Tuesday, 17 November 2015

Glenn Lurie touched on the 5G spectrum issue

Interview: AT&T on spectrum and 5G

So, Glenn Lurie of AT&T, let's talk about the future.

There's a lot of hype, we're in a 4G era at the moment, but obviously there's a lot hype around 5G. What's AT&T's take on 5G? And I'm asking that really because AT&T hasn't publicly said an awful lot about 5G at the moment, some of your competitors have.

Give us a little bit of an insight into your thinking around 5G?

Let me start with this, you said the right thing, 4G is really good, right? And what I want to make sure we don't do as an industry is start talking about something that's four, five years away. 5G is going to be very important in the industry, but today with 4G LTE there isn't anything you can't do. It's a very, very big pipe, it's got low latency, the speeds are phenomenal and really you can do anything you want. The key to 5G and the reason we've been, I wouldn't say quiet, is that the standards aren't done.

3GPP is still working with all the carriers around the world, you've got a lot of PR happening and I think we have got to be careful with just PR. 5G will be spectacular all right, it will have some new elements to it, will it be faster or lower latency, we'll see. It will have a layer for IOT. One of the things that's exciting about that is when you think about IoT and putting a sensor on a light in a smart city, I want that sensor to have a battery life of 10 years. Well today we don't have that, but we believe, it's not done yet, that that could be an element to 5G; a low power, low latency kind of a situation and layer inside of those standards. So for us, we don't want to get too far out in front of our headlights, right.

5G will be great and important but today we have a phenomenal network, especially in the US, we spend billions of dollars on it, and it works wonderfully and I think we should focus there. Yes the US has been a market leader in 4G.

Absolutely.

But Glenn there have been reports recently that maybe the US is falling a bit behind the rest of the world in the move to 5G. Are you concerned by that at all? I think those reports came from guys who do what you do everyday which are folks in the media, and reality is, yes there's a lot of PR coming out of Asia and other places.

Look we're not concerned about that, we're in the middle of it, the US is right in the middle of it, we were very influential in what came out in standards for 4G LTE and we'll be very influential on what happens in 5G.

Finally Glenn, just wanted to touch on a hugely important topic in the US industry, and that is spectrum.

Obviously we can never have enough spectrum, but your thoughts on how AT&T can help lobby to help get more spectrum. I understand there's a big incentive auction for example next March, is that something that AT&T is going to play a big role in?

I think spectrum is the lifeblood of this industry. The usage continues to go up, right, you saw the stats flying around, it's incredible and the good thing is that people want more, that's terrific for the industry. But we have to have spectrum to be able to do that.

We've already participated in prior spectrum auctions, we've said we will participate in the one coming, but the reality is we need a long-term plan, a long-term plan with the FCC.

Obviously working with CTIA they've been very involved in helping build that plan. We really need to put in place spectrum going way out and I think you're hearing more and more that the government gets it, they want to do that, the current FCC is positioning it that way, but this is something that's not going to stop, it's going to be a journey.

Because as we wirelessly enable everything, which we're going to do and we're doing today, we're going to continually have to re-evaluate what our spectrum portfolios do, we're going to have to evaluate the technology to make the best use of it, and have it be most efficient, but without question you said it very well, we're going to need more.

Glenn thanks so much for your thoughts. Thank you. My pleasure, thank you. Glenn Lurie tells Mobile World Live why any concern around a slow move to 5G by the US operator – and indeed the country in general – is unnecessary. And he argues the US needs to come up with a “long term plan for spectrum”, with demand set to continue to rise as more devices become connected.

AT&T highlights the urgent need for spectrum plans before 5G.

Glenn Lurie tells Mobile World Live why any concern around a slow move to 5G by the US operator – and indeed the country in general – is unnecessary. And he argues the US needs to come up with a “long term plan for spectrum”, with demand set to continue to rise as more devices become connected.

5G subscribers will hit 150 million by 2021

5G subscriptions will hit the 150 million mark by 2021, just a year after the first commercial networks are due to launch, with uptake expected to prove faster than the initial demand for 4G, according to Ericsson’s 2015 Mobility Report.

Ericsson’s latest report is the first time the Swedish vendor has included forecasts for “5G subscriptions”, which it defined as having a “device capable of supporting LTE Evolved or NX, connected to a 5G enabled network, supporting new use cases”. In a London briefing earlier today to discuss the findings, Ericsson’s Patrick Cerwall, head of strategic and tactical marketing, explained the thinking behind forecasting for 5G subscriptions, five years before launch.

He said the figures were based on both Ericsson’s reporting model, as well as conversations with operators. “We see 5G as the later stages of 4G, and this network will also be able to run on 2G and 3G networks,” he said. “5G is built on 4G, and with the road it is on, we see all mechanics are in place for it to go faster than we did with initial 4G.” He also said Ericsson still did not know how the market would actually measure traffic on 5G when it comes to launch.

The bulk of 5G uptake will come from South Korea, Japan, China and the US initially, while the company predicts mobile broadband subscriptions as a whole will more than double from today’s figures by the same year.

The report states mobile broadband subscriptions hit 3.4 billion in Q3 2015, and is forecast to grow to 7.7 billion by 2021, while mobile subscriptions as a whole will reach 9.1 billion, with LTE making up the largest share of all subscriptions, totalling 4.1 billion.

The company added the 4G standard reached around 850 million subscriptions in Q3, and could reach its first billion by the end of this year. Mobile data to surge Other key highlights from the report showed that total monthly mobile data traffic is expected to rise at a compound annual growth rate of “around 45 per cent”, with the rising number of smartphone subscriptions and increasing data consumption per subscriber set to result in a 10 fold increase in total data traffic for all devices by the end of 2021.

During the briefing, Cerwall said the high figures actually “came as a little bit of a surprise, as growth acceleration for video actually recently began to decline”.

Forecasts for mobile video traffic also stood out, with traffic from video set to become “increasingly dominant”, with forecasts for it to grow 55 per cent annually through to 2021, when “it will account for around 70 per cent of all mobile data traffic”.

In 2015, video accounted for almost 50 per cent of mobile data, while 15 per cent of traffic came from social networking. This however did not account for video from social media, revealed Cerwall, with Ericsson opting to put this under the separate video bracket.

Speaking of T-Mobile US’ plans to offer video data streaming for free on select services, Cerwall said the move was “risky”: “As we have shown, it’s a bit risky to do free video as that is what is significantly driving up traffic.” Asia-Pacific will have the largest share of mobile data traffic in 2021, with China forecast to add 260 million mobile subscriptions alone.

In keeping with scaled back projections for the number of connected devices, which Ericsson had initially claimed would reach 50 billion by 2020, the company said there would be 28 billion devices connected by 2021, with more than 15 billion on M2M and consumer electronic devices by the timeframe.

“There are as many mobile subscriptions as people in the world, and every second 20 new mobile broadband subscriptions are activated,” said Rima Qureshi, SVP and Chief Strategy Officer at Ericsson.

“Apart from mobile phones, there will also be a multitude of other connected devices communicating.” 5G to go “beyond mobile broadband improvements”

Within the report, Ericsson also talked up the potential for 5G, claiming that the mobile network “will offer significantly higher throughput, lower latency and more data capacity compared to previous generations of mobile broadband services”. The company said it had built a prototype for applying 5G networking functions and data analytics to public transport, with one case study it is working on designs that plan to optimise the operations of public buses.

Ericsson said a 5G world will help optimise urban traffic flows, enabled by reliable connectivity with data analytics, with dense urban mobile coverage able to provide ubiquitous connectivity, opening up opportunities to improve public transportation, resulting in reduced congestion and increased availability.

