FCC Chairman convinced by T-Mobile/Sprint concessions

FCC Chairman Ajit Pai has publicly stated he believes the concessions made by T-Mobile US and Sprint are enough to ensure the merger would be in the public interest.

Over the course of the weekend, rumours emerged over concessions the pair would have to make to get the support of the FCC, though rarely are sources so spot on. The merged business will now have to commit to a nationwide 5G deployment within three years, sell Sprint’s prepaid brand and promise not to raise prices during the rollout years, if it wants the greenlight of the FCC.

What is worth noting is this is not a greenlight just yet. Pai has said yes, though he will need a majority vote from the Commissioners. Commissioner Brendan Carr has already pledged his support, and we suspect Michael O’Reilly will in the immediate future also. The Democrats might want to throw a spanner in the works, but this would be largely irrelevant with O’Reilly’s support.

“In light of the significant commitments made by T-Mobile and Sprint as well as the facts in the record to date, I believe that this transaction is in the public interest and intend to recommend to my colleagues that the FCC approve it,” Pai said in a statement.

“This is a unique opportunity to speed up the deployment of 5G throughout the United States and bring much faster mobile broadband to rural Americans. We should seize this opportunity.”

As you can imagine, T-Mobile US CEO John Legere certainly has something to say on the matter.

“Let me be clear,” Legere stated in a blog entry. “These aren’t just words, they’re verifiable, enforceable and specific commitments that bring to life how the New T-Mobile will deliver a world-leading nationwide 5G network – truly 5G for all, create more competition in broadband, and continue to give customers more choices, better value and better service.”

The first commitment made by T-Mobile US and Sprint is a nationwide 5G network. Considering Legere has been claiming his team would be the first to rollout a genuine 5G network for some time, it comes as little surprise the FCC will want to hold him accountable.

Over a three-year period, presumably starting when the greenlight is shown, the new 5G network will cover 97% of the population. 75% of the population will be covered with mid-band spectrum, while the full 97% will have low-band. This is a very traditional approach to rolling out a network, as it meets the demands of capacity and efficiency, though there is a sacrifice on speed.

Perhaps more importantly for the FCC, the plan also covers objectives to bridge the digital divide. 85% of the rural population will be connected during this period, increasing to 90% after six years. This is not to say all the farmers fields will be blanketed in 5G, though it does help provide an alternative for the complicated fixed broadband equation in the rural communities.

Moving onto the divestment, selling Sprint’s Boost prepaid brand seems to be enough to satisfy the competition cravings of Pai. What is worth noting is this will not be a complete break-away from the business as it will have to run on the T-Mobile US network. Unfortunately, MVNOs in the US are not as free to operate as those in Europe, as switching the supporting network would mean have to change out all the SIM cards.

This becomes complicated as you do not necessarily know who your customers are in a prepaid business model. The situation certainly encourages more competition, it will after all not be part of the T-Mobile US/Sprint family anymore, but it is far from a perfect scenario.

Finally, Legere has promised tariffs will not become more expensive during the deployment period, another worry for the FCC should the duo want to meet the ambitious objectives to compete with AT&T and Verizon. However, it does appear Legere is promising 5G tariffs will not include a premium either.

And now onto the other side of the aisle. Commissioner Jessica Rosenworcel has tweeted her opinions on the concessions and it appears she is not convinced.

“We’ve seen this kind of consolidation in airlines and with drug companies. It hasn’t worked out well for consumers. But now the @FCC wants to bless the same kind of consolidation for wireless carriers. I have serious doubts.”

Rosenworcel has also suggested the decision should be put out for public consultation. We suspect Pai will want to avoid this scenario, as it would be incredibly time-demanding; the Chairman will want the merger distraction off his desk as soon as possible.

Commissioner Geoffrey Starks is yet to make a comment, but DO NOT, I repeat, DO NOT go on his Twitter page if you haven’t watched the latest Game of Thrones episode.

We understand the Democrat and Republican Commissioners are going to be at each other’s throats over pretty much every decision, however trolling any innocent individual with a GoT spoiler is a low blow.

Starks and your correspondent are going to have some issues.

