Future of the mobile industry: network operators must increase capacity without irritating customers with higher prices and data caps

At the end of October, Real Wireless hosted a breakfast meeting with Bloomberg to discuss what the future holds for the mobile industry.

Around 40 Bloomberg subscribers from across a number of sectors, including financial institutions, telecom vendors, analysts and operators attended the event. The morning’s talk featured a presentation from Real Wireless’s director of technology, Professor Simon Saunders, who provided a compelling overview of what the future shape of the mobile industry will be — and what the implications of this are for operators.

The challenge at hand
In particular, the presentation highlighted how MNOs now face the dual challenge of delivering major capacity increases and improving their earnings while avoiding customer churn through price increases and data caps. This challenge is set against a backdrop of increased competitive pressures from disruptive new-style players — like Uber and Netflix — that are adopting completely new technology and business models to attract customers away from established competitors.

Growth in mobile demand over the next 15 years is a given, even if the exact rate of growth varies widely between forecasts. Ambitious predictions state that mobile demand will grow to 30 times present levels by 2030, while conservative estimates place growth at 23 times. Whatever the exact rise, meeting demand will depend on many factors — particularly how efficiently mobile operators can supply capacity.

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But as growth continues to increase exponentially, revenues remain largely static, squeezing operator margins and in turn impacting capital available for investment.

Facing up to the task
To address these challenges, Simon outlined several potential options available to operators who wish to maintain current standards of mobile connectivity while keeping pace with demand.

One option available is for operators to try and reduce demand themselves by increasing prices and capping data volumes, which would almost certainly prove unpopular with consumers. Operators could also charge differentially according to need through daily or hourly ‘pay-as-you-use’ fees, or attempt to compress data to ease capacity strains.

The ideal option though would be to reduce the cost of delivery while increasing quality. This approach would involve operators combining different spectrum bands, technology (for example enhanced modulation and coding, carrier aggregation and antennae techniques) and topology (for example small and macro cells) in certain ways and to varying degrees to meet the varying levels and patterns of demand.

The importance of small cells
Small cells in particular could play a vital role in the future of the mobile industry. By offloading subscribers from macro cells in busy areas, they can offer a better throughput and quality of experience at a significantly lower cost than macro cells. Operators will find they are able to keep their tariff prices low, whilst touting the benefits of their enhanced service to subscribers.

Past Real Wireless projects have demonstrated how the benefits of small cells align with market drivers and, when rolled out intelligently by operators, can deliver a positive return on investment. Capacity-driven projects in urban areas can yield benefits of up to $48.6m, with a total cost of ownership of $29.8m and a return on investment of 136%. Coverage-driven projects, meanwhile, can save operators who lack low-frequency spectrum between $2.8m–$7.2m while achieving equivalent coverage as expensive macro cells.

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Automated Wi-Fi systems for better QoE
Operators can also save money and reduce mobile capacity strains by taking advantage of automated Wi-Fi. Our calculations across 10 global cities show that operators could be $17.9 billion better off in a mixture of cost savings and additional revenues by using automated systems to enhance Wi-Fi quality of experience. This approach enables operators to offer seamless hand off to Wi-Fi and back on to the network given certain signal strength, capacity and optimisation metrics. However, the operation support system (OSS) and the business support system (BSS) must be set up to manage the traffic across the different networks.

For example, a mobile operator in New York that has 25% mobile market share could save $71m. Using those savings, the operator can reinvest in expanding capacity without having to increase prices for consumers. It’s a win-win situation.

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There’s no doubt that MNOs have some stern challenges ahead — and it’s all being driven by insatiable consumer demand. Operators need to act now if they’re to make life easier for themselves in the next few years and avoid a public backlash on price increases.

Real Wireless enhances strategic expertise with new CTO

Simon FletcherIndependent expert continues to bolster management team by hiring Simon Fletcher from NEC Telecom Modus

London UK, 18th November 2015 – Leading independent wireless advisory Real Wireless has recruited Simon Fletcher as chief technology officer.

Simon joins Real Wireless from NEC Telecom Modus and brings an impressive range of experience to the role, particularly in team management and strategic business development. The appointment comes as two new recruits also join the business. Dr. Raymond Kwan joins the company’s technology practice from Cisco (Ubiquisys), and John Stephens joins the deployment and lifecycle practice, drawing on his background in wireless system rollouts and planning at CommScope and Bluwan.