“As mobile technology evolves towards 5G, network services with mission critical data traffic, such as instructions sent from a cloud service to a driver or an automated vehicle, will coexist with other types of network services,” read the report.

Hutchison Whampoa (Three) gets some valuable spectrum in the 1.47 GHz space for around £100M

As expected, Ofcom has now rubber-stamped the L-band deal which saw Qualcomm sell a portion of its spectrum to Vodafone and Three, publishing a statement on the matter.

Vodafone has bought the 1452-1472MHz frequencies, and (the soon-to-be-merged-with-O2) Three's spectrum at 1472-1492MHz.

Spectrum is a touchy subject, but this must have been one of the easiest decisions ever for the UK regulator.

Indeed, when it put out a public consultation on the sale it only got one response – of the opinion that selling spectrum to someone who might actually use it was A Good Thing.

So that's unanimous then. Ofcom looked at how fit and proper Vodaphone and Three were to buy the spectrum and concluded that both companies seemed to know precisely what they were doing with the spectrum they already had, so purchase away.

More interestingly, the regulator looked at how it affected the allocation of spectrum between the operators. Unusually, it deemed 1400MHz as “low frequency”, more akin to 800MHz and 900MHz than the 1800MHz and 2600MHz bands, although EE's total spectrum holding is so much greater than that of Vodafone, and more than twice that of Three, that it’s not going to distort the market.

When BT merges with EE the combined company will have even more of a holding – and when O2 and Three merge the shares will all be roughly equal.

Funnily enough virtually nobody has shown much interest in L-band in the past, and its main use is likely to be as an ideal aggregated carrier to provide more 4G and 5G bandwidth. However, recently both CEPT, the European Conference of Postal and Telecommunications Administrations, and the GSMA have highlighted L-band as being a useful frequency for global use.

Strangely financially silent, none of the parties involved in the sale will say quite how much the spectrum went for. Since Qualcomm paid just £8.3m, but when – the day before the official announcement – we suggested a huge profit was being made (I.e. tenfold! and more than £100m), one person who claims to know intimate details of the clever deal let it slip that Vodafone and Three paid a bit more than £100m each. Interesting L-band spectrum times ahead, perhaps?

4.5g from Huawei is LTE- Advanced Pro or we all wait till 5g?

Huawei's Mobile Broadband Forum in Hong Kong was a fun place to attend. While BT and the UK government may think that 10Mbps downstream and 2 Mbps up is plenty of speed for Broadband for the masses, nobody else does it seems, and the mobile world is now gearing up for 1Gbps down and 100Mbps up!!

In fact, the so-called 4.5G non standard, "standard" which has not been ratified even has an official name, and this is relabelled as being "LTE-Advanced Pro". Whatever it’s going to be called, the ability to increase the bandwidth well beyond the 150Mbps of standard 4G comes from three specific technologies, namely carrier aggregation, more reliable advanced modulation, and an increase in the number of antennae.

Carrier aggregation is up and running on EE and Vodafone right now (the networks simply combined), with typically 20MHz of spectrum space from each of two frequencies – say 800MHz and 1800MHz in the case of EE – to provide more bandwidth and up to 300Mbps downstream.

If the two carrier frequencies are contiguous you can get even better performance. The LTE 4g spec would still technically allow lots of carriers to operate, but the cost of licencing the spectrum means that most people are looking to going along the four frequencies path as a sensible limit.

Naturally, merely improving the modulation technique needs far more processing power but Moore's law is our friend here and at least mobile phone carriers don’t need to buy any more spectrum space.

Going from 64-bit to 256-bit QAM (quadrature amplitude modulation), where out-of-phase carriers are modulated, and increasing the rate of modulation improves the throughput no end.

Again, it is the Infrastructure companies that are really keen to sell 256QAM kit into mobile phone operators, and are pushing it hard today.

The final element of the increased performance shtick is the shere magic of MIMO, (multiple-input, multiple-output). This cleverly uses several antennae so that multiple data streams can be transmitted on the same frequency at the same time with clever error correction left to sort out the resultant mess.

In 4.5G LTE-Advanced Pro this is likely to be four or eight instances. For 5G, look to Massive MIMO with 256 or more input and output channels.

Putting all this together, mobile phone operators and infrastructure manufacturers are confident of seeing speeds of 1Gbps as being entirely possible from the technology by 2020.

Huawei and Hong Kong Telecom actually demonstrated a basic prototype system producing 900Mbps at Huawei's Mobile Broadband Forum in Hong Kong last week, with all three technologies running well and a real-world handset running over 200Mbps downstream data rate with just carrier aggregation, and two instances of MIMO.

Putting these very high speeds in the hands of end users begs the question of what the hell will they be used for; yet history has shown that unexpected uses always seem to appear and grow up quickly and sooner or later gradually become the norm. At the forum last week just the two mostly hyped but obvious examples of self-driving cars and augmented reality 3D headsets were much discussed. We'll see how it pans out when 8k video streaming content providers weigh in since that is seen to be their goal!

Wednesday, 4 November 2015

Nokia signs MOU with China Mobile Research.

Nokia Networks revealed more about a MoU signed last week with China Mobile Research Institute (CMRI) to co-operate on 5G development, the first for a foreign vendor. The two firms will work together on the research, standardisation and industrialisation of 5G features such as multi-connectivity and high-speed seamless mobility.

China Mobile last week signed a one-year framework deal with Nokia Networks valued at more than $1 billion (€930 million). The MoU on 5G was part of this wider deal, although TD-LTE and VoLTE grabbed more headlines. Indeed, parent Nokia made much of the performance of its networks business in China during last week’s quarterly financials.

CEO Rajeev Suri highlighted the strong growth in the country, which partially offset decreases in sales from North America and Europe. Nokia and CMRI will work on service scenarios and requirements for 5G, including support for IoT; combine on 5G development in international standards-making bodies such as 3GPP and ITU, as well as jointly promote TD-LTE evolution in 5G via the GTI initiative, and hunt out more spectrum.

The two will also research and develop prototype 5G features, including multi-connectivity, seamless mobility and MIMO. They will also run joint demos of typical 5G applications, as well as verifying key 5G technology and systems via field trials. “I am happy to see that Nokia Networks is the first non-Chinese vendor to sign a 5G strategic cooperation agreement with China Mobile Research Institute.

We started to actively drive 5G development in China as early as 2013, and have made great efforts to encourage Sino-EU 5G strategic cooperation,” said Vicki Zhang, head of technology, Greater China, Nokia Networks.

Tuesday, 3 November 2015

4G LTE services

4G LTE networks, by the middle of this year, now offer service to 755 million users, according to GSMA Intelligence. This high number is also projected to surpass one billion by the end of 2015 and reach 3.6 billion in 2020. But the rapid uptake of LTE services has created new challenges as well as opportunities for operators as they roll out and upgrade their mobile broadband (MBB) networks.

Worldwide data usage is on track to expand by more than 60 % over last year and monthly data traffic is forecast to increase tenfold by 2020. To keep up with this soaring demand, an increasing number of operators are already looking to deploy LTE-Advanced.

As of 31 July, 131 operators in 60 countries had plans to invest in LTE-A, according to GSA statistics. That’s 30 % of all operators with LTE networks. In addition, it’s no secret that traditional revenue sources, such as voice and SMS, are in steep decline and operators are struggling to find new revenue streams.

Monetising data continues to be one of the most significant obstacles that all operators face.

The Global Mobile Broadband Forum is  tackling this key theme and helping develop a long-term industry vision for MBB connectivity and innovation.

