Germany frees up the whole of C-Band for 5G and the GSMA approves, sort of

The German government has decided to make the entire 3.4-3.8 GHz band available for 5G use, which is a good idea.

For 5G to do its thing, it needs big chunks of continuous spectrum to ‘fatten the pipe’. Piecemeal auctions of 3.4-3.8 GHz spectrum (otherwise known as C-Band) such as we had in the UK earlier this year, are not as useful as offering up the whole lot in one go. The eventual outcome may end up being the same, but the whole process is a lot more complicated.

This decision has been met with approval by the mobile industry trade association, the GSMA. “The C-Band is the most vital frequency band for 5G,” said Mats Granryd, Director General of the GSMA. “Germany is demonstrating 5G leadership in the timely release of this vital spectrum, but risks undercutting its 5G future with unnecessary obligations. Spectrum is a limited resource and it must be used and managed as efficiently as possible to ensure a 5G future that will benefit all.”

Among the GSMA’s regulatory gripes are proposed coverage obligations for 3.6 GHz spectrum, which it says disregard the laws of physics. Since the time of Isaac Newton this had been frowned on by polite society and the GSMA has chosen to use this emotive concept to point out what short range these high frequencies have.

They do seem to have a point here. 5G is all about capacity and surely coverage obligations can be left to earlier generations in the short term and 5G over lower frequencies in the long term. As characterized by the GSMA this stipulation seems to be gratuitous, counter-productive and a classic example of regulation for the hell of it.

Other than that there are some inevitable whinges about roaming obligations and high reserve prices for the auction. In the latter case we have sympathy for the GSMA position as any attempt by the German government to push up the price of spectrum is a blatant cash grab and an indirect tax on mobile subscribers.

GSMA reckons spectrum might come in handy for 5G

In a new ‘industry position’ mobile trade association the GSMA warns that clever new 5G tech won’t be much good without the spectrum to carry it.

The executive summary is the standard stuff about a new generation of wireless tech opening up a bunch of new opportunities, but this is just the setup. We won’t be able to do any of this cool stuff, you see, unless governments and regulators do a better job of giving operators the swathes of spectrum they will need to deliver on the promise of 5G.

“Operators urgently need more spectrum to deliver the endless array of services that 5G will enable – our 5G future depends heavily on the decisions governments are making in the next year as we head into WRC-19,” said Brett Tarnutzer, Head of Spectrum at the GSMA.

“Without strong government support to allocate sufficient spectrum to next generation mobile services, it will be impossible to achieve the global scale that will make 5G affordable and accessible for everyone. There is a real opportunity for innovation from 5G, but this hinges on governments focusing on making enough spectrum available, not maximising auction revenues for short term gains.”

WRC-19 refers to the World Radiocommunications Conference 2019. It will be the first one for four years and it’s the event at which the world has a think about things like allocating radio spectrum according to current needs. So it’s a rare opportunity for organisations such as the GSMA to try and get their members some more of that precious resource.

“Governments and regulators have a major role to play in ensuring that consumers get the best outcome from 5G,” said Tarnutzer. “Once spectrum is allocated to mobile at WRC, licensing that spectrum at a national level, as history has shown, can take up to 10 years. Therefore, it is essential that governments take the right action now.”

The fact that the GSMA still feel the need to spell out the importance of radio spectrum to governments and regulators is faintly depressing, considering what a redundant point that should be. But this sort of thing is where such organisations earn their keep, by packaging the bleedin obvious into things like industry positions, which presumably increases the chances of bureaucratic types taking it seriously.

Here’s the GSMA’s list of demands:

  1. 5G needs wider frequency bands to support higher speeds and larger amounts of traffic. Regulators that make available 80-100 MHz of spectrum per operator in prime 5G mid-bands (e.g. 3.5 GHz) and around 1 GHz per operator in vital millimeter wave bands (i.e. above 24 GHz), will best support the very fastest 5G services.
  2. 5G needs spectrum within three key frequency ranges to deliver widespread coverage and support all use cases:
  • Sub-1GHz spectrum to extend high-speed 5G mobile broadband coverage across urban, suburban and rural areas and to help support Internet of Things (IoT) services
  • Spectrum from 1-6 GHz to offer a good mix of coverage and capacity for 5G services
  • Spectrum above 6 GHz for 5G services such as ultra-high-speed mobile broadband
  1. It is essential that governments support the 26 GHz, 40 GHz (37-43.5 GHz) and 66-71 GHz bands for mobile at WRC-19. A sufficient amount of harmonised 5G spectrum in these bands is critical to enabling the fastest 5G speeds, low-cost devices and international roaming and to minimising cross-border interference.
  2. Governments and regulators should avoid inflating 5G spectrum prices (e.g. setting high auction reserve prices) as they risk limiting network investment and driving up the cost of services.
  3. Regulators should avoid setting aside spectrum for verticals in key mobile spectrum bands; sharing approaches, such as leasing, are better options where vertical industries require access to spectrum.

GSMA points finger at greedy governments for poor connectivity in developing nations

Spectrum pricing is one of the biggest bugbears of the GSMA, and its latest report is another opportunity for the lobby-group to wag the finger of disapproval at governments trying to replenish bank accounts at the expense of connectivity.

The ‘Spectrum Pricing in Developing Countries’ report, released by the GSMA Intelligence unit, puts forward familiar arguments from the association, which of course represents the interests of the telcos. Whenever the GSMA has a bee in its bonnet you have to take any criticism with a pinch of salt, but it is difficult to argue with some of the evidence and conclusions which have been put forward here.

“Connecting everyone becomes impossible without better policy decisions on spectrum,” said Brett Tarnutzer, Head of Spectrum at the GSMA.

“For far too long, the success of spectrum auctions has been judged on how much revenue can be raised rather than the economic and social benefits of connecting people. Spectrum policies that inflate prices and focus on short-term gains are incompatible with our shared goals of delivering better and more affordable mobile broadband services. These pricing policies will only limit the growth of the digital economy and make it harder to eradicate poverty, deliver better healthcare and education, and achieve financial inclusion and gender equality.”

The view must be exceptional atop that incredibly high-horse… but there is a point to the self-righteous proclamation.

Spectrum

As you can see from the graph above, the trends are quite clear. When the GDP of the country is taken into account, the adjusted cost of spectrum licenses are three times higher in developing nations than in the developed ones. There will of course be several reasons for this, not just greedy governments trying to bolster spreadsheets as the GSMA seems to be implying, but it is not a correlation which makes sense.

These are countries where mobile infrastructure is under-developed, therefore significant investments need to be made to kickstart the digital evolution. Spending more of spectrum licenses reduces the amount (in theory) an operator can spend on the infrastructure, while it would also be a fair assumption to assume lower national GDP means lower ARPU for the operators. In a perfect world, every government should be able to reclaim the same amount on spectrum sales in each of their auctions, but generally life is not fair. Reserve prices and annual license fees have to be adapted to the market to make an attractive business case for the operators.

What is worth noting is it is not every developing nation which is getting the policy decision making wrong, and in some cases the lessons have been learned. But there are consequences.

Jamaica is an example of where high reserve prices caused chaos. With a reserve price of $40 – 45 million set in 2013 for 700 MHz, the auction was ignored by the operators. A year later, the government corrected its mistake, though the launch of 4G networks was delayed until 2016 as a result with Jamaica’s 4G penetration today less than half that of the average throughout the Caribbean. Mozambique is another, which offered a total of 50 MHz in the 800 MHz band for the reserve price of $150 million. Operators would have had to invest a third of their annual mobile service revenues to meet the starting bid, which was concluded to be completely unfeasible. This is a country where the situation has not been rectified, 4G is yet to be launched, though the National Communications Institute of Mozambique plans to launch another auction during 2018.

The case for cheaper spectrum licenses has been made many times by the GSMA. The argument from operators and the GSMA that more would be spent on infrastructure with lower license expenses is theoretically sound, though sceptical individuals might suggest the penny pinching telcos are just looking for another way to spend less. However, there are examples where the boy who cried wolf might have spotted some teeth; it’s hard to argue with some of the figures presented by the GSMA here.

GSMA has a pop at BEREC over Euro MNO merger study

Mobile industry lobby group GSMA is unconvinced by findings from Euro telecoms regulator BEREC about the effects of consolidation.