As CTO, Simon will take overall technical responsibility across the company as a part of the management team. Recognised as a regular speaker at industry events and currently acting as chairman of the Cambridge Wireless Future of Wireless Conference Organising Committee and Small Cell SIG Champion, Simon brings an enviable network of contacts to Real Wireless alongside a proven ability to lead teams in delivering technical projects while identifying and meeting new strategic goals for the wider business. His long standing association with the UK innovation eco-system as a director of mVCE and the Innovate-UK ICT-KTN brings a wealth of knowledge on the application of stratetgic research through open innovation to accelerate product and services delivery. In recent times his focus has been on future cities, the application 5G and IoT in industry verticals with an event horizon towards 2030.

“Simon is a talented and knowledgeable professional and a perfect fit for the company,” said Real Wireless CEO Mark Keenan. “In addition to assuming technical responsibility across the company, he will join as a member of Real Wireless’s newly strengthened management team. Here his leadership skills, detailed knowledge of sustainability strategy, and emerging technology insights will come together to help further build on the strength of the business, identify new potential value areas, and drive forward future growth.”

Simon Fletcher said: “As demand for wireless products and services continues to enjoy massive growth thanks to the 4G rollout, 5G development and the Internet of Things, to mention but a few areas, it’s a great time to be joining Real Wireless. The business has a great history of adding value to all parts of the wireless industry and end user eco-system, and I look forward to helping the company achieve its growth ambitions while building relationships with all of our existing and future customers.”

Simon spent the past 20 years working in the design and development of technical telecoms infrastructure. Beginning his career in technology demonstrators at Racal Radar Defence Systems, he moved to Telecoms Modus in 1999 to play a key role in the development of 3G products and in 2006 he established a core architecture team that helped develop the first-generation of technology for 4G systems culminating in a Steering Board position in the LTE SAE Trials Initiative (LSTI), a global forum with a mission to assure the early adoption of LTE. His long participation in Common Public Radio Interface (CPRI) defining early C-RAN concepts brings great foresight on an important architectural element of emerging 5G architectures.

About Real Wireless
Real Wireless delivers independent, informed and innovative advisory services in every aspect of wireless, from the technical to the commercial. The company works with mobile operators, governments, venues, building owners, vendors and regulators to bridge technical and commercial domains to help its clients get the best from wireless. With experts in every aspect of wireless and a proven track record, Real Wireless is one of the world’s leading wireless advisory firms. Its clients include Ofcom, Wembley Stadium, The ECB, BAA, The European Commission, major network operators, vendors and many others.

For more information visit www.realwireless.biz
Twitter: @real_wireless

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The BBC Charter select committee — fail fast, learn fast

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Simon Saunders (right) at BBC Charter select committee. Click on the image to watch the video — “fail fast” from 10:42:15

Last Tuesday (10th November), I was called upon to attend the House of Lords communications committee‘s inquiry into the renewal of the BBC Charter.

This session saw Mike Flood Page, former BBC TV and digital media executive producer, and I give evidence in relation to the BBC’s technological innovation efforts — particularly with respect to the development of iPlayer and the failure of the much-maligned Digital Media Initiative (DMI).

At the core of discussions was whether the BBC should continue a role in technological development. After all, this is an organisation that’s spending public money; it is therefore crucial any project it invests in is able to justify its own cost to the taxpayer.

I would argue the organisation still has a key role to play in technological development in the broadcast sector. But the BBC needs to make big changes to how it approaches projects if it wishes to safeguard taxpayer investment; most importantly, it needs to take a lesson from technology startups and be prepared to quickly drop any project that looks set to fail — appreciating that there is no inherent issue in failed projects as long as lessons are quickly learned.

Throughout its history, it’s fair to say that the BBC has played an important role in broadcast technology innovation in the UK. Particularly in radio, aiding in the development of radio wave propagation techniques in the first half of the 20th century, to spearheading the DAB rollout in the second.

But today is a very different world, with the BBC increasingly being called upon to serve a more diverse number of objectives at the same time. The organisation therefore need to reconsider, reassess, and recast its goals, taking in to account the platforms it needs to reach users on.

iPlayer is a great example of where lessons could be learned. One of the more successful recent BBC developments, at launch iPlayer was vastly superior to anything its competitors could offer. This was a great achievement, and a shining example of what the organisation can achieve once it commits to a project.