Huawei is once again organising its Global Mobile Broadband Forum (MBBF). The event is between the 2nd and 5th of November at the Asia-World Expo in Hong Kong. It is expected to attract over 1,000 operators, regulators, industry partners and media from right around the world.

“Transformation does not happen behind closed doors,” said Qiu Heng, President of Huawei’s Wireless Network Marketing Operations. “If you want other industries to use the network, you need to meet their real needs. Our communication with other industries is still at an early stage and we aim to meet with them as well as operators at this forum to explore future possibilities together.”

One area of discussion, Qiu said, will be around operators’ ability to develop new sources of revenue from IoT (the Internet of Things sector) as well as Huawei’s efforts to develop a wider ecosystem to create opportunities in related industries.

The two-day conference features more than 20 external speakers from operators such as HKT, SoftBank, Telefonica and Vodafone, as well as Bosch, CNN, Google, Phillips, Visa and Time.

Huawei’s rotating CEO and deputy chairman Ken Hu will kick off the forum with a presentation on ‘Building a Better Connected World’. He is followed by HKT group executive director Alex Arena, who will talk about the need for speed before 5G.

GSMA acting director general and CTO Alex Sinclair will speak about global spectrum considerations. Huawei is expected to make a number of announcements during the event, including a 1Gb/s demo from HKT, Hong Kong’s largest operator, and a joint GSMA-Huawei white paper on the benefits of C-band spectrum for MBB.

This is Huawei’s sixth annual MBBF conference and they will showcase the latest MBB trends covering 4.5G applications, 5G innovation, narrowband Internet of Things (NB-IOT) and the MBB network evolution in a 2,000-square-metre demo area.

This year’s forum will also feature the MBB experience tour, with attendees given the opportunity to see HKT’s 1Gb/s service in action.

4.5 G rears its ugly head above the parapet. Interim measures are not welcome in the 5G camp.

Huawei teased out a number of big name operators trialling its so-called 4.5G technology, including a commercial agreement with Norway’s TeliaSonera, as the Chinese vendor touts progress for kit it claims can bridge the gap between 4G and 5G. “5G will be here in 2020 but we still have five years to go; the end user requirements won’t wait for 5G,” Huawei’s marketing chief Chaobin Yang told a media event this afternoon. He claims that demand for HD video and emerging Internet of Things services is driving the need for 4.5G deployment. It was at Huawei’s 2014 Global Mobile Broadband Forum that the company made its first big 4.5G push, declaring the technology a genuine necessity rather than merely a marketing term. A year on, and the company today revealed China Mobile is testing a 4.5G network in Shanghai, Japan’s SoftBank is trialling the tech in Tokyo, and Hong Kong’s HKT is using the kit to achieve its 1Gb/s demonstrations. “Last month we officially signed a commercial contract for TeliaSonera’s network in Oslo,” added Chaobin Yang. And he also namechecked Turkey as a potential market opportunity, given that the country recently awarded licences that specifically used the term 4.5G. “With operators in West Europe we are now exploring plans – you might see news as early as next month,” he added. Adding weight to the case for 4.5G, the Huawei man noted that standards body 3GPP officially approved the technology last month and gave it the moniker LTE Advanced Pro (read more on the move here). When questioned by Mobile World Live, Chaobin Yang said Huawei would likely continue to use the term 4.5G to promote the technology. Huawei claims 4.5G will reduce latency from the current level of about 40ms to 10ms and provide peak speeds of 1Gb/s. As always, question marks remain though over the availability of supporting chipsets and devices.

Tuesday, 20 October 2015

HP and Aruba plan for 5G.. continued

Partnering with us to go after the campus market, which is changing from wired to wireless. HP has a good history on the wired side, so we felt this was an opportune moment to bring the sides together, but go to market with a mobile-first story. After all, as customers re-architect their infrastructure they’re not going with four cable drops to every desk, they’re looking at where the traffic is, which is all on the wireless networks these days. HP agreed with that and basically said, “Why don’t you guys come in and not only grow Aruba, but take all of networking within HP and make it a part of the whole ecosystem.” So HP Networking and Aruba have come together in one organization and Dominic Orr [formerly CEO of Aruba] is the leader for that and I am Chief Technology Officer. We are focusing on integrating the Aruba products with the HP network products to create a mobile-first campus architecture. Does the Aruba name go away and does everyone move to an HP campus? No, and there is some exciting news there. The go-forward branding for networking products in the campus is going to be Aruba, including the wire line products. Over time you will start to see a shift in this mobile-first architecture with Aruba switching also coming to market.

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And we talked about real estate. Do we all move to the HP facilities in Palo Alto or do we stay here? The good news is we’re going to stay here for at least 12 months, and after that we are building a facility for Aruba, so we are going to move into a new building right down the street. Will that include the HP Networking operations in the area? No, we have a global development model, so we have development sites here in Sunnyvale, Palo Alto and Roseville. And we have sites in India, China, Canada and in Costa Rica. There won’t be any changes to any of the development sites. As the business grows we’re going to have to grow most of those sites. HP has bought other wireless players along the way, including Colubris and 3Com, so how does it all fit together? Colubris was a pretty focused wireless acquisition back in 2008 and those products have done well for HP, but that customer base is ready for upgrades to 11ac and as they upgrade they will migrate to Aruba. The former product line will be end-of-lifed over time, but we’re not going to end support for it. There is a small team supporting it and will continue to do so until customers are ready to migrate. 3Com was a much broader acquisition, involving data center campus products, routing, etc. Most of the R&D for 3Com is in China with H3C [the joint venture 3Com formed with Huawei Technologies before 3Com was acquired by HP in 2010]. There is a two-prong go-to-market approach for those products. There is a China go-to-market, which has done really well. In fact, they are number one, even ahead of Cisco, from an overall network market share perspective in China. For the rest of the world we were using the products to go after the enterprise.

As you probably heard recently, we are going to sell 51% of our share in H3C to a Chinese owned entity because there needs to be Chinese ownership for them to further grow share. H3C will be an independent entity on the Chinese stock market and will sell networking gear in China and HP servers and storage as well. So that becomes our way to attack the China market while we will continue to sell the other network products to the rest of the world. Those products are doing very well, especially in the data center. They run some of the largest data centers in the world, names that are less familiar here in the U.S., but very large data centers for the likes of Alibaba, Tencent and other companies that are basically the Amazons and Facebooks of China. 3Com has a wireless portfolio called Unified Wireless. That product line will also be end-of-lifed but still supported, and as we migrate to next-generation architectures we will position Aruba for those buyers. The definitive statement we’ve made is Aruba will be the wireless LAN and mobility portfolio in general and Hewlett-Packard’s network products will be the go-forward switching products. Two products that are really helping to integrate our product lines are: ClearPass, which is our unified policy management platform, which is going to be the first point where access management is integrated between wired and wireless; and AirWave, which is the network management product which will become the single console for the customer to manage the entire campus network. For the data center we will have a different strategy because data center management is about integrating with servers and storage and everything else, but for the campus the AirWave product will be the management product.

3Com has a product called IMC Intelligent Management Console that will continue if customers need deep wired management, but if you need to manage a mobile-first campus, AirWave will do the complete job for you. Given your longevity and perspective in the wireless LAN business, are we where you thought we would be in terms of Wi-Fi usage when you first started on this path 13 years ago? It’s taken longer than I thought it would, but it has certainly far surpassed my expectations. Back in 2002 there was no iPhone or iPad. Wireless was for mobile users on laptops and we believed it would become the primary means of connecting to the network and you would no longer need to cable them in. That was the basic bet we made when we started Aruba. My hope was we would get there in five to seven years and it took 15, but things always take a little bit longer than you think. The seminal moment in our business was the introduction of the iPad. Even though the iPhone was around most people were still connecting to the cellular network and not Wi-Fi because of the convenience. Laptop-centric networking was still prominent, but when the iPad arrived there was no way to connect it to the wire and there were all sorts of challenges. How do you provide pervasive wireless connectivity, because the executives that brought them in were taking them along wherever they went. Security was a big challenge because they were all personal devices.

