, as a practical matter, one minute of use of LTE results in more consumption than one minute of 3G usage simply because more data can be transferred in the same amount of time.

A September 2014 report by Citrix found that video accounted for 52 percent of all mobile traffic, on both 4G and 3G networks.

But 4G users were 1.5 times as many requests for video over 4G LTE networks than on 3G networks, and those requests resulted in five times as much video data traffic on 4G compared with 3G.

Ironically, the more the supply, the more the demand.

But advances in computing capabilities now make possible more extensive use of spectrum that in the past has been unusable for communications purposes.

“Years ago, engineers and policymakers debated the feasibility and practicality of using spectrum above 2 GHz for mobile wireless services,” FCC Chairman Tom Wheeler noted.

More recently, 3 GHz has been seen as the highest frequency that could be used to support mobile operations.

The difference now is signal processing that allows practical communications at frequencies traditionally unusable. But cheaper signal processing now means it is possible to overcome propagation issues that have prevented use of millimeter waves for mobile or fixed communications apps.

So there now is optimism that frequencies above 24 GHz could be used to support mobile service, a previously-unthinkable option.

This matters for obvious reasons. More spectrum is needed. Also, the basic trade off–capacity and distance are inversely related–means very-high capacity is possible at millimeter wave frequencies, even if distance is limited.

Physics dictates the higher bandwidth possible at millimeter wave frequencies, even if coverage is more limited than at frequencies below 2GHz. Despite digital coding, potential bandwidth still is dictated by the number of oscillations a radio wave makes in a single unit of time.

In other words, at the peak of the cycle, coders might represent a positive bit, at the trough, a negative bit. So the total number of possible symbols depends on the frequency, or number of instances in a given unit of time that the waveform crosses between high and low states.

As the name implies, higher frequency signals have many more oscillations than lower frequency signals. Hence, more potential bandwidth, using any particular coding and modulation scheme.

The trade off is the effective distances at which such waves are useful for mobile or fixed communications, as millimeter waves are attenuated by water and, in some cases, oxygen. The trick is to use frequencies where attenuation is relatively lower, as is the case for optical communications as well.

Still, it seems highly probable that new frequencies, best suited for use in dense population areas, will be released for service, at some point.

by Gary Kim

Is U.S. Telecom Market About to Get Tougher?

Unless something rather unusual happens, it is likely that U.S. Internet access providers–and by direct implication cable TV and telco service providers–will in the future face tougher business models.

There are a few reasons. For starters, competition in the mobile and fixed segments of the business has heated up, and likely will get more intense.

That is going to cause pressure on gross revenue as well as profit margins, right at a point where access providers must invest heavily in their core networks to accommodate must-faster access speeds (gigabit fixed network speeds and fourth generation mobile network investments).

At the same time, new potential rules related to network neutrality will shape access provider revenue models, most likely in a more-limiting way. Regulating Internet access services using a common carrier framework also is a live issue, and likely would be worse, for ISPs.

The consumer impact could be substantial, though industry participants differ significantly on the direction of the impact. App providers think consumers would be better served under either net neutrality or common carrier rules.  ISPs take the opposite view.

In addition to reimposition of net neutrality rules for fixed operators, extension of “best effort only” access rules for consumer mobile services could be imposed for the first time. That arguably would make harder the task of maintaining quality of service in the mobile realm.

The net effect of possible future rules will be that “brute force” bandwidth upgrades will remain the dominant way of providing quality of service, compared to potential alternative network management methods.

Up to a point, that would be case under any scenario. But physical upgrades likely would be more important under either a common carrier or strong network neutrality regime.

Just how much bandwidth upgrade investments might be affected is unclear. A compelling argument can be made that major ISPs must now upgrade, for core business reasons, unrelated to policy changes.

In that sense, new network neutrality policies might be viewed as an irritant, at the margin. Common carrier regulation could have quite more impact.

It isn’t surprising that cable TV companies, telcos or Internet service providers oppose common carrier regulation, while ecosystem partners sometimes favor such regulation.

Common carrier regulation implies, and often imposes price controls, as well as shaping permissible features, terms and conditions of service.