But at the same time, many of the challenges it faced and had to invest internal resource to resolving were simultaneously being invested in by external parties. Other solutions existed that, while perhaps not a perfect fit for the organisation to use ‘off the shelf’, could have helped reduce development costs and time.

Public organisations have been criticised in the UK for a perceived over reliance on external consultants, but these criticisms are misguided. The issue is in what areas organisations like the BBC are choosing to rely on external resources.

For example, while the BBC may consider the ongoing efforts to transcode and upload its content library as a task that needs to be handled internally, the initial efforts to develop the iPlayer network technology could have been offloaded to external technology experts who were already tackling these challenges.

There’s also a key need for, where projects are being handled by internal resource, for the organisation to take lessons from agile working methodologies and adopt a ‘fail fast’ culture. Aiming to rapidly produce proof of concepts, without fear of dropping those that look unlikely to be successful, will ultimately avoid — much more significantly costly — long-term project failures.

Of course the biggest example of where the current culture failed is the Digital Media Initiative, which managed to spend £98 million of investment across only two of its five years — and considerably more across its other three. For a project that seemed to be doomed for much of its lifespan, the counter-productive impact that a culture that fears failure delivers is starkly obvious.

At the same time, the BBC has a role to play in future technological development. Through its non-commercial yet high profile nature, it is in a unique position to drive developments in areas many commercial broadcasters would not. However, this also requires much more intelligent and considered management of investment — and a far more honest appraisal of success and failure.

Click here to view a transcript of the session.

MoD spectrum auction — business as usual or time for new entrants?

1280px-Tropo_Scatter_Microwave_System_AntennaThe recently announced MoD spectrum auction is the culmination of 10 years’ work, numerous reports and even more consultations — some of which I’ve been fortunate enough to be involved with.

It’s taken a lot of effort to get to this point and, as one of the first countries to auction off public spectrum assets, it’s a process that is being closely watched both at home and abroad.

The details of the auction have already been covered in good detail here and here and — while what’s on offer clearly isn’t going to result in a new, nationwide mobile network — we’re likely to see it being used to add capacity to existing networks in busy city centres.

The spectrum to be auctioned has some associated and additional complexities for operators to contend with, including coordination with RAF and naval bases and a much smaller device ecosystem compared to 800 MHz and 2.6 GHz.

The 2.3 GHz spectrum will be adjacent to other MOD services. As a result, new mobile services will need to both protect these existing services and also manage potential incoming interference from MOD deployments, all without impacting the QoS for users.

The mobile operators will almost certainly put in bids nonetheless. Having invested hundreds of millions in purchasing 4G licenses just over two years ago that they are yet to recoup, investment in further spectrum rather than network rollout may be challenging for some mobile operators.

But if operators didn’t bid how else could it be used?

One potential model might be the ‘small cells as a service’ approach that has been discussed for some time, but as of yet has never really got off the ground. This would allow someone, potentially a provider with existing fibre assets, to offer a small cell network over a city centre or business district and charge operators for access. Given the challenges holding back urban small cell deployments, it’s a model that many are pushing for and the FCC’s move to promote shared access for small cells in 3.5 GHz may end up driving this model in the UK.

Businesses involved in smart city or vertical applications could also be interested, particularly in the 3.4 GHz band given the issues with mobile device compatibility. The 3.5 GHz spectrum could encourage new entrants or new services from existing fixed line players, however the business case for these models is not straightforward, as existing owners of spectrum in this band can testify.

With no coverage obligations and no focus on encouraging new entrants, it is difficult to predict how this auction will develop. The varied block sizes in each band of spectrum and a number of issues with coexistence may put off one or two of the established players that have other higher priorities, instead encouraging new entrants or business models from fixed-line operators. Regardless of the outcome it’s an exciting time for the industry and great to see the spectrum finally being released to the market after many years of hard work.

Christmas is the time for retailers to make the most of wireless

King-edward-street-leedsWe recently launched a report outlining the opportunities for retail businesses that take advantage of wireless technology to support their business — and as the first Christmas products are already beginning to hit the shelves, now is the time to react ahead of the busiest period of the year.