Sunrise plugs FWA in Swiss 5G launch

Swiss telco Sunrise has jumped on the 5G bandwagon with the launch of a Fixed Wireless Access (FWA) offering aiming to bridge the digital divide.

Like the UK, Switzerland is one of the more sluggish European nations when it comes to fibre penetration. According to the latest statistics from the Fibre to the Home Council, Switzerland currently has FTTH penetration rate of 7.8% across the country, potentially creating a digital divide. This offering from Sunrise is using such a chasm to promote its FWA offering.

“In the digital age, residential and business customers alike need fast Internet with speeds of up to 1 Gbps,” said Olaf Swantee, CEO of Sunrise. “But in many places, customers are waiting in vain due to a lack of fiber optic connections.

“With 5G for People we are filling this gap, e.g. in Unterkulm (AG), where the first Sunrise 5G pioneer switched on his Sunrise Internet Box 5G and can now use ‘fibre through the air’, which is ten times faster than fixed networks. 5G for People is closing the digital divide in Switzerland and making Switzerland Europe’s pioneer in digital infrastructures.”

The initial launch will focus on 150 cities, towns and villages across the country, with each location aiming for between 80% and 98% population coverage, the aim will be to provide an alternative to fixed broadband services, some of which will be considered sub-standards by the demanding consumer of today.

Interestingly enough, the claims themselves demonstrate the difference in attitude between advertising authorities in the UK and Switzerland.

Using a statement such as ‘fibre through the air’ and comparing the 5G service to copper fixed networks not fibre, might irk some advertising authorities. Although it is not a direct lie, it is not telling the entire truth of the situation. Some might suggest this is misleading the customer through omission of information. We suspect the Advertising Standards Authority (ASA) in the UK would have an issue with some of these claims.

Sunrise is on the charge through the Swiss alps, with its latest acquisition of Liberty Global’s assets adding momentum. First to market does not necessarily mean much in the long-run, but it is good ammunition to add to the armoury.

FWA can be the fuel for fibre ambitions – Huawei CTO

Fixed wireless access (FWA) should not be considered an alternative for fibre connectivity in the home, but that does not mean it should be ignored as a usecase to justify expenditure.

“5G is not about speed but about making money,” said Paul Scanlan, CTO for the Huawei Carrier Business Group.

Those who are basing business models around the idea that 5G will deliver faster connectivity are heading down a perilous road. There will be an opportunity to make money from faster connections, but a 5G-orientated telco thinks about the economics of connectivity differently, according to Scanlan. One example is the FWA buzz.

In some circles, FWA is being touted as an alternative to fibre broadband. For Scanlan, this is short-sighted, but it can create a more attractive position to ease the transition from legacy networks through to the future proof infrastructure.

Two concepts of fibre connectivity are completely unavoidable; firstly, its expensive to deploy a fibre network, and secondly, its very time-consuming. The materials are in high-demand pushing up the price, digs are laborious and planning permission laws can create a complicated red-tape maze. These are some of the reasons mobile connectivity vastly outstrips fibre deployments, which generally only grow 5% a year.

In certain geographies, the FWA usecase is an incredibly valuable one. Not only is it quicker to deploy, offering fibre-like speeds sooner rather than later, it is cheaper. Telcos can start delivering fibre-like broadband services immediately, increasing customer satisfaction, while these revenues can offset the heavy financial demands of deploying fibre. It’s a slightly different mindset, but FWA could aid the inevitable.

This is where the ‘bigger, faster, meaner’ mentality of the telcos could create a risk. It is simply not sustainable. Connectivity is becoming increasingly expensive, and consumers are paying less. This is not an attractive equation, but new services can eliminate the chasm.

Latency and transmission are two areas which are not attracting as much attention but could be the difference between the digital service provider of tomorrow and a utilitised telco for connectivity. With 5G, Huawei is promising latency can be reduced by 30-50X, while throughput can be increased by 16X; these numbers can create a more attractive business model.

On the latency front, there are some telcos across Asia who are attempting to monetize latency, creating added value services for gamers. For $1 a month, gamers can turn-on ‘low latency mode’ which can be the difference between winning and losing for certain titles. At $1 a month, it isn’t going to turn the tides, but enough of these value-adds fights back against the pressure of utilitisation trends.