Aruba evolves as HP adds a new dimensional network architecture to its stable of products.

Wireless LAN stalwart Aruba was acquired by HP last March for US $3 billion, so Network World Editor in Chief John Dix visited Aruba co-founder Keerti Melkote to see how the integration is going and for his keen insights on the evolution of Wi-Fi. Melkote has seen it all, growing Aruba from a startup in 2002 to the largest independent Wi-Fi company with 1,800 employees.

After Aruba was pulled into HP he was named CTO of the combined network business, which employs roughly 5,000. In this far ranging interview Melkote talks about product integration and rationalization, the promise of location services and IoT, the competition, the arrival of gigabit Wi-Fi and what comes next.

Keerti Melkote, CTO, Aruba Networks, an HP company Why sell to HP?

Aruba was doing really well as a company. We gained market share through every technology transition -- from 802.11a to “b” to “g” and "n" and now “ac” -- and today we’re sitting at roughly 15% global share and have a lot more than that in segments like higher education and the federal market. But we were at a point where we could win far more if we had an audience at the CIO level, and increasingly we were getting exposed to global projects that required us to have a large partner in tow to give us the people onsite to execute on a worldwide basis.

So we began looking for what internally we called a big brother to help us scale to that next level. We talked to the usual suspects in terms of professional services, consulting companies, etc., but then HP approached us and said they were interested in partnering with us to go after the campus market, which is changing from wired to wireless. HP has a good history on the wired side, so we felt this was an opportune moment to bring the sides together, but go to market with a mobile-first story. After all, as customers re-architect their infrastructure they’re not going with four cable drops to every desk, they’re looking at where the traffic is, which is all on the wireless networks these days. HP agreed with that and basically said, “Why don’t you guys come in and not only grow Aruba, but take all of networking within HP and make it a part of the whole ecosystem.” So HP Networking and Aruba have come together in one organization and Dominic Orr [formerly CEO of Aruba] is the leader for that and I am Chief Technology Officer. We are focusing on integrating the Aruba products with the HP network products to create a " mobile-first campus " architecture.

Does the Aruba name go away and does everyone move to an HP campus?

No, and there is some exciting news there. The go-forward branding for networking products in the campus is going to be Aruba, including the wire line products. Over time you will start to see a shift in this mobile-first architecture with Aruba switching also coming to market.

5G and the Internet of Things

In 10 years time you and I may be trying to watch silly cute cat videos in 4K, 8K or even 16K resolution, but cellular mobile networking will be as much a big-data problem as a bandwidth drag race.

The systems that mobile carriers brag about now for delivering games and streaming HD media to smartphones will have to be totally re-architected in the next few years to accommodate billions of sensors, cameras and remote-control connections, according to Marcus Weldon, president of Bell Labs.

The New Jersey-based research group is part of Alcatel-Lucent, which could become part of an even larger mobile equipment vendor next year if Nokia wins approval for a takeover bid. So Weldon, who is also Alcatel's CTO, has an interest in overhauling vast networks of cells and back-end systems. But Bell Labs has been ahead of the curve a few times in its more than half century of existence, inventing the laser, the transistor and Unix, among other things. 9 tips for speeding up your business Wi-Fi What's happening in mobile now is the start of a trend as big as the Industrial Revolution and the emergence of the Internet, according to Weldon. It's the instrumentation of everything:

" By 2025, we will be well on the way to measuring everything going on in the world and being able to remotely control most machines", he says.

The few sensors out there now, collecting digital security video or counting cars going over a wire on a highway, are just the beginning. "We've instrumented almost nothing in our physical world," Weldon said. Others call what's coming an acronym known as IoT or the Internet of Things. Even simple devices can tell intriguing stories, like the Jawbone UP activity trackers that gauged an early-morning earthquake by showing whether users woke up.

The concept can be extended to things like logistics, where cheap wireless devices on boxes could fill in the gaps in package tracking. Today's wireless networks won't even be able to deal with the vast number of objects that will be sending signals in 10 years, let alone the amount of data they may be transmitting, Weldon said. Mobile Virtual and Real Network Carriers will have to rebuild their entire infrastructure and systems for signaling, the procedural messages that networks and devices exchange just to make communication work.

For example, a typical cellular base station on a tower is built to handle signaling for only about 1,200 devices. That may be enough to serve all the mobile subscribers in a rural area, but after all these sensors and connected machines get installed over the next 10 years, that same cell tower might have 300,000 devices to keep tabs on, Weldon said.

Monday, 28 September 2015

Facing opposition from consumer advocates and the cable industry over a new but controversial flavour of 4G LTE, T-Mobile, Verizon, Qualcomm and a handful of other companies will launch an industry coalition today, Monday 28th of September 2015 in an effort to sway federal regulators in Washington's latest technology fight.
The coalition, known as "Evolve", wants the Federal Communications Commission to avoid regulating LTE-Unlicensed, a new form of LTE that proponents claim will vastly improve consumers' mobile data speeds and coverage.
Qualcomm and Verizon are among LTE-U's leading developers, but the rest of the wireless industry is eager to adopt the technology. It promises to give wireless carriers more capacity as Americans turn increasingly to mobile devices for Internet browsing, streaming video and online games. Other founding members of Evolve are expected to include AT&T, the Competitive Carrier Association, which represents smaller telecom companies, and CTIA, the country's top wireless association.
Critics of LTE-U argue that the technology could compete with WiFi and other users of public airwaves, making it harder for wireless routers, Bluetooth headsets and garage door openers to function. The cable industry in particular fears that LTE-U could threaten its business model of offering wireless service through public WiFi hotspots.
Both the wireless industry and the cable industry have rolled out competing studies showing that LTE-U is, alternately, good for WiFi and a potential threat to WiFi.