When value in the Internet ecosystem is highly uncoupled–app providers can reach any customer so long as those customers have Internet access–”access” is an input to an app provider’s business.

For an ISP, access is the business. That explains the prevalence of past debates about dumb pipes and  smart pipes.

Current efforts by the Federal Communications Commission to shape regulation of Internet access inevitably will affect revenue models for app providers and access providers alike.

There is a larger context that might sometimes be lost, namely, whether it is socially useful to institute policies that arguably make it harder for a challenged and essential industry to invest in its business.

No matter how well intentioned, it ultimately matters whether our policy agenda reflects not only ways to solve perceived current problems, but also reflects the ways the policy context might soon change.

Of course, at the moment, contestants paint very different pictures of current reality. App providers say there is a danger access providers could behave anti-competitively. In other words, a few ISPs have such market power they need to be restrained.

Access providers, with an arguably harder case to make.  “Treat all apps equality” is an easier argument for someone to understand than “Some apps require quality of service mechanisms.”

“Freedom to use any app” is a more-appealing slogan than “Freedom to provide bundled or featured or better-performing apps.” It doesn’t matter if important nuances are lost.

“Freedom to choose and value for users” might be the outcome all contestants promise. But “app freedom” arguably is more appealing than “freedom to promote apps.”

Historically, regulatory disputes were relatively confined to a small number of market contestants and policy groups. What is different this time is the relatively higher profile of “app access” issues in the general public.

And by most accounts, public opinion has been mobilized extensively in favor of strong versions of network neutrality, with some attempting to push the debate into a “common carrier” direction, with unclear success.

So here is a potential danger. As logical as some believe network neutrality or common carrier regulation is, there always are implications for investment and business strategy whenever a significant change in regulation occurs.

And there almost always are shifts in competitive fortunes within the ecosystem. The Telecommunications Act of 1996 opened up competition in the local exchange market for the first time. AT&T, MCI and scores of new competitive local exchange carriers believed they would .  as a result.

Major changes in wholesale discounts–not to mention the acquisition of both AT&T and MCI by former Bell operating companies–eventually reshaped competitive fortunes. Facilities-based cable TV companies emerged as the single biggest beneficiary in the consumer market, even if many CLECs were able to sustain themselves in business customer markets.

Dynamics in the ISP–and therefore broader telecom business–likewise will be affected once the current regulatory reset has occurred.

That is not to say the outcome is ordained. But under the best of circumstances (from an ISP point of view), restrictions are going to increase.

Whether that is dangerous or not depends on one’s view of industry health. Up to this point, at least some U.S. providers have defied downward revenue trends, despite growing competition and maturation of key services.

So the issue is whether the U.S. access provider market is robust and profit rich, or becoming less robust and less able to afford investment in new facilities.

That is important, long term, since any government policies that limit some important ways of boosting revenue, at a time of product maturation, will consequently lead to lower investment. That is an issue European telecom regulators are dealing with.

On that score, there is some disagreement about growth prospects for future telecom global revenue. Some predict slow but rather steady growth. Others think a slowdown could happen.

The conventional wisdom arguably is for modest continued U.S. industry revenue growth. But none of the current forecasts have incorporated the potential impact of significant new revenue-reducing regulations.

Ironically, the worst situation is what we have now, namely uncertainty. Uncertainty tends to cause investment to lag. Certainty at least allows rational planning.

Service provider executives undoubtedly expect heightened competition and pressure on gross revenues and profit margins in any case.

Common carrier regulation might have significant long-term effect on investment decisions. Network neutrality arguably would have less near-term impact.

The one scenario virtually nobody believes is that, after the new regulations, whatever the outcome, ISPs will have an easier time growing revenue, creating new products and innovating.

by Gary Kim

Why M2M, IoT are So Important for Mobile Service Providers

“Connected cars” have recently become a key AT&T new product initiative, for perhaps obvious reasons: AT&T wants to fuel growth (revenue and subscriptions) for its mobile business.

And connected cars might well be a big business. The global connected-car market is estimated become a $49.5 bllion (39 billion euros) industry in 2018, up from $16.5 billion (13 billion euros) in 2012, according to forecasts in a forecast report from research firm SBD and the GSMA.

