FCC modifies frequency policy to encourage 5G investment

Changes to licence regulations on 3.5 Ghz have been approved by the FCC in an effort to encourage the 5G rollout.

The 150 MHz wide spectrum on the 3.5 GHz (3550MHz to 3700MHz.) band, or Citizens Broadband Radio Service (CBRS), is very busy. Following the rules of the FCC established in 2015, three tiers of users are sharing this band. There are the Incumbent Access Users, in particular the US Navy Radar Operators; the Priority Access Licenses (PALs) which are mainly commercial users like the telcos; and dinally, General Authorized Access (GAA) users which are permitted to use any portion of the 150 MHz frequency so long as it has not been granted to the other two tiers.

FCC Commissioner Michael O’Rielly, who was tasked to lead the review of current regulations and deliberation of new policies with special focus on PALs, claimed the old rules “would not support large-scale deployments, such as mobile or 5G networks… The rules in place favored small-scale, fixed networks, by making it unattractive for any other type of deployment. Basically, the rules were designed so that a select group could get licenses on the cheap.”

The Report and Order published by the FCC on Tuesday October 23 has kept the three tiers in place, but has made modifications to the specific implementations, including:

  • Changes the size of PAL license areas from census tracts to counties;
  • Extends the PAL license term to ten years and makes these licenses renewable;
  • Establishes end-of-term performance requirements;
  • Ensures seven PALs are available in each license area;
  • Allows the use of bidding credits for rural and Tribal entities;
  • Permits partitioning and disaggregation of PALs;
  • Updates information security requirements to protect registration information; and
  • Facilitates transmission over wider channels while maintaining protections for other services

In addition to extending the license term from three years to ten years and changing it from unrenewable to renewable, the new rules also did away with the limitations on the number of PALs a single applicant can have in one licence area (currently capped at four) and the bandwidth a PAL can use (currently limited to 10 MHz).

Ajit Pai, Chairman of FCC, admitted there has been debate on the new size of PAL licence, with different entrenched interest either arguing for maintaining the current census tract-sized licence, or demanding vastly enlarged areas. He had to cite support from Rural Wireless Association and Competitive Carrier Association, which represents smaller carriers, to defend the Commission’s  decision to opt for county-size license.

“We find that county-based licenses are just right,” said Pai. “This compromise will allow most interested parties, large and small, to bid on 3.5 GHz spectrum in order to provide 5G services. License sizes aside, we make other necessary changes today to promote investment and innovation in the 3.5 GHz band, including extending the license terms and giving an expectancy of license renewal.”

Pai also reassured the GAA users that “even after PALs are granted, General Authorized Access users can provide service in the PAL spectrum until licensees deploy. Taken together, these reforms will help make this band a sandbox for 5G and represent another aspect of our comprehensive 5G FAST plan to secure American leadership in the next generation of wireless connectivity.”

The rule modifications might not look revolutionary, but they should prove positive for more aggressive 5G rollout in the US. With the extended licence term and the possibility of renewal the new regulations provide more confidence to investors looking at long term. Meanwhile, it also strikes a balance both to encourage scale and to protect operators with local ambitions only.

Verizon might have launched 5G, but new iPhone pulls subscribers

Verizon published Q3 results, beating market estimates on earnings and subscriber adds.

Verizon published Q3 results today, narrowly beating market expectations. On the wireless side, Verizon Wireless added 510,000 net postpaid smartphone subscribers, with the postpaid churn rate at 0.8%. The strong marketing activities following the launch of the new iPhone, including an offer of up to $750 off new models, has helped attract new subscribers. As an important operation landmark right at the end of Q3, Verizon launched fixed wireless access service on 5G in four cities, therefore could claim to be the first to offer 5G in the country.

“Verizon has posted a third quarter of strong operational and financial performance,” said CEO Hans Vestberg. “With the beginning of the 5G era in this fourth quarter, we expect that trend to continue. We are investing in networks, creating platforms to add value for customers and maintaining a focused, disciplined strategy. Verizon is best positioned to take full advantage of the opportunities offered by the new game-changing generation of technology.”

On the broadband and TV side, Verizon’s Fios gained 54,000 new internet users, slower than the 66,000 it gained the same period last year, and lost 63,000 cable TV subscribers, faster than the 18,000 it lost last year, another indication that the cord-cutting trend shows no sign of abating.