Sunday, 27 September 2015

5G innovation centre has opened at University of Surrey

The “world’s largest academic 5G innovation centre” (5GIC) opened in September at the University of Surrey in the UK, which will see the country’s current four operators collaborate on development of the technology. The facility, which has been in the works for three years, has more than £70 million investment behind it, and will house 170 researchers, with 24 members overall, including China’s Huawei as a lead researcher. Through work already completed, the institute claims to have developed technology enabling speeds over 1Tb/s, and filed over 15 patents. Speaking at the launch, Rahim Tafazolli, who is heading up the facility, outlined his vision for the development of 5G, while cautioning the importance of designing the right network architecture to fully understand how the technology will develop. “We have to bear in mind that 5G is expected to serve the market for 20 years from 2020 to 2040,” he said. “We will work on the heart of the design of the network and look deeply at user requirements. For something to last for so long, we need to look at how we design the networks – lower latency and higher reliability will be key to that.” Mr Tafazolli said the institute and its partners wanted to create a complete 5G solution on the campus by 2018, which includes a complete core network that is compliant for IoT. 5GIC will also work with standardisation bodies, but wants to “wrap up all contributions to the standardisation process by next year”. From then, the institute will develop integrated solutions in a real time environment from its research testbed which will be used “as a playground to test future technologies”, and will enable full 5G functionality and capability. 5GIC also has provisions for start-ups and SMEs, with nine of its members coming from that segment. During the testing phases, students will be invited to the campus to hack the 5G network, “to learn how robust it actually is and how it can be improved”, said Tafazolli. UK operators come together Representatives from Vodafone, EE, BT and O2 were present at the event, and spoke of their commitment in working with the research institution, while O2 and EE representatives said any pending M&A transactions would not have an effect on their commitment to 5G development. While O2 is presently in the midst of a takeover bid from Hutchison Whampoa, EE could soon be acquired by BT, with the deal still going through the regulatory motions. Telefonica O2’s VP of R&D Mike Short said any deal with Hutchison “may still take 12 months, and it’s all full speed ahead until then”. “We’re not looking to slow down, and when you create a leading market, no-one should be taking a short term M&A view. 5G is reliant on collaboration.” BT’s Chris Bilton, who revealed the company had been partnering with 5GIC “even before it started working with EE on various acquisition opportunities”, said 5G was going to be more important as customers continue to adopt mobile solutions. “The opportunity for this technology will be the ability to do things you can’t do with 4G, and that’s where the future lies.” Perhaps a soon-to-be colleague, Paul Ceely, head of network strategy at EE, instead opted to focus on the continued growth of 4G, where the company leads the market, which he believes is “laying the foundations for a future 5G”. “There’s still a long way to go with 4G, and the pull is still huge.” Vodafone’s group R&D director, Luke Ibbetson, meanwhile, said 5G was not all about pushing the consumer to adopt 5G technologies, which some operators in the UK have struggled to do with 4G, but said the technology would emerge more as a hotbed for changing other industries. “From M2M all the way through to the future of robotics, government and healthcare, we will build a technology to promote this growth.” A world first for 5G During the briefing, Tafazolli revealed 5GIC would display “some 5G technologies ahead of anyone in the world”. These demos included the first transmission of ultra HD 4K video, which was streamed to a mobile device over an enhanced outdoor mobile network, which used software and hardware to show the capabilities of 5G with “bandwidth hungry applications such as ultra-high definition”. Two sites were deployed compatible with 5G radio computing architecture to provide the demo, and was run in collaboration with Huawei and BBC. A second demonstration showed off a new “5G spare code multiple access radio wave form,” which 5GIC said could support 300 per cent more IoT devices compared to 4G. In the live demo, numerous devices connected to a central system, showing how multiple users can occupy the same spectrum resource. “We want 5G to be 1,000 times faster than the highest 4G speeds, response time and latency needs to be 50 times faster, 5G has to be 100 times more reliable and its capacity per square metre needs to be 1,000 times that of 4G to accommodate IoT,” added Tafazolli. “Wireless connectivity is the future and collaboration with other industries will be just as important as we develop this technology.

Monday, 14 September 2015

First commercial 5G rollout in 2020

Nokia promised “a big bang” with a proposal for the “first commercial full spec 5G rollout” at the European football championship in 2020. The target, and a call for Europe to be ambitious in its pursuit of 5G, came in a blog by Markus Borchert, Senior Vice President, Market Europe, at Nokia Networks. Borchert said Nokia is also willing to champion the target as one of the key partners for this launch. The 2020 European football championship is, unusually, due to be held in 13 cities in 13 countries. Normally the event is held in one country, or at the most, two countries. Nokia is not the only company hanging a deadline on a major sporting event. Earlier this year, KT Telecom said commercial 5G will be ready for the 2018 Winter Olympics in Korea, a more aggressive target than the Finnish vendor’s. Mind you, another major operator from Asia, NTT Docomo, is more cautious on launch dates. It will focus on a 2020 Tokyo Summer Olympics date, but with the caveat that the launch will likely occur in the lower part of the spectrum below 6 GHz. And Huawei is working with Russia’s MegaFon on trials for the 2018 World Cup. Borchert was blogging after last week’s Telecoms Summit in Santander, at which “a clear sense of urgency” was detectable among Europe’s mobile industry. “The European mobile industry has a strong track record in innovation and developing new services but is currently lagging behind other developed markets in next-generation networks,” he stated. “A sustainable 5G ecosystem is necessary to help push Europe back to the forefront of the global mobile industry again.” He said Europe’s operators and vendors are taking radical steps in driving 5G-related research and standardisation, but that collaboration with policy makers is essential to speed the development of 4G and 5G. 5G needs to be made a more attractive long-term proposition, he said. “The message to Europe’s capitals was clear: we need to improve investment conditions now! Other markets are meanwhile making rapid gains, and seriously challenging Europe’s innovator position.”

Wednesday, 15 July 2015

5G and 4G LTE must be linked!

Ericsson’s CTO for the APAC region, Magnus Ewerbring said that further development of 5G and LTE technologies must be linked, following recent operator comments that the industry should continue to develop 4G because it cannot stand still waiting for its successor’s appearance.

The vendor supports 5G being based on two radio access parts, said Ewerbring. One part is LTE Evolution which extends on LTE-Advanced and other improvements added to LTE. The other part includes “more radical changes” addressing very high bitrates in high bandwidths, he added. “The two parts are aligned on higher protocol layers. 5G will therefore naturally drive the further evolution of LTE,” he pointed out, speaking ahead of his appearance at this week’s session on 5G Leadership in the Asia Pacific Region.

Operator agreement

An Orange executive recently urged the industry to continue developing 4G technology to meet evolving customer needs. Alain Maloberti, SVP of network architecture and design at Orange Group, warned that “we cannot stand still for five years in order to wait for 5G”. Elsewhere, the Ericsson executive also threw out a few examples of 5G existing in test form. The vendor has demonstrated over-the-air tests of pre-5G systems, which are still 20-30 times faster than today’s networks. In Asia-Pacific, it signed 5G MoUs with CAICT (China Academy of Information and Communications Technology), Japan’s NTT Docomo, Korea Telecom, Singtel and Telstra. At this year’s Mobile World Congress in Barcelona, Ericsson demonstrated the kind of services that might be expected with 5G-based M2M, including an excavator that was remotely controlled thousands of kilometres away. Low latency is essential to such an application, which 5G can deliver.

Recently, a consortium including Ericsson started 5G research on real-time control of equipment in mines. The consortium will assess the possibilities of 5G with very short latency providing the basis for real-time control. “The latency shall be significantly lower than in today’s systems, perhaps down to 1 miilisecond end-to-end.”

5G talk is all about the use case

Big Asian operators agree that 5G talk is all about the use case

The telecom industry is abuzz with talk about 5G, even though implementations are years away, with the discussions already focused around use cases, business models and the wider ecosystem, according to the CTOs of leading operators from Japan and South Korea. NTT Docomo CTO Seizo Onoe explained that the type of discussions taking place are very different than with 3G and 4G, when the technology came first, which then led to services and new businesses long after deployments. “With 5G the actual technology to support the business cases will come later.” SK Telecom CTO Alex Choi agreed, noting that over the past couple of years the telecoms industry has been in the process of defining the use cases for 5G. “The use cases being discussed span many technology domains and, therefore, it is essential for the different technology domains to share the visions, strategies and use cases for efficient and timely development of 5G networks and services,” Choi said. Because many incremental steps tend to make things more complicated, Onoe said, the telecoms industry needs to take fewer, more significant steps on its road to 5G. The industry should stop the evolution of old technologies after it finds a new one, he said. “This would make things more simple through quicker migration to the new. Actually, I tried to stop HSPA evolution standardisation after LTE had emerged, but I couldn’t and then finally 8x HSPA specifications were created. Thus many steps were created in 3G.” This is not only true for core networks but also for radio networks and device implementations, he said. “5G will need a big step with significant gains for futureproof expandability,” Onoe explained.

