FCC finally opens up 3.5 GHz for US telcos

It might be years overdue, but the Federal Communications Commission (FCC) has made the first tentative steps towards utilising valuable assets in the 3.5 GHz spectrum band.

Described as the C-Band, or at times the ‘Innovation Band’, the 3.5 GHz spectrum assets have been widely recognised around the world as the key to unlocking 5G in the short-term. Thanks to a more palatable compromise between coverage and speed, these spectrum assets have been the most desirable for telcos in Europe and Asia.

In appointing CommScope, Federated Wireless, Google and Sony as its four Spectrum Access System (SAS) Administrators, US telcos might have the opportunity to access the spectrum in the near future.

“The FCC has made it a priority to free up mid-band spectrum for advanced wireless services like 5G,” said FCC Chairman Ajit Pai. “And today, I’m pleased to announce the latest step to achieve that priority: the approval of four systems that will enable the 3.5 GHz band to be put to use for the benefit of American consumers and businesses.

“As with all of our efforts to execute on the 5G FAST plan, we’re pushing to get next-generation wireless services deployed in the 3.5 GHz band as quickly and efficiently as possible.”

While many of the US telcos have been preaching the benefits of mmWave spectrum to deliver 5G services, many have been critical of the approach. It might deliver eye-wateringly fast download speeds, though the coverage from cell sites is currently pathetic, as are the propagation characteristics. There is a very good reason the vast majority of regulators have prioritised the 3.5 GHz spectrum band; it offers increased download speed but does not frustrate on coverage anywhere near as much.

The issue for the FCC and US telcos in the 3.5 GHz spectrum band has been one of congestion. The US Navy has been utilising the spectrum in recent years and is reluctant to permanently vacate due to the compatibility of its equipment on ships and bases. Overhauling the US Navy radar system is hardly a simple task, though as it does not make use of the spectrum in all places and at all times, a new solution was needed.

What will emerge over the near future is an innovative dynamic spectrum sharing mechanism, with the four SASs key to the success. The 3.55-3.7 GHz band will now be split into 15 channels, with access for third parties and telcos being managed by the SASs, though the Navy will have priority use as and when demanded. However, the Navy’s use of the spectrum will largely be limited to the coastal areas.

While the US is very late to the 3.5 GHz spectrum party, it is bringing a very interesting idea with it. Such a dynamic spectrum sharing initiative is an excellent idea to make use of scarce and valuable assets. There will be numerous regulators watching this project very closely.

Liquid targets early 2020 for South African 5G wholesale launch

Liquid Telecom has said it plans to launch a 5G wholesale network in all major South African cities in early 2020.

The firm will make use of the 56 MHz of 3.5 GHz spectrum, building a wholesale network before most of the domestic operators have a chance to bid for their own 5G spectrum licenses. The team has previously said it has no intention of launches retail services in the market.

“This breakthrough 5G wholesale service will create innovation in every aspect of South African society and industry,” said Liquid Chairman Strive Masiyiwa.

“For the first time, mobile network operators and ISPs will have open access to Liquid Telecom’s new 5G mobile network. The launch of the service also underscores Liquid Telecom’s vision to bring high-speed connectivity to everyone.”

Although Liquid Telecom has a licence for the 3.5 GHz spectrum bands, the South African regulator, ICASA, is yet to decide plans for the rest. State-owned Telkom also has a licence, though it has not unveiled plans yet. MTN and Vodacom are yet to get their hands on the valuable assets, offering a very interesting opportunity for Liquid Telecom and its 5G wholesale network.

The unallocated 116 MHz of 3.5 GHz spectrum will be auctioned next year, though both MTN and Vodacom have said they are ready for aggressive deployments now. Rain is the only other to have access to 3.6 GHz spectrum, though it is rolling out fixed wireless access, as opposed to mobile, services currently.

“This is a milestone moment for Liquid Telecom South Africa,” said Liquid Telecom CEO Nic Rudnick.

“Our wholesale operating partners can exploit our new ultra-fast 5G roaming network to build the next generation of communications and make innovation possible, anytime, anywhere. 5G will facilitate real-time remote collaboration, improved business efficiency and lower costs – ultimately driving growth in the South African economy.”

Although it might seem unusual to discuss 5G for Africa considering the other challenges faced across the continent, South Africa should not be considered the norm.

In the most recent ‘State of the ICT Sector’ report from ICASA, population coverage for 4G is estimated at 85.7%, while it also estimates smartphone penetration is as high as 81.7%. These figures might be a bit massaged, as other estimates put the numbers noticeably lower, though South Africa is certainly ahead of other nations across the continent.