Verizon Wireless continued to make the largest financial contribution. It generated $23 billion revenue (70.5% of group total) and brought in $11 billion EBITDA (90% of group total). The wireline business’ total revenues went down by 3.7% to $7.4 billion. The consumer side of the wireline business largely held at $3.1 billion (-2.1% year on year), with the corporate business dropped by over 5%.

On the group level, the total revenues of $32.6 billion, up 2.8% from last year, beating market expectation by $110 million, with non-GAAP earnings per share of $1.22, beating expectations by $0.03. GAAP EPS of $1.19 was right in line with market expectations.

Like most telecom operators, Verizon is a mature business that does not often disappoint but seldom excites. The management guidance pointed to low-to-mid single-digit percentage of full-year consolidated revenue growth and low single-digit percentage growth in EPS, which makes us pay some attention to another area of interest, Oath, the Media & IoT business mainly comprised of AOL and Yahoo.

If Verizon was to bank on this division to herald its future growth then it might be disappointed. Total revenues went down from $2 billion a year ago to $1.8 billion. More importantly, Verizon does not expect Oath to hit the $10 billion revenue target it set for the division earlier.

Verizon’s share price gained by 1.4% in pre-market trading.

BBWF 2018: Telcos are starting to find their voice through openness – TIM

For years the CSPs have been a fading voice in the telco ecosystem, but control is being wrestled back through the open communities.

The challenge over the last couple of years has been a lack of control. Standards organizations and technological developments are controlled by the vendors, which in turn results in control the industry’s landscape. The CSPs are no-longer masters of their own fate, which is primarily their own fault, but according to Mauro Tilocca of Telecom Italia the open source communities are giving the CSPs a voice.

“We need to blend the strengths of standards organizations and open source communities,” said Tilocca at Broadband World Forum in Berlin. “This is the only way to get to carrier grade solutions.”

It’s amazing to think that in years gone CSPs used to be technologically innovative organizations. But tough market conditions and stress on profitability has seen a trend of outsourcing responsibility. In other words, outsourcing the risk element of innovation.

Speaking to other attendees at this year’s event, there is a feeling the CSPs of yesteryear wanted to be financing organizations. This might explain why there are so many accountants in leadership positions, and such a distaste for risk. Allowing others to innovate and then leaning on the findings is certainly a safer way to conduct business, sitting on the top of the stack realising the advances of others; standing on the shoulders of giants is a common phrase which can be applied here.

But the downside is a loss of influence from a technological perspective and future developments in the industry. This might have allowed the accountants to manipulate spreadsheets to make the financials of an organization healthier, but the standards working groups and research projects are dominated by vendors. The CSPs are having their roadmaps dictated to them because they have lost their voice in the ecosystem.

With open source and white box groups becoming more prominent in the ecosystem, the CSPs are starting to find their feet. Open source and open standards are becoming more regular fixtures of the telco world, and these are the groups which are designed to be led by the CSPs. Of course, these groups alone cannot dictate the terms of the industry, there is still too much knowledge and talent hiding away in the vendor-influenced standards groups, but the balance of power might be shifting towards a healthier position.

The outsourcing trend which handed control of the ecosystem to the vendors was a massive over-reaction from the telcos. Fear took over and too much risk was outsourced. Openness is leading a CSP renaissance, but it is still a bit early to call CSPs innovative.

AT&T and Verizon compete for yet more 5G ‘firsts’

US carriers AT&T and Verizon have completed what they both claim to be the world’s first data transfer to a smartphone form factor device over mmWave 5G live networks.

If we put together all the 5G ‘firsts’ claimed by the industry players it would make a long read, especially if we included cases where similar firsts have been claimed by different companies. In this most recent case, both AT&T and Verizon called themselves the world’s first to successfully transfer data over live 5G networks to purpose-built mobile devices, in Texas and Minnesota respectively.

Temporally, AT&T might have stolen a step ahead of its competitor. The AT&T test took place “over the weekend”, while news coming out of Verizon on Monday declared the success happened yesterday, but they were essentially the same kind of tests. Probably the most intriguing part of the story is that both carriers used Qualcomm’s terminals on networks supplied by Ericsson.