LTE-Advanced has technical specifications for speeds of over 1Gb/s, which have not yet been implemented, so there is room to enhance current 4G networks, he noted, adding that Docomo will also continue work on the evolution of 4G, while at the same time seeking to provide 1Gb/s services before 2020. “I don’t see the aggressive push to 5G having a negative impact on 4G. We have a concrete plan for the 4G evolution and some 5G features might be implemented over the 4G evolution path, which will help smooth the introduction of 5G.”

Docomo is currently conducting trials on basic technologies and demoing the performance of some applications in computer simulations. He expects to see 4K and 8K UHD videos and sensor networks over 5G available for real-time monitoring of athletes in the Tokyo Olympic and Paralympic Games in 2020.

Choi said by the end of the year it will focus on setting up a 5G test-bed to identify and verify the feasibility of potential key enabling 5G technologies independently.

Wednesday, 8 July 2015

Fantastic 5G consortium grows exponentially.

16 providers join latest EU-backed 5G research project

A group of 16 leading providers will join ‘FANTASTIC 5G’, the latest EU-backed research project designed to develop standards for the next-generation of mobile technology. The initiative, “designed to boost capacity, flexibility and improve efficiency for 5G”, according to a release from project lead Alcatel-Lucent, is part of the European Commission’s first phase of its 5G Public Private Partnership initiative (5G-PPP). The EC gave backing to 19 projects designed to develop research around 5G standards in an announcement last week, after receiving a total of 83 proposals, and will invest €128 million in phase one. “I want Europe to be the world leader in 5G,” tweeted Gunther Oettinger, EU Commissioner for the digital economy and society, earlier today. “Our PPP will help to bring us there.” FANTASTIC 5G will see a number of other leading operators and vendors team up, including Nokia Networks, Huawei, Orange and Telecom Italia, to develop a new air interface below 6GHz for 5G networks. It will run for 2 years, with a total of €8 million in EU funding. The project follows the formation of the 5G NORMA consortium, announced last week, also backed by the EC, which will see 13 leading vendors and operators partner to begin thinking about the mobile network architecture for 5G. The EC added that all 19 projects are “designed to work together and collaborate to deliver “critical 5G technology building blocks”. Alcatel-Lucent said FANTASTIC 5G aims to develop highly flexible 5G solutions to support data traffic, support more devices and enable versatile solutions to support diverse device types and traffic characteristics. “FANTASTIC-5G is of key importance, as the multi service air interface concepts being developed in the project will be evaluated and validated by the partners,” said Frank Schaich, research engineer at Alcatel-Lucent. “This helps to build up consensus and to facilitate the standardisation process of 5G.” Overall, the EU pledged a total of €700 million in public funding to develop 5G networks, with 5G-PPP broken up in three phases. The research phase of 5G-PPP is due to complete next year, before companies are due to move on to system optimisation. Large scale trials are then planned for 2019, with a target launch for 5G in 2020.

Thursday, 25 June 2015

If 5G is just an incremental step over 4G it will fail

If 5G is an “incremental step” over 4G technology “we are going to fail”, Erik Hoving, CTO of Dutch operator KPN, warned this morning.

“5G is going to ask different things from us as an operator, it’s going to give people different things. If you look at what the demand for 5G is, it’s capacity, but it’s also latency.

There is never going to be a Google car driving safely if the latency isn’t solved, and latency isn’t going to be solved if we continue doing what we are doing today,” he continued.

So far, the mobile industry has developed through “a huge amount of incremental steps that we all thought would bring a better world for our customers. But at the end we have this huge spaghetti of core networks.

And listen to the words – a core network. In any other industry, core would mean one,” the executive commented. “Everything we do needs to start with a picture of the future, which often our industry didn’t do.

Our industry is extremely incrementally driven, because most of the companies are stock-market quoted, and the next quarter is the most important quarter,” Hoving observed.

But, in the face of growing data demand, “there is no way we can step back from the incremental things,” he said. “You have to invest in your core network, you have to invest in your access, you will have to invest in frequencies, because the amount of data that is being consumed is exploding in our face.”

“I think 4G is going to be the horsepower for mobile data consumption for a long while. It’s going to be mixed with WiFi, definitely, and ultimately this will grow into 5G, but first we have to define exactly what 5G will mean,” the executive continued.

With this in mind, “we as an industry, and at KPN, have to simplify what we have first. Because it’s way too complicated,” he said. “If we do not clean-out what we have today, in core networks and in IT at the back-end of our industry, some of our companies will collapse.

Because there is no way you can continue with this IT shebang that we have. We have to first clean-out and virtualise,” Hoving argued.

With many operators here iterating that 2G networks are likely to have a long lifespan, the KPN technology head was especially critical of its younger brother, 3G.

“Basically, 3G is a very mediocre solution. 2G is a voice-centric solution. 3G was created from a technology perspective with a half-baked data solution. And we rolled it out again incrementally,” he said.

Saturday, 9 May 2015

Healthcare and 5G

Imagine the world in 2020, only five years from now. If predictions hold true, more than 50 billion devices will be connected to the Internet (creating the Internet of Things), through smart homes, smart cities, smart factories, smart everything. Two recent Cisco studies show there’s $19 trillion in IoT value is at stake in the private ($14.4 trillion) and public ($4.6 trillion) sectors. The studies see, for example, $2.5 trillion in value from better use of assets, improving execution and capital efficiency, and reducing expenses and cost of goods sold.

In 2020, cars could be driving themselves and people could be monitoring their health through a variety of smartwatches and other wearables. And, of course, smartphones will continue to proliferate. 5G could also become a reality as early as 2020 (some estimate it will be later, perhaps 2025). Carriers’ base stations can handle hundreds of simultaneous users now, but that’s not enough to accommodate the billions of new devices that will hook into the Internet of Things. Some estimate that equipment makers will need to increase base station connectivity capacity by a factor of 1,000. RF and microwave electronics are also becoming more valuable. Consider RF chips in smartphones. Instead of 30-40 cents for RF chips in a 2G phone, chipmakers will see $2 to $3 in a lower-end 3G smartphone. It then rises to $4 to $6 for a mid-tier LTE smartphone and $10-plus for high-end global LTE smartphones. No estimate yet on 5G smartphones, but it’s sure to be more. These trends are good news for everyone involved in technologies associated with RF, microwave, millimeter wave, and THz frequencies, many of whom will be attending “Microwave Week” in Phoenix, May 17-22.

Besides the flagship IEEE MTT-S International Microwave Symposium (IMS), Microwave Week also hosts the IEEE RFIC and ARFTG conferences. Microwave Week 2015 will start with RFIC Symposium, and followed by IMS Symposium, Microwave Historical Exhibit and ARFTG Microwave Measurement Conference. The RFIC Symposium kicks off Sunday evening with the awards ceremony followed by two plenary speakers: Dr. Peter H. Siegel from Jet Propulsion Laboratories will talk on “From THz Imaging to Millimeter-Wave Stimulation of Neurons: Is there a Killer Application for High Frequency RF in the Medical Community?” He’ll be followed by a talk by Dr. Hermann Eul of Intel titled “RF as the Differentiator.” On Monday at the IMS Symposium, University of Illinois’ Swanlund Chair Professor John Rogers will deliver the plenary session address. This kicks off a week of more than 160 technical sessions that indicate industry growth at the intersection of RF and microwave technologies with health. Dr. Rogers’ opening keynote, “Soft Assemblies of Radios, Sensors and Circuits for the Skin,” will focus on the experimental and theoretical approaches for using soft materials, ultrathin micro/nanostructures and controlled processes of mechanical buckling to achieve ultralow modulus systems of semiconductor devices. The resulting skin-like technology has the potential to provide clinical-quality health monitoring capabilities for use outside of traditional hospital settings and laboratory facilities. “Rogers sets the precedent for bridging the gap between research and real-world application,” said Vijay Nair, IMS symposium general chair. “His expertise allows him to provide deep insight into how technological innovation can result in significant opportunities for the microwave industry and for society as a whole.” Closing IMS2015 on Thursday, May 21 is Agilent Technologies’ Chief Technology Officer and Senior Vice President Dr. Darlene Solomon, who will present her vision for how breakthroughs in cellular biology will enable advances in biology-based engineering in her talk, “The Century of Biology is Great for Engineering.” “Solomon’s holistic approach to the application of technology to address societal issues offers a unique perspective to illustrate the great opportunities ahead for RF and microwave engineers,” said Nair. The focus of the ARFTG 85th Microwave Measurement Conference; Automatic RF Techniques Group (ARFTG) on May 22nd, will be “Measurements and Techniques for 5G Applications.”