Another interesting usecase is in the smart factory, using latency to remove intelligence off the robots. Scanlan highlighted very few people would buy a $1 million robot, but demand would be much higher for the same device priced at $1,000. The difference between the two could be removing the intelligent component from the robot and hosting them in the cloud. But for this to be a reality, latency would have to be significantly reduced. This is another monetization opportunity for the telcos.

Looking at transmission, Scanlan points to consumer traffic growth. If growth continues its current trajectory, at least 25% year-on-year, 4G will hit a glass ceiling within three years. 4G would have to increase network densification by 160% to meet the demands, though 5G could be the answer. Yes, there will need to be more small cell sites to address the coverage requirements, but each of these sites will have dramatically increased capabilities to deal with the traffic consumption.

Huawei claims CAPEX expenditure would have to increase by 5X for 4G to meet the demands if traffic increased by 50%, though it would only be 1.8X for 5G infrastructure. This creates a much more palatable equation for a scenario which is inevitable.

“What is the real reason for big 5G, it is significantly more efficient,” said Scanlan.

5G is faster, there is no avoiding this fact, but building a business around such a narrow focus is incredibly dangerous. The days of the ‘bigger, meaner, faster’ mentality is quickly dying in the telco world.

T-Mobile uses FWA and digital divide as latest Sprint merger justification

T-Mobile US has announced the launch of an LTE Fixed Wireless Access service, which could address the connectivity needs of 50 million people, assuming the Sprint merger is approved of course.

It hasn’t been billed as an Uncarrier move from T-Mobile, however it has the potential to be quite disruptive. The team has pointed to statistics which suggest 61% of rural customers either have no or only one home broadband services available to them, offering a significant opportunity for CEO John Legere and his magenta army, if they can prove the concept works effectively.

In the first instance, T-Mobile plans to invite 50,000 customers to participate in the live trial, though should the bureaucrats approve the Sprint merger, the team would be able to open this up to 9.5 million customers by 2024. And thanks to 5G, T-Mobile is promising speeds “in excess” of 100 Mbps to 90% of the forecasted FWA footprint, also by 2024.

“Two weeks ago, I laid out our plans for home broadband with the New T-Mobile,” said Legere. “Now, we’re already hard at work building toward that future. We’re walking the walk and laying the foundation for a world where we can take the fight to Big Cable on behalf of consumers and offer real choice, competition and savings to Americans nationwide.”

Although FWA is not a long-term, realistic alternative to fibre, at least not on the current airwaves, T-Mobile could certainly craft a useful position here. Pricing the service at $50 per month, the team suggests customers could save $360 per year, assuming the average monthly cost of home broadband is $80.

For T-Mobile this is perfect timing to plug the benefits of the Sprint merger and gain the interest of influential politicians. With the 2020 Presidential Election machine beginning to crank into first gear, potential candidates and the President himself will be looking for soundbites to rollout to the Middle America rallies. The FWA service ticks two boxes here.

Firstly, with so many rural consumers (and potential voters) either unable to purchase a home broadband service, or only having a single option, T-Mobile is providing an answer. In most cases, the reason home broadband is not available is due to an inability for the telco to prove ROI or the geographical landscape makes it incredibly difficult. FWA addresses these problems.

Secondly, $360 is a lot of money. T-Mobile has a track record of undercutting rivals while delivering a service which is at least on par. This might well be an offering which will attract the interest of many.

Should any politician be involved in forcing the T-Mobile and Sprint merger through, it would be an excellent anecdote for the ambitious politicians to take to potential voters. Not only are they delivering Middle America the internet, they are doing it cheaper than what is available to everyone else around the country.

T-Mobile is promising the merged company will use a low-cost structure to aggressively capture market share by undercutting rivals. This strategy is not only a chance for Legere to further irritate AT&T and Verizon, but it is a massive plug for the merger. In an FCC document, T-Mobile suggests by “monetizing available spectrum and leveraging off of other deployed network assets, the in-home service will be profitable on its own”. The underlying message is quite clear; look what we can do once you greenlight the merger.