A persistent theme in the European mobile market is the desire for consolidation. The European Commission has regularly blocked such attempts, apparently viewing four as the optimal number to ensure healthy competition. The counter-argument put forward by operators is that consolidation creates efficiencies and economies of scale that allow for greater investment, etc.

One of the organisations the EC apparently looks to for guidance on such matters is BEREC (Body of European Regulators for Electronic Communications), which recently published a report entitled ‘Post-Merger Market Developments – Price Effects of Mobile Mergers in Austria, Ireland and Germany’.

While there were few concrete conclusions the report seemed inclined against 4 to 3 mergers on competition grounds. “In all of the three cases considered, there is at least some evidence that retail prices for new customers increased due to the merger compared to the situation without the merger (the counterfactual),” it said in its conclusion.

The GSMA isn’t convinced and thinks BEREC failed to provide sufficient evidence to support this claim. Regarding price it picks holes in BEREC’s choice of data from Austria, reckons the Irish data used doesn’t support the claim at all and says most of the German data is ‘not very robust’, which seems like a polite way of saying ‘dodgy’.

BEREC also directly criticised the GSMA’s own study of the effects of the Hutchison/Orange merger in Austria, specifically the methodology and data used and the positive conclusions made about its effect on network quality. The GSMA predictably pushed back on that, saying its findings don’t stand up to [the GSMA’s] scrutiny.

“In summary, the BEREC report does not add any significant finding to the existing body of evidence on the impact of mergers,” concludes the GSMA press release. “It fails to convincingly dismiss past evidence on the positive impact of recent mergers, while not providing a convincing picture of higher prices for consumers in Austria, Ireland and Germany.”

BEREC hasn’t issued any public response but if it did, it would probably be something like “It’s not our methodology that’s rubbish – it’s the GSMA’s. And no returns.”

MWC Shanghai: GSMA takes another swipe at regulators

Bemoaning regulators has become common place in the telecommunications industry, but that hasn’t stopped the GSMA having another dig at the world’s boresome bureaucrats.

5G is on the horizon, and fulfilling the bold promises made by the industry is going to be an expensive job. For the digital world to be as glorious as we have imagined, or have been told to imagine, there need to be some changes on the regulatory front. Or at least that was the message which came across this morning during the opening keynotes at Mobile World Congress Shanghai.

“We cannot move forward without regulatory support,” said Sunil Bharti Mittal, Chairman of both Bharti Enterprises and the GSMA.

Of course it should not be a surprise Mittal is preaching for regulatory reform. He is the Chairman of Bharti Enterprises and the GSMA, therefore any changes which would benefit members, and his own organization, would certainly be top of the agenda for Mittal. But this is a message we are starting to hear far too often; the regulatory environment is not suitable for a sustainable industry.

Harmonised spectrum is one aspect which will be addressed in the near future, but another elephant in the room is the affordability of this valuable asset. Dependent on where you are in the world, the approach is very different.

Looking at the Asian markets, in particular China, Mittal suggested the regulators were basically giving the spectrum away for free. While this is somewhat of an exaggeration, comparatively to the Western markets, it is not far off the mark. The theory here is the less operators are paying for spectrum licenses, the more can be spent on actual deployment.

“In the Western world, way too much money is being spent on spectrum,” said Mittal. “It’s the wrong way around. No wonder China is the leading country to provide mobile connectivity to its customers.”

Cynical individuals might frown upon this assumption, pointing towards profit-mad, penny pinching executives as the reason for substandard infrastructure, but you can’t argue with the results. China arguably leads the way when it comes to network deployment, and is one of the leading lights in the 5G world. There are numerous factors to take into account, but you can’t ignore the affordability of spectrum as one of them.

Another to condemn the regulatory environment was GSMA Director General Mats Granryd. This should hardly come as a surprise also, but change is needed to facilitate the deployment of futureproof networks. The timely release of harmonised spectrum is next on the agenda, though new policies to encourage investment should be prioritised, as well as reform to level the playing field for telcos when it comes to digital services, and finally, a long, hard look at privacy policies. Regulators might be patting themselves on the back constantly, but for Granryd, there is still much work to do.

This is of course not a new complaint from the GSMA, but eventually something will have to be done. If you call a man a horse once, he’ll probably ignore you, the second time he will cuss you, the third might be a prompt to buy a saddle. Sooner or later, regulators are going to have to address the chorus of voices condemning the regulatory landscape.