Wednesday, 22 April 2015

5G revolution is under way

Huawei sees 5G as revolution, not evolution The gap in performance between current LTE-ADVANCED 4G networks and the requirements of future 5G networks means the new technology is a “revolution, instead of a mere evolution of today’s 4G network,” said Yang Chaobin, CMO of Huawei’s wireless network unit.

Sunday, 5 April 2015

Antennae Market: Benefit of MIMO

  • 1. Antenna Market Overview June 2014
  • 2. Presentation Outline • The benefits and shortcomings of MIMO • LTE network performance and the need for higher capacity / better edge of cell throughput • Mobile device performance implications – “it takes two to tango” • Final thoughts
  • 3. The Impact of MIMO on Data Rates  Test conducted in our hotel room  Logged using Accuver XCAL drive test software  Occurred while operator / vendor turned on MIMO at 6 AM
  • 4. Results from each test were fairly consistent!
  • 5. MIMO gains varied as a function of SINR (no surprise)  The benefits of MIMO are most evident with SINR >20 dB  At 15 dB the impact of MIMO on end user data rates is only modest  Below 10 dB the availability of MIMO could actually degrade performance
  • 6. Is the Glass half-empty or half-full?  At least 40% of the time TM 3 increased user throughput by at least 20%  At least 50% of the time the availability of TM 3 would only have a modest improvement on throughput while 30-40% of the time it could degrade performance  In all likelihood, SINR will only get worse, not better
  • 7. Actual MIMO Utilization is much lower!  Results based on network-level testing at multiple sites and for extended lengths of time  Logged using the Sanjole IntelliJudge test platform  Likely due to a combination of poor network conditions and user / application behavior  The typical data connection consumes very little data
  • 8. Actual MIMO Utilization is much lower!  A mobile device is far more likely to use transmit diversity versus MIMO (Rank Indicator 2)  Device performance (as we’ll see in a bit) could have been a contributing factor  Device location (and application behavior), combined with network design criteria was also a likely contributing cause
  • 9. Spectral Efficiency isn’t what we think it is!  Median efficiency across all tests was 1.16 bps/Hz  Vendor differentiation is evident  Most device interactions with the network involve minimal amounts of transferred data while network design also played a likely role
  • 10. Mobile Devices don’t perform the same  OTA testing in an anechoic chamber done with Spirent and ETS-Lindgren  All devices use LTE chipsets from the same manufacturer  Major differences in performance likely due to poor RF front-end design  Challenges escalate with multi-band (7+ band) devices
  • 11. Mobile Devices don’t leverage MIMO to the same degree Device 1 Device 2 Device 3 Device 4 Device 5  Simulated network conditions were good, but by no means ideal  RSTP = -80 dBm  Uncorrelated MIMO signals with UMi channel model  Device 2 outperforms all other devices by a considerable margin  ~120% higher throughput than worst performing device
  • 12. Mobile Devices don’t leverage MIMO to the same degree  Best performing device leveraged MIMO fairly extensively and with success  Two devices barely used MIMO, if at all  Up to 2 unit differential in reported median CQI values Device 1 – CW0 Device 1 – CW1 Device 3 – CW0 Device 3 – CW1 Device 5 – CW0 Device 5 – CW1 Device 2 – CW0 Device 2 – CW1 Device 4 – CW0 Device 4 – CW1
  • 13. Where do we go from here?  Vendors and operators are moving from 2x2 to 4x2 MIMO with Closed Loop MIMO now becoming more prevalent  Preliminary analysis of test results suggests it offers a compelling gain at edge of cell (uplink) and in some cases even at the center of the cell  4x4 MIMO has promise based on test results we’ve seen, but market opportunity is limited by device support  Impact of higher order MIMO schemes on devices cannot be ignored – they are already struggling to keep up  More “complex” antenna technologies, such as 8T8R, are being deployed in support of LTE TDD – largely to compensate for higher frequencies  Multi-user MIMO and/or beamforming will help drive capacity gains – good news is no impact on devices w.r.t. feature requirements

Wednesday, 18 March 2015

The wave of cellular network operator consolidation is being driven by cutting costs and achieving economies of scale.

The wave of operator consolidation across the Americas and Europe is driven by the urgent need to cut costs and achieve economies of scale. With average revenue per user (ARPU) falling, even for supposedly premium LTE and fiber services, and with huge infrastructure upgrades still ahead, carriers need to find drastic cost efficiencies or be consigned to a spiral of rising debt and falling margins.

Even in the US, the big four operators, whose ARPUs are the envy of the rest of the world, are seeing their profits squeezed by price competition and huge capital expenditure (capex) bills, and now they are being hit by another factor, the inflated cost of spectrum. All four have seen their market values slashed in recent days, with investors scared by the bids being made in the current AWS-3 spectrum auction, as well as warnings of difficult quarters from the two market leaders and the ongoing price wars.

Such jitters will put even more pressure on carriers to adopt a dramatically different approach to building their networks, including the software-defined strategies which will eventually eat into the revenues of traditional equipment makers.

Sprint hammered despite its auction caution

All four national US cellcos have seen their stock being dumped in the past week, and have lost a total of $45bn in market value between them since mid-November, according to Wall Street Journal calculations. That loss in value is greater than the combined market capitalisation of Sprint and T-Mobile.

Sprint suffered the most, with a drop of 16 per cent in the second week of December, reflecting the persistent lack of confidence in the carrier, which has been less aggressive than T-Mobile USA in price cutting, but has failed to increase its premium base significantly either. It has also been hit by delays in its ambitious LTE rollout plan, and the transition has caused temporary network quality issues which have added to its churn woes.

The drop in Sprint’s value shows the new coolness on carrier stocks is not just about the headline factor of the huge prices bid in the AWS-3 auction, which have now topped $43bn. Sprint was the only one of the big four to stay out of that process, saying it has enough capacity to support its Network Vision multimode infrastructure and its Spark triband LTE offering for now. It will concentrate on leveraging its great asset, its huge quantity of 2.5GHz spectrum, to improve its cost:capacity position relative to its rivals, and wait until the 2016 600MHz auction to acquire more frequencies.

Staying out of the AWS-3 madness has not saved Sprint from investor anger, partly because of its ongoing issues, and partly because the current spectrum sale has set new expectations for the 600MHz incentive auction of broadcast frequencies. Since sub-1GHz bands are generally seen as "beachfront" assets, investors fear that the 2016 sale may command even higher prices than AWS-3, and at that stage, Sprint is expected to be a heavy buyer, as is TMo.

Of course, it is not as simple as that. Many market changes will have occurred by the time the delayed 2016 procedure gets under way, and many operators will be setting higher value on capacity bands by that stage, rather than coverage-focused sub-1GHz frequencies.