Even the technical details disclosed look very similar. Both tests were using smartphone form factor test devices from Qualcomm integrating the latter’s Snapdragon X50 5G modem and RF subsystem (see the picture), both were going through Ericsson 5G-NR capable radios connected to 3x virtual core networks.

These announcements followed hot on the heels of a couple of other 5G firsts in the last few days: last week Verizon and Nokia claimed to have completed the first over-the-air data transmission on a commercial 5G NR network in Washington DC, though the receiving end was not exactly a smartphone-like device. On Monday Nokia announced its demo with Sprint to conduct the first (in the US though) 5G NR connection over Massive MIMO.

Ericsson and Qualcomm claimed to have completed the first 5G NR ‘call’ to a smartphone-like device (which was pretty similar to the ones used in the AT&T and Verizon tests). That announcement itself came a couple of days after Ericsson announced another similar test with Intel. These two slightly earlier tests were conducted in lab environment while the latest AT&T and Verizon cases were done over live networks, or as AT&T emphatically stressed, “Not a lab. Not preproduction hardware. Not emulators.”

We understand the marketing departments of these companies must be busy generating as big a buzz as possible in the run-up to the Mobile World Congress America (starting tomorrow). Meanwhile we cannot discount that tests and announcements (and claims) like these do show the wider world 5G potentials when the commercial networks roll out in the coming months and years, though at the moment all these firsts still do not mean anything for consumers as no 5G terminals are available yet.

Another interesting angle to look at these tests is how active the US carriers are in pushing ahead 5G on mmWave, which contrast with how slow the European operators and regulators are moving. The European Commission launched a project to look into the feasibility of using mmWave for 5G deployment in the EU. A reporting session was organised in Brussels in June this year. The views were divided, and conclusions elusive. The main doubt from the industry looked to be the lack of compelling business case and the wrangling between the telecom industry and the satellite industry on the utilisation of the lower mmWave spectrum, hence the lack of contiguous bands for 5G buildout.

It may be a worthy reminder that we can never tell with full confidence what new technologies can do. Andre Fuetsch, AT&T Communications’ CTO was bang on when he said “… yet to be discovered experiences will grow up on tomorrow’s 5G networks. Much like 4G introduced the world to the gig economy, mobile 5G will jumpstart the next wave of unforeseen innovation.”

UK media and telco industries demand more red tape for social media content

A coalition of UK media and telco businesses have written a letter demanding the UK government introduce an independent regulatory oversight of the content carried over social networks.

In the letter written to the Sunday Telegraph, the BBC, Sky, ITV, Channel 4, BT and TalkTalk have attacked unregulated tech giants Facebook, Google and Twitter, suggesting the creation of a new watchdog with the purpose of tackling the increasing presence of abuse and misinformation online is the way forward.

“We do not think it is realistic or appropriate to expect internet and social media companies to make all the judgment calls about what content is and is not acceptable, without any independent oversight,” the letter states. “There is an urgent need for independent scrutiny of the decisions taken, and greater transparency.

“This is not about censoring the internet: it is about making the most popular internet platforms safer, by ensuring there is accountability and transparency over the decisions these private companies are already taking.”

Pressure to more closely regulate the newcomers to the communications game is hardly a new phenomenon; the heavily regulated telco industry has been trying to level the playing fields for years. With the introduction of social media platforms such as Facebook or video content sites like YouTube, stress has been placed on the more traditional communications companies. Whether it is being forced to innovate or having core revenue streams destroyed, digital transformation is much more than an industry buzzword, it is a necessity for survival.

Unfortunately for the telcos, they are largely playing to different rules when it comes to how personal data can be used to deliver these services, while also being held accountable for the vast expense of deploying the all-important communications infrastructure. Any opportunity to have a dig at the digital new-boys will be taken, and this is what this letter seems to be.

This is of course a political pain-point for the social media players right now, and the traditional players are taking full advantage of the situation to rain down some red tape. Governments around the world are grappling with the difficulties of how to govern social media platforms, protecting users from abuse while also maintaining free speech. While there are some very obvious examples of what shouldn’t be allowed, the majority of the time judgement on what posts are acceptable and which are not is a hazy line.