GSMA advises operators to keep it simple on network slicing

On the final day of 5G World 2018, GSMA Technical Director Michele Zarri gave operators some advice on deploying network slicing on 5G: “keep it simple”.

Zarri advised operators to work together with their competitors to create a set of standard slices. “Only a handful of slices maybe 10 or 15 can serve the vast majority of the use cases,” he said. “You can have a safety net of 10 slices that every operator creates as this makes it easier for manufacturers. It does not block innovation, it is complementary and allows for roaming.”

This all sounds good in theory and would greatly benefit those producing IoT devices in the future. However, we’ve been talking about network slicing for a while now, and it’s hard to imagine any such plan being all that simple to execute.

As with many of the network developments discussed at this year’s event, it all comes down to money. With European operators struggling to justify their investments in 5G, business cases seem to be at the top of everyone’s agenda.

But to Zarri, the business cases for network slicing are obvious. By allocating a network across virtualised network slices, each for different use cases and services, reliability is massively improved. For many of the use cases proposed for 5G such as autonomous vehicles, this reliability will be essential. Such a wide range of use cases have been put forward for 5G in everything from entertainment to agriculture that this could open up major new revenue streams. “When you look at vertical industries that did not benefit from 4G, they are all targets now,” he said.

There are fears that network slicing and the creation of private networks might start to push operators out from major revenue streams that will be created. Zarri tried to set everyone’s mind at ease, by addressing this concern. On the issue of private networks, he insisted that operators would still be the key players and weren’t at risk of being pushed out. “Private networks will exist, they exist today, but operators have the know how – you need someone who knows how it works,” he said.

It remains to be seen how fast European operators will move in network slicing and whether it really is possible to find a simple solution. But with demand for reliable, low latency networks increasing and operators so focussed on finding that all-important business case, I think we’ll be hearing a lot more about network slicing over the coming year.

Europe updates its telecoms rules, GSMA moans

The Eurocracy has updated the European Electronic Communications Code but telecoms trade association GSMA thinks it doesn’t go far enough.

For some reason the EU press release saw fit to tell us “The European Parliament and the Council reached late last night a political agreement to update the EU’s telecoms rules.” They clearly want everyone to know how hard they’re working, not that that’s ever in any doubt, surely.

“This agreement is essential to meet Europeans’ growing connectivity needs and boost Europe’s competitiveness,” said Vice-President in charge of the Digital Single Market, Andrus Ansip, bravely refusing to succumb to exhaustion. “We are laying the groundwork for the deployment of 5G across Europe.”

“The new telecoms rules are an essential building block for Europe’s digital future,” said Commissioner for Digital Economy and Society, Mariya Gabriel, who presumably staggered over the finishing line with Ansip. “After several months of tough negotiations, we have agreed on bold and balanced rules to provide faster access to radio spectrum, better services and more protection for consumers, as well as greater investment in very high speed networks.”

Here’s what they managed to thrash out in the small hours of the morning, with only vintage Bordeaux to lift their spirits:

  • Ensure the availability of 5G spectrum
  • Facilitate high capacity fixed networks
  • Yet more regulations to ‘benefit and protect consumers’

But the GSMA seems ungrateful to the point of cruelty about this Herculean effort. “As shown in the past, Europe has the ability to overcome difficult decisions and ensure a more solid and scalable EU market,” said Afke Schaart, VP and Head of Europe at the GSMA. “We are disappointed that this crucial opportunity – for citizens as well as for the 5G industry – was not fully grasped, and strongly believe in the need of a better deal for Europe’s global digital competitiveness.”

Here are the specific holes Schaart picked in Europe’s endeavours:

  • Still too much investment uncertainty
  • Not enough spectrum harmonization across member states
  • Too much regulation of telcos in general, made worse by fresh retail price restrictions

There is a distinct sense of déjà vu to all this. Trade bodies and individual companies have been clamouring for more help for the European telecoms sector from the EU for ages, but the EU seems more concerned with consumer virtue-signalling. We do have some sympathy for the GSMA’s position as other parts of the world seem to be empowering their telcos just as Europe seeks to restrict its own.

Deutsche Telekom and Vodafone claim first European NB-IoT roaming trial

Low power IoT network technology isn’t much good if it can’t easily cross national borders, so DT and Vodafone have been looking into that with the help of the GSMA.