Looking at 5G penetration, Ovum estimates there could be some interest in 5G over the coming years. The business case for a Liquid Telecom wholesale network certainly seems to be present as it is assumed there is consumer appetite for 5G. The likes of MTN and Vodacom could be lured into a lucrative agreement while deploying their own networks over the next few years.

Total South African 5G subscriptions – Ovum World Information Service estimates
Telco 2021 2022
Vodacom 488,244 1,043,443
Telkom 250,025 436,656
MTN 329,575 707,212
Cell C N/A 380,522

Canada preps the industry with hint of regulatory disruption

The Canadian Competition Bureau is suggesting competition is not healthy in the country and new regulation could emerge to encourage the creation of new challengers.

Having submitted initial feedback for a Canadian Radio-television and Telecommunications Commission (CRTC) review, the competition agency is suggesting significant market power for Bell, Telus and Rogers in most regions across the country, which could mean retail connectivity tariffs are 35-40% higher. Regulators are often very sensitive to when the consumer’s wallet takes unnecessary damage, especially when it comes to a concentration of competition.

For the moment, these comments will not mean too much, though the telcos should keep a wary eye on the situation. The Competition Bureau has pointed to the presence of regional challengers, such as Sasktel, Videotron and Freedom Mobile, as having a positive impact on prices for the consumer, perhaps offering ammunition for the CRTC to force through regulatory disruption.

Country Average price per GB ($) Percentage of monthly income
Canada 12.02 0.322%
Australia 2.47 0.056%
New Zealand 9.87 0.288%
UK 6.66 0.193%
USA 12.37 0.236%

Canada’s connectivity prices are by no-means the highest worldwide, but in comparison to the other members of the ‘Five Eyes’ alliance, they are expensive. Only the US telcos charge more per GB on average, though US consumer wallets maybe more tolerant to higher prices thanks to higher incomes.

The feedback from the competition watchdog seems to be suggesting a regulatory framework which would not be welcomed by the Canadian MNOs. Allowances could be made for MVNOs to enter the market, though the regulatory landscape could well be adjusted to aid the same companies in creating their own scaled and independent networks to compete alongside the ‘Big Three’.

“The CRTC should allow wireless disruptors to act as MVNOs as a transitional step to becoming full-fledged facilities-based providers as they continue their expansion,” the Competition Bureau’s submission suggests.

“This would ensure that the progress made by these providers to date will continue to pay dividends to Canadians. An investment-based MVNO policy achieves the goal of spurring additional price competition from wireless disruptors in the short term, while avoiding the risk of declining network quality in the long term.”

The issue which Canada faces here is a simple to understand but very difficult to overcome. Telecommunications is a very CAPEX intensive business at the best of times, but when you throw in Canada’s expansive and often aggressive environment, introducing a new player becomes even more difficult.

Should Canadian authorities want to encourage the growth of scaled competitors for the ‘Big Three’ there will need to be assistance. This might take the form of forcing lower wholesale prices on the current MNOs, as well as more direct regulatory/financial assistance for the challengers. Interestingly enough, next year’s 3.5 GHz spectrum auction could cause some headaches.

As we have seen in other markets, Germany for example, regulators have a tendency to use spectrum auctions to rebalance the distribution of power. With 3.5 GHz being viewed as an incredibly valuable spectrum asset for future connectivity, the slated 2020 auctions could be an opportunity for the Canadian Government to encourage more competition in the country.

For Bell in particular, this is not welcome news. The current market leader decided to sit out the already expensive 600 MHz auction in April, turning attention to next years’ 3.5 GHz sale instead. If the Canadian Government starts placing difficult obligations or limits on purchases, this might prove to be a red-tape maze of nightmares.

Although the pursuit of increased competition to aid consumers is a valiant cause for authorities to champion, the current chaos in India should serve as a warning for the Canadians. India was a market which was perhaps in need of a disruption (like Canada) due to high data prices and the risk of a digital divide emerging (like Canada), though authorities did not strike the correct balance.

With arguably too much assistance offered to Reliance Jio, the market risks heading towards an environment with even less competition. Telenor has already given up on India, Vodafone and Idea merged, with the new company now financially strained, state-owned telcos are being propped up with bailouts and Bharti Airtel looks uncomfortable. This is a perfect example of what happens when regulations to encourage the growth of challengers are implemented in an ineffective manner.

No concrete plans have been made yet, but this is an area certainly worth keeping an eye on. New rules and regulations are likely to be slated over the coming months, though it will be very difficult to strike the right balance and avoid another debacle like we have been watching in India.

US starts edging towards mid-band spectrum release

The Federal Communications Commission (FCC) has released a statement all the telcos have been waiting for; there is finally going to be a spectrum auction for the 3.5 GHz band.