Interestingly enough, T-Mobile seems to be fighting the competition concerns in the wireless market, with the opportunity to enhance competition in the wireline market. Soon enough, the merger judges will have to decide what is more important; maintaining the four MNO balance or creating more competition in the home broadband arena.

“These pro-competitive and pro-consumer in-home broadband benefits are clearly merger-specific, verifiable, and compelling considerations to inform the Commission’s overall review of the merger’s effects on competition and the public interest,” the statement to the FCC reads.

Another point which will gain the attention of the pro-consumer politicians and bureaucrats is the promise of free hardware. T-Mobile is promising the LTE router will be provided and installed at no-cost to the consumer, and as soon as 5G is available in the area, the upgraded 5G router will be provided free of charge.

The merger is still hanging in the balance, but the promise of increased competition in the broadband world, especially with the prospect of a race to the bottom, might turn some heads. The pros and cons of the T-Mobile/Sprint merger are starting to become very interesting

Nokia launches a 5G FWA router and Optus buys some of them

Nokia’s big MWC 2019 reveal went big on 5G fixed wireless access with the launch of its FastMile 5G Gateway.

FWA is a popular early use-case for 5G. It’s presumably a lot simpler to set up a 5G connection to a static domestic router than to a mobile handset, but you still get to say you’ve done some 5G. Aside from showcasing 5G in the wild, FWA is all about providing decent broadband to places that otherwise lack it.

Nokia claims the FastMile 5G Gateway serves up 10-25 times more bandwidth then LTE. It uses sub-6 GHz 5G spectrum, so will still have half-decent range. It’s being described as ‘plug-and-play’, which is geek-talk for ‘easy to set up’ and seems like a fairly inoffensive bit of industrial design. We don’t know what its costs though.

FWA is also being positioned as an early bit of ROI for operators upgrading their networks to 5G, although Nokia is only anticipating around 50% growth in its use – from 18 million to 27 million households globally – by 2022. When you’re dropping a ton of cash on a network upgrade it’s never to early to have something to show for it.

One operator that seems at least partially convinced is Optus in Australia, where you can imagine there are a fair few remote households in need of a bandwidth boost. It has been the first to trial the FastMile in a live network and seems to think it’s gone well, so much so that it will have 50 live 5G sites using it by the end of March.

“These are historic milestones for Optus as we focus on delivering our customers the very best 5G experience,” said Allen Lew, CEO at Optus. “Nokia has partnered with Optus to accelerate our preparations for 5G and as a result we are first in the world to deliver live 5G NR FWA services using the Nokia’s FastMile 5G Gateway.”

“We are excited to partner with Optus on their 5G vision with solutions that will create a better, more connected future for Australia,” said Sandra Motley, President of Nokia’s Fixed Networks Business Group. “With our 5G FastMile solution Optus will be able to unlock the full potential of its mobile network and deliver new ultra-broadband services to customers.”

The rest of Nokia’s announcements were predictably 5G-ish too. There are some trials and general 5G conviviality with Bharti Airtel, Korea Telecom and Vodafone. On top of that Nokia is helping Sony Pictures bleed its Spiderman asset yet again by combining with Intel to serve up some kind of 5G VR experience at their respective MWC booths.

 

 

The US digital divide – does anyone have a clue what’s going on?

Depending on who you listen to the severity of the digital divide varies greatly. But with so many different opinions, how do you actually know what is going on? And if you don’t have a clue, how can you possibly solve the problem?

This topic is one which carries a particularly heavy amount of political charge, for good reason might we add, and is not limited to the US. Digital inclusion is a buzzword and objective associated with almost every nation due to the increasingly complex and embedded role digital is having in our lives. Every society should be considering strategies to ensure everyone is taken forward into the digital utopia, but the success of such initiatives is questionable.

Here we are going to have a look at the US market, but not question how successful the political administration and telcos have been at closing the gap, but whether they have the right foundations in the first place. To tackle a problem, you have to actually know what it is, and this is where we feel the industry is failing right now.