However, for now, fears that operators will never be able to call a halt to spectrum spending – even with the use of Wi-Fi and other options – are haunting the carrier stocks. T-Mobile lost 10 per cent in the first week of December, while Verizon lost six per cent and AT&T five per cent, partly because of the high sums they will end up paying if they are successful bidders.

But warnings about lower profits in the current quarter, issued by both Verizon and AT&T, are also a big factor, especially as these negative vibes are not about the wireline business but about wireless, which is usually the growth driver. The markets are concerned that the price wars, and the ever greater promotions and discounts operators must offer to lure and retain consumers, will drag on into next year.

The need for consolidation

Consolidation is the usual remedy for excessive price wars, as seen in other competitive markets like France. In a research note last week, Jefferies analysts Mike McCormack, Scott Goldman and Tudor Mustata wrote that they had "doubts for the sustainability of the four-player market," and that "without a more accommodative M&A environment, short term lower pricing for consumers will likely end poorly for all”.

These are the kind of opinions which send investors running, but have less impact on competition authorities. While Sprint owner Softbank argued persuasively, earlier in the year, that a merger with TMo would create a more viable third player and more profits all round – which could then be invested in services and capacity – it backed away from making a bid in the end, deterred by likely antitrust scrutiny of a deal which would reduce the number of carriers. Other offers for the fourth operator could still materialise in 2015, from Dish or even Vodafone (see separate item), but for now TMo is aggressively independent and continually upping the ante in terms of consumer offers. Even Verizon, usually aloof from such mud-fighting, has been forced to join in, hence its warning about current profit levels.

Dump market share to maintain profit?

Apart from mergers, carriers may also choose to preserve profit margins by sacrificing market share, losing the lower value consumers and keeping those who choose an operator not on price but for network quality, added value services or choice of devices, for example.

AT&T and Verizon are both working hard on adding new revenue streams, many of them not dependent on the fickle consumer – Verizon’s alliances with carmakers are a good example, as is the involvement of both giants in GE’s Industrial Internet initiative and in smart city projects.

If they can build new revenues, and increase wholesale activity (which protects them from the cost of acquiring and retaining users), they may decide to take the hit of lower subscriber numbers. The Jefferies note argues that it is better to lose customers than ARPU, calculating that a fall in ARPU is 2.5 times more damaging to EBITDA (earnings before interest, taxes, depreciation, and amortization) profits than a loss of subscribers. "The bottom line is the industry needs to stop obsessing about subscribers when ARPU is so much more important," they wrote. "In our opinion, going negative on subscriber growth may be just what the doctor ordered."

Another analyst, Kevin Smithen of Macquarie Capital, urged Verizon and AT&T to let about five per cent of their customer bases go, and concentrate on a clear network performance advantage over rivals, which would be helped by a lower burden of subscribers, and would drive higher (or at least stable) ARPU. Sprint and TMo could then pick up those users – a total of eight million to nine million between them – and gain what they most need, better scale to improve cashflow and lower debt. That would see a clear divide between the two pairs of operators, with the leading two investing their improved profits in spectrum and network quality, not on subsidies and customer retention.

That model reflects what has already happened in the US, with Sprint and TMo increasingly focused on prepaid and lower cost businesses and AT&T and Verizon staying at the premium end. However, LTE has changed that pattern somewhat, because the smaller operators will need to climb back up the value tree in order to recoup their investments, hence the spread of price wars and heavy discounting from the low end segment and right into postpaid 4G.

LTE has been a big disappointment as a profit generator, especially as it has coincided with a rise in usage which is far bigger than anticipated a few years ago, and a period of heavy spending on device financing. The network upgrade which was supposed to improve the carriers’ economics with its lower cost of capacity and its improved spectral efficiency has caused further pain to some, forcing them to make major investments in spectrum and infrastructure, only to hunt in vain for ROI in a price-competitive market.

The Jefferies trio added: "In our view, innovation, both in the network and in the handset, has caused increasing industry pain. Now, with too many competitors in the market, carriers are unable to price at levels to properly re-coup investment."

Domain 2.0 and the new approach to networks

The carriers will learn some lessons from this difficult period. One will be to think about their infrastructure investments in a completely new way in future. This is one driver for general interest in virtualised and software-defined networks, which currently come with all kinds of uncertainties and upfront costs, but should eventually allow operators to adopt the economics of IT – commoditised hardware running network functions as apps in the cloud, and supporting very low cost cell site end points.

AT&T is a leading light in this process with its Domain 2.0 program, which sets out a multi-year process to move its network functions to the cloud and create a next generation platform based on SDN (software-defined networking). This will be directly responsible for a reduction in capex spending, it says. Verizon expects to spend about the same on its networks in 2015 as it did in 2014 – its LTE roll-out is almost complete in coverage terms, but now it needs to shovel in more capacity – but AT&T says it will reduce its bill from $21bn this year to $18bn in 2015, and down from there.

This week, it announced new vendors for Domain 2.0, taking the total to 10, and said in a statement that it expected its next generation network “to reflect a downward bias toward capital spending. This will come from relying less on specialized hardware and deploying more open source and reusable software".

The latest additions to its supplier roster are Brocade, Ciena and Cisco. These suppliers will see it as an important endorsement – AT&T is such a frontrunner in telco software defined networks (SDN) that inclusion on its list is seen as a signal that a vendor is geared up to adapt to the software-led world and its new economics, rather than battling against the huge upheaval. In the first wave of Domain 2.0 selections, Cisco was omitted, which helped create considerable market concern that it would struggle to convert its hardware-based business to SDN, despite all its high profile efforts in this direction. Cisco subsequently acquired one of the Domain 2.0 choices, Tail-f, but has now also joined the elite club under its own steam. The other participants so far are Affirmed Networks, Alcatel-Lucent, Amdocs, Ericsson, Fujitsu, Juniper and Metaswitch.

With its high profile focus on SDN, AT&T is differentiating itself clearly from its arch-rival in terms of its approach to its network. Verizon was the clear winner of the race to get to LTE first, but AT&T has been more experimental with its architecture, and more concerned with adopting technologies which alter the cost structure – it was a pioneer of mobile offload with its acquisition of Wayport; it is prominent in industry developments and organisations for both small cells and WiFi; it is intensely involved with NFV and SDN.

Its architecture chief, John Donovan, summed up the differences in philosophy at the recent Barclays 2014 Global Technology Conference, saying: "Can we benefit from standards? Yes. Can we flatten the network? Yes. Can we reduce components? Yes. But I'm more enthused about making that stuff software-defined than I am about next-gening it.”

And in a new blog, he is pledging to make the AT&T network 75% software-driven by 2020, building on existing projects such as the virtualisation of network analytics, edge routers and some data platforms, during 2015.

This emphasis keeps Donovan out of the most hype-infested areas of debate about "5G". The senior EVP of architecture, technology and operations is not uninterested in a possible air interface upgrade, but only if it is a real leapfrog “that would allow us to carry more bits per hertz, so that we can gain more efficiency in our spectrum ... It's sort of a high bar saying if you can clear this, then it might make sense to take a look. Absent that, then it's good to sit and talk and plan, but it's not going to trigger any sort of investment cycle."

This is the sort of comment which strikes fear into the hearts of traditional network vendors, many of which are busily testing technologies which could go into a brand new air interface and power a conventional 5G upgrade. But the operators know there are likely to be more significant, and possibly more immediate, cost gains to be made from turning the network into software.

The initial effort and disruption will be just as great as ripping and replacing a generation of mobile kit, but the eventual savings should be greater for many, and they will gain a flexible network which can support many kinds of as yet unimagined new services and behaviours, without the need for yet another rip and replace.