In truth, the social media giants have created the problem for themselves. For years, they positioned themselves as curators of content, not owning or taking responsibility for it, but by creating successful algorithms to personalize feeds and suggested content, they have demonstrated an exceptional ability to influence and control content. Some might ask if they can figure out when the best time to position adverts for car insurance or specific holiday add ons is, why can they not tackle the rising tide of abuse and misinformation?

The answer probably lies in the middle of it being incredibly difficult and contentious, and it is more convenient (financial rewarding) to focus on honing the effectiveness of advertising platforms. Work is being done to try and curb the negative impacts of social media, though whether this is enough to convince the government the segment is capable of self-regulation is suspect.

Boresome bureaucrats never usually need a reason to throw around the red tape, though pressure from the telco lobby might just fuel the anti-social media rhetoric which is currently echoing around the Houses of Parliament.

Nokia inks €1 billion framework agreement with China Mobile

A new agreement, valued at €1 billion ($1.17 billion, £0.88 billion), has been signed that covers the delivery of Nokia products and services to China Mobile throughout 2018.

The signing took place in Berlin during the fifth iteration of the inter-governmental economic forum between Germany and China, starring the German Chancellor Angela Markel and Chinese Premier Li Keqiang. This capped a busy week for Nokia’s business updates with China, during which time it also signed MoUs to set up joint labs with Tencent and China Mobile respectively.

Nokia was already one of the key vendors in China when the first its mobile telecom networks were rolled out there in the late 20th century. However, it was only recently, after it bought Siemens out of their joint-venture, then acquired Alcatel-Lucent including the legendary Bell Labs, did Nokia become a credible end-to-end supplier. In this new agreement Nokia’s supplies to China Mobile will include the full range of equipment and services from access, backbone, transport, to network management.

Mike Wang, President of Nokia Shanghai Bell, which will be the front-end implementation entity with China Mobile, saw this agreement “highly significant”, consolidating “Nokia’s position as a leading provider of next-generation technologies and services in China.” Chinese companies are much more aggressive in rolling out 5G in scale than their Western European counterparts.

Orange throws millennials a Pickle

French telco Orange has launched a new TV offering targeting the elusive and lucrative millennials demographic, known as Pickle.

Most organizations around the world will have a wary eye on securing the millennials as customers due to their potential over the next couple of years. A millennial is defined as someone who enters young adulthood in the early 21st century, and over the next couple of years, this group will soon emerge as the powerhouses of consumer spending. Unfortunately for the telcos, this cluster also contains a significant amount of cord-cutters.

The new offering from Orange aggregates different content and will target users aged between 15-35 years old, at an attractive price tag of €4.99 per month. For anyone to gain traction with this audience, the price will have to be low enough as it is generally accepted that millennials are skint, but are they? Some might be and some might not, but this is just like every other generation. The OTTs have brought the price-to-play down to such a level, it is impossible to price any offering at what would be deemed normal to previous generations.

Irrelevant to the reasoning, the price is what it is, and the offering sounds pretty interesting as well, there are some more traditional content genres, but also a couple of more risky bets; it seems quite un-telco, which is nice to see. Some of the channels include:

  • Golden Stories: An unreleased, humoristic and offbeat series
  • ES1: New French channel dedicated to eSport
  • Game One: A channel dedicated to boxsets, mangas (Japanese comics), gaming and news
  • Manga One by Game One: 100% mangas content
  • South Park: Because every millennial love South Park
  • OKLM: Hip-hop and street culture
  • Clubbing TV: Dedicated to electronic music and electro culture
  • Spicee: Channel for documentaries and stories

As you can see from the above, it is far from what we are used to when a telco has a bet on the content market. It certainly will be interesting to see how this works out, but is in keeping with the Orange trend in recent years.

While other telcos have struggled to adapt to the 21st century, Orange has taken a much more adventurous approach. It spent big of fibre across key markets, put forward genuine differentiation with its banking and energy services, and now it’s having a very alternative-crack at content. The traditional telco business model and approach to ‘differentiated’ services can no-longer exist, but it is nice to see Orange have a crack at doing something genuinely different.

Digital Minister visits Tate Modern instead of figuring out what job actually is

Two days after reshuffling the UK cabinet, key roles are yet to be handed out, but DCMS Minister Michael Ellis still found some time to visit the Tate Modern for Modigliani exhibition.