First of all, let’s start with the obvious issue. The telcos clearly favour the denser urban environments due to the economics of connectivity; providing customers the internet is an expensive job in the beginning. Not only do you have to buy the materials and the equipment, you have to process planning permission, deal with lawyers and do the dirty-job of civil engineering. But, you also to have to have the confidence customers will buy services off you. When there is such a sparse residential population in a region, it can be difficult to make the equation add up.

This is the issue in the US, and perhaps why the digital divide is so much bigger than somewhere like the UK. The land mass is substantially bigger, there are a huge number of isolated communities and connectivity tariffs are much more expensive. The problem has been compounded every time connectivity infrastructure improves, creating today’s problem of a digital divide.

But, here lies the issue. How do you solve a problem when you have no idea what the extent actually is?

An excellent way to illustrate this is with a road-trip. You know the final destination, as does everyone trying to conquer the digital divide, but if you don’t know the starting point how can you possibly plan the route? You don’t know what obstacles you might encounter on the way to Eden, or even how much money you will need for fuel (investment), how many packets of crisps you’ll need (raw materials such as fibre) or how many friends you’ll need to share time at the wheel (workforce).

The industry is trying to solve a problem when it doesn’t understand what it actually is?

The FCC don’t seem to be helping matters. During Tom Wheeler’s time in-charge of the agency, minimum requirements for universal broadband speeds were tabled at 25 Mbps, though this was then dropped to 10 Mbps by today’s Chairman Ajit Pai. Rumours are these requirements will once again be increased to 25 Mbps.

Not only does this distort the image of how many people have fallen into the digital divide, it messes around with the CAPEX and OPEX plans of the telcos. With higher requirements, more upgrades will be needed, or perhaps it would require a greenfield project. Once you drop the speeds, regions will once again be ignored because they have been deemed served. If you increase these speeds, will the telcos find a loophole to ignore them, or might they unintentionally slip through the net?

Under the 25 Mbps requirements it has been suggested 24 million US customers, just over 7%, fall into the digital divide, though this is an estimate. And of course, this 25 million figure is only meaningful if you judge the digital served customers as those who can theoretically access these products.

A couple of weeks ago, Microsoft released research which suggested the digital divide could be as wide as 150 million people. We suspect Microsoft is stroking the figures, but there will certainly be a difference because of the way the digital divide has been measured.

In the research, Microsoft measured internet usage across the US, including those who have broadband but are not able to surf the web at acceptable speeds. Microsoft considers those in the digital divide as those who are being under-served, or have no internet at all, whereas the FCC seems to be taking the approach of theoretical accessibility. There might be numerous reasons people fall into the digital divide but are not counted by the FCC, price of broadband for example, but this variance shows the issue.

Another excellent example is in Okta’s speed tests across Q2-Q3 which have been released this week. The Okta data suggests a 35.8% increase in mean download speed during the last year, ranking the US as the 7th best worldwide for broadband download speeds. According to this data, average download speed across the US for Q2-Q3 was 96.25 Mbps. This research would suggest everything is rosy in the US and there is no digital divide at all.

As you can see there is no consolidated approach to arguing the digital divide. Before we know it campaigning for the next Presidential Election will begin and the digital divide will become another political tool. Republican’s will massage the figures to make it seem like the four-year period has been a successful one, while Democrat’s will paint a post-apocalyptic image.

And of course, it is not just the politicians who will play these political games. Light Reading’s Carol Wilson pointed out Microsoft has a commercial stake in getting more bandwidth to more people so that more people can access their cloud apps and make them more money. Should we trust this firm to be objective in contributing to the digital divide debate? Even if the digital divide is narrowing, Microsoft will want to paint a gloomy picture to encourage more investment as this would increase its own commercial prospects.

The issue which is at the heart of the digital divide is investment and infrastructure. The telcos need to be incentivised to put networks in place, irrelevant as to the commercial rewards from the customer. Seeing at this bridge is being built at a snail’s pace, you would have to assume the current structure and depth of federal subsidies is simply not good enough.

The final complication to point out is the future. Ovum’s Kristin Paulin pointed out those in the digital divide are only those who are passed by fixed wireless, not taking into account almost every US citizen has access to one of the four LTE networks. Fixed Wireless Access will certainly play a role in the future of broadband, but whether this is enough to satisfy the increasingly intensifying data diets of users is unknown. 5G will certainly assist, but you have to wonder how long it will take to get 5G to the regions which are suffering in the divide today.