In fact the GSMA was the one to make the announcement, claiming the two operator groups “…have successfully completed the first international roaming trial in Europe using licensed NB-IoT technology.” NB-IoT is generally accepted to be the default LPWAN technology, for which Vodafone has been one of the most active cheerleader, so it’s no surprise to see it involved in this.

“The success of these trials is an important milestone in the development of a sustainable roaming environment for mobile IoT networks, showcasing their capabilities as well as ensuring consistent service across geographical boundaries,” said Alex Sinclair, CTO of the GSMA. “The market has matured considerably in a very short time and we anticipate that this will be the year that Mobile IoT scales. Only licensed, managed mobile services can provide the secure low power connection that can meet future demand.”

“Deutsche Telekom has successfully introduced and developed NB-IoT networks across most of its European footprint and we are very pleased to see the ecosystem rapidly expanding,” said Ingo Hofacker of DT. “First commercial offers are available on a national basis already, but now, operators need to satisfy customer demand for international coverage and service continuity as well.”

“This development shows the successful evolution of the technology and I am confident that it will lead to a raft of new applications for NB-IoT, such as the cold chain monitoring of goods across borders,” said Vodafone director of IoT Stefano Gestaut.

The trial used global SIMs from DT on Vodafone Spain’s network and global Vodafone SIMs on T-Mobile Austria’s network and commercial NB-IoT modules. The announcement somewhat redundantly stresses that NB-IoT roaming is especially important for anyone deploying LPWAN devices on a global basis. The GSMA is claiming some credit for creating a mobile IoT initiative that may or may not have played a significant role in this happening.

Telcos must raise game or lose out on $1.1 trillion IoT prize – GSMA

The GSMA forecasts the IoT segment will be worth $1.1 trillion in revenue by 2025, though connectivity could be worth as little as 5% of the spoils.

Despite statistics such as the estimation of 25 billion IoT connections providing some sort of comfort to the telcos, the GSMA warns these organizations much diversify if they want to be rewarded for the vast investments which are being made into delivering connectivity for the IoT revolution. In the early days of the IoT euphoria, market value will shift from connectivity to platforms, applications and services, as enterprise organizations search for a viable business model. Telcos will have to start prepping for this transition, as many would question whether they are more than a utility as it stands.

“As the number of connected consumer devices and industrial machines grow rapidly, the IoT ecosystem will evolve to become a trillion-dollar market over the course of the next decade,” said Sylwia Kechiche, Principal Analyst for IoT at the GSMA. “But the IoT revenue opportunity is shifting away from simply connecting devices to addressing specific sectors with tailored solutions, and successful ecosystem players will need to adapt their business models in line with these market trends.”

Platforms, applications and services growth within the emerging IoT segment will surpass that of connectivity, capturing 68% of the total by 2025. With 5% being allocated to connectivity, IoT professional services, such as system integration, managed services and consulting, will take the remaining 27%.

The concern which we have is the idea that the telcos should be advising other companies on how to capitalise on innovation when they are yet to demonstrate they are capable of doing it themselves.

BT is one of the companies which has been gearing up to become more of an advisory business with its Global Services business, but that division has been nothing but a headache over the last 12 months, despite making some progress prior to the scandals. That said, there are few examples in recent years of the telcos taking charge of a burgeoning industry, and continue to lead the way in terms of innovation. The smart home is turning into a missed opportunity, as was the cord-cutter revolution, and autonomous vehicles is looking like another.

Stereotypes are there for a reason, and it is generally because there is an element of truth. The stereotypical telco is defined by legacy business models, cumbersome, delivers poor customer experience and doesn’t like to take risk. For the telcos to have any credibility in adding value services to the IoT ecosystem, there needs to be some leadership and innovation in the segment. A telco which sounds anything like the stereotypical description above will fail in the IoT mission.

This is not to say that it is an impossible dream, but there will need to be notable changes not only in the operational model, but also the culture of the telcos. To compete with the likes of Capgemini or Accenture in the professional services arena, or AWS and Microsoft in the platforms game, the right people will need to be attracted to the organization. When looking at job prospects, young, talented university graduates aren’t likely to come out with ‘my dream job is to work at Vodafone’.