Previous Minister for Digital Matt Hancock received a promotion, now being the Secretary of State for Digital, Culture, Media and Sport, essentially in charge of the entire department, though he has a few new names to keep in line. Ellis and Margot James are two new Ministerial entries to the department, though what they will actually do is unknown (at the time of writing).

Whilst the majority of us might be concerned that our job was undefined, such minor details of course do not bother politicians. Especially when there is an opportunity to shake some hands and show off the pearly whites with a photo op. As you can see below, Ellis seems happy with his new remit:

We were curious about who would be taking over the important task of readying the UK for the connected economy, and ensuring the country’s digital credentials don’t continue to slide downwards, so we called the Department’s media team. During the call, we were told decision on who would be leading what aspect of the department has not yet been made, and we should keep an eye out on the DCMS Twitter page for any announcements. This might be this afternoon (January 10), but more likely tomorrow morning.

We did wonder why there was a hold up, but initially assumed it was just a case of the public sector moving at its usual pace. But with Ellis galivanting around London taking in the sites, while the rest of the poor team are slumming it in front of a laptop, the delay is starting to make a bit more sense.

Just so you are aware, the Minister responsible for Digital will oversee the following areas:

  • Broadband and mobile connectivity
  • Broadcasting
  • Creative industries
  • Cyber security
  • Data
  • Digital Charter
  • Digital economy
  • Digital skills and inclusion
  • Digital technology
  • Internet governance
  • Media
  • Online safety
  • Spectrum
  • Telecoms markets and resilience

As you can see, these are all areas which might be considered crucial as the country readies itself for the era of connectivity and internet businesses.

If you do happen to spot Ellis wandering around London’s Southbank this afternoon, feel free to give him a prod and tell him to get back into the office. The London Eye will still be there on Saturday.

We need to stop talking 5G BS – Vodafone CTO

Brutal honesty in an industry that usually flirts with the line between science and fiction; Vodafone’s CTO Johan Wibergh begged for sanity from the telco heavy weights.

“We have a tendency to overhype things,” said Wibergh, in an almost ironic delivery.

More specifically, Wibergh focused his talk at the Global Mobile Broadband Forum on two areas which he believes the industry needs to focus on. Firstly, is the idea of the efficiency gains which can be achieved through 5G networks. And secondly, we need to stop overpromising and start to communicate realistic 5G ambitions to the world.

Problem is that telcos are very good at making big, grand promises and under-delivering. It’s part of the DNA of the industry, but it seems Wibergh is on a one man mission to rationalise the irrational. Assuming each ‘G’ is matured over the course of a decade, is the industry being clear enough over the benefits? Of course, what can be delivered in the first two years is completely different from the final two, but whether this message is being communicated remains to be seen.

One interesting observation from Wibergh was the success of 2G and 4G. These were two developments which were genuine step-changes in connectivity, and both were successful. There were realistic promises offered by the industry to the customer, which were deliverable. 3G however was overhyped. It was also more of an evolution than a dramatic step-change. The same could be said for 5G, but has the industry learned to make reasonable claims, or will the desperation born out of eroding profits see the hype lead it down the 3G route?

The second observation from Wibergh was over the efficiency gains which can be realised from 5G. While this is certainly a significant benefit for the industry, it is one is rarely discussed. Wibergh would like to see this change.

Of course the efficiency gain depends on how much you spend in the first place, part of this will be dictated by the amount governments charge for spectrum licences, but it is a benefit none-the-less. One question which should perhaps be asked is whether this efficiency gain would accelerate the race to the bottom? If data can be delivered more cost effectively, will this benefit be passed onto the consumer? It would certainly create an attractive offer to steal market share, but maybe it would also consolidate the image of telcos as utilities?

Obviously there are still a huge number of questions still to be asked about the realities of 5G, but one which will become apparent quite soon is whether the telcos have learnt their lesson about overhyping. Marketers will always need something new to shout about, but let’s hope they can be kept on a realistic leash.

Deutsche Telekom: Best-in-class experience

Deutsche Telekom (DT) has the clear ambition to be a leading European telco, with digitalization a key part of its strategy. In 2016, DT increased its revenue by 5.6 percent year-on-year to reach €73.1 billion based on high investment in its networks. DT CTO Bruno Jacobfeuerborn explained how the German operator is ramping up its network strategy during digital transformation.

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