That report suggests $5.2 billion (4.1 billion euros) will be earned suppling mobile connections to vehicles. There are other plausible ways mobile service providers might benefit, however.

SBD forecasts that almost 21 million of the cars sold in 2018 will be fitted with smartphone integration systems (18 percent penetration) that rely on all or some of the intelligence being hosted on the owner’s smartphone.

That at the very least, will be another way to increase the value of mobile service from suppliers able to support that feature.

SBD further expects 10 million of the cars sold in 2018 to be fitted with tethered solutions (nine percent penetration), up from 2.6 million cars in 2012.

These tethered systems rely on intelligence embedded into the car, but use the owner’s mobile phone for connectivity. That wil both provide higher value, and also consumption of Internet access connectivity, allowing mobile ISPs to sell bigger service plans.

Over the next five years there will be an almost seven-fold increase in the number of new cars equipped with factory-fitted mobile connectivity designed to meet demand among regulators and consumers for safety and security features, as well as infotainment and navigation services.

By 2025, GSMA hopes, every new car will be connected in multiple ways.

AT&T expects meaningful subscriber growth for its connected car services in the next three to five years, and already supplies connections for almost two million vehicles already.

About 500,000 accounts were added in the third quarter of 2014.

In 2015, AT&T expects to serve nearly half of new mobile-connected U.S. passenger vehicles and also expects to serve more than 10 million vehicles by the end of 2017.

AT&T expects revenues from its connected cars to be driven initially by wholesale customer relationships with auto manufacturers, with the opportunity to develop a direct retail relationship with drivers.

Wholesale average monthly revenue per subscriber, paid for by auto manufacturers, is expected to be in the low single digits and retail ARPU, paid for by the car owners, is expected to be similar to that of a tablet on an AT&T Mobile Share Value Plan, or abouit $10 a month.

Beyond the connected car, there are other opportunities in the machine-to-machine and Internet of Things markets.

ABI Research, the installed base of active wireless connected devices will exceed 16 billion in 2014, about 20 percent more than in 2013. The number of devices will more than double from the current level, with 40.9 billion forecasted for 2020.

“The driving force behind the surge in connections is that usual buzzword suspect, the Internet of Things (IoT),” according to Aapo Markkanen, ABI Research principal analyst, who predicts that 75 percent of the growth between today and the end of the decade will come from non-hub devices: sensor nodes and accessories.”

And that is why mobile service providers, among others, are so interested in machine-to-machine applications and the Internet of Things. After connections serving people of all ages and their phones, tablets and PCs, the big growth will come from connections supporting sensors and other devices that communicate with servers.

Connected car is only the start

by Gary Kim

Kodiak Networks Selects Razorsight for Advanced PTT Data Analytics

Today, we’re proud to announce a major agreement with global Push-to-Talk (PTT) provider Kodiak Networks, which will be using our Executive Insights and Real Time Predictive Analytics products to improve operational performance and deliver a superior end-user experience that helps reduce churn, increase sales, and improve margins.

As explained by our VP of Sales, Paul Tardif: “This is a very exciting win for Razorsight. Kodiak is an innovator. Their advanced enterprise features include encryption for security, centralized contact and talk group management, and location-based dispatch. Kodiak is spearheading the growth of PTT as a ‘must have’ technology for hyper-mobile verticals ranging from construction to healthcare, transportation, public safety and government agencies. We look forward to partnering with Kodiak Networks and supporting them as they continue to advance rapidly in the market.”

Click here to read the official press announcement in its entirety.

What’s the most important question for telecommunications service providers?

Almost nothing is more important, for a service provider, than discovering and building new revenue sources big enough to replace equally-large legacy sources such as voice, messaging, Internet access or video entertainment. You might argue that is a bigger present reality for executives in developed markets than in developing markets. But limits to present revenue growth modes will be an issue for nearly all telecommunications service providers soon enough.  According to a new forecast by Strategy Analytics: though global mobile service revenue growth will accelerate in 2014, it is going to go flat in 2015.

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