Paulin points to the affordability question as well. With the FCC only counting those US citizens who cannot access the internet in the digital divide, who knows how many citizens there are who can’t afford broadband. A New York times article from 2016 suggested the average broadband tariff was $55 a month, meaning 25% of the city, and 50% of those who earned under $20,000 would not be able to afford broadband. The Lifeline broadband initiative project is supposed to help here, but Paulin politely stated this is suffering some hiccups right now.

If citizens cannot afford broadband, is this even a solution? It’s like trying to sell a starving man, with $10 in his wallet, a sandwich for $25. What’s the point?

Mobile broadband might well be the answer, Nokia certainly believes a fibre network with wireless wings is the answer, though progress is slow here. Congestion is increasingly becoming a problem, while video, multi-screen and IOT trends will only make the matter more complicated.

As it stands, the digital divide is a political ping-pong ball being battered as it ducks and dives all over the landscape. But, the US technology industry needs to ask itself a very honest question; how big is the digital divide? Right now, we’re none the wiser, and it will never be narrowed without understanding the problem in the first place.

Korea switches on 5G

All three of Korea’s major mobile operators switched on 5G networks simultaneous at midnight on 1 December, offering business FWA based on 3GPP standards.

The launches marked Korea as the first country to have more than one commercial 5G network. The largest operator SKT, launched the service in 13 cities, while LG U+ plans to expand its 5G coverage to 85 cities by the end of the year. KT, the second largest mobile operator and the leading fixed-line services provider, which recently suffered a fire damage to its cable tunnel, is said to be only covering the greater Seoul area with its 5G network.

The services offered are limited to business users on fixed-wireless access. The launch at LG U+ was signalled by a video call made from a PC by the operator’s Vice Chairman. SKT’s CEO made a call using a prototype 5G smartphone. Both the wireless router and the prototype phone were supplied by Samsung, which sent out a congratulatory tweet for the occasion:

Three UK and Ovum reckon 5G FWA is a great idea

Research from Ovum, commissioned by Three UK, has concluded 5G-powered fixed wireless access could replace fixed connections for most UK households.

The report, entitled 5G Wireless Home Broadband: A Credible Alternative to Fixed Broadband, was commissioned to assess the potential of 5G as a substitute to fixed wired broadband in the UK. The bandwidth promised by 5G rivals what is currently available to most UK households via traditional fixed lines and it doesn’t involve digging up the pavements, so what’s not to like?

In fact Ovum anticipates speeds of 80-100 Mbps from FWA, compared to the current fixed-line average of 46 Mbps. Furthermore Ovum reckons 85% of urban punters currently get less than 80 Mbps, so they would receive a boost from 5G FWA.

“Advantages of 5G wireless broadband technology are not just in speed: wireless is more flexible, does not require long-term contracts, is faster and cheaper to deploy and less of a burden for customers – no waiting time, no engineer visits,” said Dario Talmesio of Ovum, who wrote the report. “With low availability of fibre and high cost of deployment, 5G Wireless becomes a viable alternative to fixed-line broadband. While the UK continues its fibre roll-out, this is a quicker and more economical way to satisfy customers’ fast-growing demand for data.”

“5G gives consumers the opportunity to bin their fixed line, enjoy faster speeds and save money,” said Three UK CEO Dave Dyson. “Wireless home broadband means that we can speed up access to super-fast internet services at a lower cost, without installation delays or inflexible contracts.

“The efficient and widespread rollout of superfast broadband across households and businesses is crucial to the growth of our economy. Wireless home broadband de-risks government’s ambitions for a Digital Britain by providing alternatives to a fibre-to-the-home solution.”

Now it should be noted that Three UK doesn’t have a stake in the UK fixed line market and that it’s keen to show something for its £250 million acquisition of UK Broadband, part of the stated reason for which was to offer 5G FWA over the 3.4 GHz spectrum that came with it. Three expects to launch a UK FWA service sometime next year, so it’s fair to say it has a strong commercial interest in bigging up the potential of FWA.