The telcos will have to wait more than year to access the valuable spectrum assets, though the FCC team will hope to discuss rules and procedures to carve up the much-desired mid-band spectrum next June. The auction will likely be later in the year or early 2021, though it is evidence of the slow-moving wheels of progress.

“Making more spectrum available for the commercial marketplace is a central plank of the Commission’s 5G FAST strategy,” FCC Chairman Ajit Pai said in a blog post.

“We’ve already completed two spectrum auctions this year and will begin a third on December 10. And at our September meeting, we will vote to seek comment on draft procedures for an auction of 70 MHz of spectrum in the 3.5 GHz band to begin on June 25, 2020.”

For the telcos, this will be welcome news. The US has largely focused on high-frequency spectrum bands, the mmWave assets, though commentators have suggested this has not been able to deliver the desired experience for 5G connectivity. High speeds might be achievable, however there is a serious compromise to be made on the coverage maps.

This is where the European telcos are reaping the benefits. Most of the 5G launches have been based on mid-band spectrum, striking what is a much more palatable balance between increased speeds and reasonable coverage. This coverage can later be supplemented by higher frequency connectivity to add additional speeds in the future, though the 100+ Mbps speeds should be more than enough for the moment.

“The 3.5 GHz band is prime spectrum for 5G services,” Pai said. “But when I became Chairman, we didn’t have the right rules in place to encourage the deployment of 5G in the band.

“That’s why I asked Commissioner O’Rielly to lead our effort to adopt targeted updates to the licensing and technical rules for the 3.5 GHz band with the aim of promoting more investment and innovation.”

Alongside frequencies in the 3.5 GHz band, the FCC is also considering new procedures to free-up more spectrum in the 3.7-4.2 GHz frequency range. Currently being used for video, this band will offer much more opportunity than the 70 MHz being released for auction in the 3.5 GHz band.

Although the mmWave frequencies will be critical in delivering the promised speeds for the 5G era, it does look like the US has gone the long-way around delivering the foundations for 5G. European telcos and regulators have generally prioritised mid-band spectrum, allowing for a 5G-ish experience on current network densities, with the long-term ambition of supplementing with higher frequencies.

This approach seems to be a much more reasonable one. It creates a foundation layer, with coverage maps consumers have come to expect, though speeds can grow as adoption increases and applications emerge which require the ridiculous speeds which are being promised.

With these auctions promised by the FCC, the US is heading in the right direction, albeit, quite slowly.

Ericsson, Intel and Telstra do commercial 5G over licensed 3.5 GHz

The trend of networking vendors, modem makers and mobile operators combining to demo commercial 5G continues with Ericsson, Intel and Telstra doing their thing over 3.5 GHz.

Each new demo claims an important incremental step towards doing 5G in real life and this one was no exception. This ménage a trois has already yielded a demo designed to show how great for long-distance gaming 5G will be and more recently the three took part in a bit of multi-vendor lab-based action in Stockholm.

This time they went back to Telstra’s 5G Innovation Centre (pictured) and the most significant bit seems to have been the claimed completion of ‘the first end-to-end 5G non-standalone data call on a commercial mobile network’. It was done on Telstra’s licensed 3.5 GHz spectrum, using Ericsson radio, baseband and packet core and Intel’s 5G mobile trial platform.

“Demonstrating this 5G data call end-to-end using my own personal SIM card on Telstra’s mobile network is the closest any provider has come to making a ’true’ 5G call in the real world-environment, and marks another 5G first for Telstra,” said Telstra’s Group Managing Director for Networks, Mike Wright.

“We’re quickly moving towards 5G commercial reality,” said Fredrik Jejdling, Head of Networks at Ericsson. “Achieving the first commercial data call with our partners Telstra and Intel shows the progress we’ve made from testing the technology in a lab to a 5G commercial network environment. 5G is open for business and Ericsson is helping customers get it done.” Someone from Intel said much the same, but with Intel replacing Ericsson in the quote.

Meanwhile Samsung unveiled some 5G kit for 3.5 GHz and 28 GHz, according to a report from ZDNet. Apparently the Korean tech giant want to grab 20% of the global network kit market, which is quite a jump from its current 3%. Samsung seems to think all the aggro ZTE and Huawei are having to deal with in the US might give it the opportunity it needs.

Another report from Bloomberg, however, begs to differ. An exec from SK Telecom indicated there is no favouritism towards Samsung and Huawei seems to think thinks like price competitiveness are more important than US security concerns. Ericsson and Nokia, while presumably alarmed by Samsung’s ambitions, must be pleased to see Huawei declared at its main competitive target.