For many businesses, Christmas is a make or break time, particularly as the high street struggles to compete with the significant challenge posed by the online sector.

In our report we identified that consumers expect to receive similar levels of personalisation as they get online while visiting traditional high street shops. Consumers also want the whole process to be as simple and enjoyable as possible. But, faced with a choice between battling the crowds in shopping centres and browsing from a tablet at home, many are understandably opting for the latter.

Enhancing the instore experience is therefore crucial to encouraging customers to leave their homes, and it’s in this area that wireless can make a massive difference – it’s not just encouraging people in to stores by providing basic phone signal.

At Christmas wireless can provide the connectivity for shop floor staff to be able to display personalised information on shoppers’ preferences on their tablets — with their consent, of course. Rather than having to spend time asking many basic questions, this will allow staff to quickly provide recommendations based on previous purchases — and will more likely result in a sale.

Wireless can also help mitigate one of the negative aspects of the retail customer experience at Christmas, the dreaded queues, something that will only become more important as customers migrate to contactless cards or applications such as Apple Pay. A number of retailers and restaurants are now even offering the option for payment via a dedicated app, removing the need for queuing and staff from the equation completely.

This is just as relevant for the grocery sector as well as retail. At a recent conference, Joanne Denney-Finch, CEO of IGD, predicted a retail world that entails “automated replenishment, smart queuing systems and enhanced click and collect services”, enhancing the store experience by “allowing consumers to engage with brands and avoid perceived mundane shopping processes.”

All of these are services that require wireless connectivity to function efficiently. However, there’s a danger that the focus is currently on services and applications and the communications infrastructure to support these has been forgotten.

Wireless isn’t an easy challenge to address — from provision across a complex building to the business case for the investment. For more information on the opportunities enabled by wireless and the business case to support them, download our guide here.

How indefinite spectrum licences will encourage innovation and investment

hammer-719068_1920Back in November 2000, Ofcom held a spectrum auction of 28 GHz Broadband Fixed Wireless Access (BFWA) licences, which were sold on a 15-year fixed-term basis. During the first few years of these licence terms, some operators invested heavily into 28 GHz hardware and networks, leading to higher levels of innovation by both manufacturers and operators in this band. But operator’s investment levels have a tendency to drop when the licences get closer to the end of their term. This is due to the operator’s business plan (related to the spectrum asset) no longer yielding the required margins and return on investment (ROI).

In a more recent Ofcom spectrum auction in February 2008, 10 GHz, more 28 GHz, 32 GHz and 40 GHz spectrum access licences were auctioned on an “indefinite term”. Following this auction, the majority of licences auctioned in November 2000 have been varied to “indefinite term” too, subject to payment of fees from January 2016. In December this year, the licences awarded in November 2000 will come to the end of their initial term and Ofcom has announced proposals that will allow operators to hold spectrum indefinitely, subject to the payment of fees. This is proposed to be calculated using comparable licence costs of fixed-link in similar frequency bands. The proposal of indefinite licences based on fees will go a long way, allowing operators to sweat deployed infrastructure based on their 28 GHz licence and means that they don’t have to stop operating or replace their 28 GHz infrastructure with costly alternatives. Especially smaller operators, where a substantial amount of revenue is based on their 28 GHz infrastructure, have peace of mind that their investment is not tied to a single fixed period and will continue to grow their RoI. As a result of indefinite licensing, the spectrum value does not decrease over time in the same way as before. In contrary, more recently, the 28 GHz bands gained much more global attention as it is seen as a potential contender to be included in harmonised 5G spectrum. This would have major impact on the value of 28 GHz spectrum and support the growth of the ecosystem.

Ofcom has been aware of how important it is to keep investment levels high in spectrum related infrastructure and therefore the change to “indefinite term” should help to stimulate the industry. Further to the above, Ofcom introduced permitted spectrum trading in 2004 as a way of promoting innovation and competition in the supply of wireless services. But it is also as a way to enable entities with demand to acquire a licence from those in the market either not using, or planning to stop using the spectrum or looking to dispose of their licence and therefore ensures the spectrum is actively being used.

A recent high profile and high value spectrum trade is Qualcomm’s sale of the 1.4 GHz band, which it had acquired in 2008 for £8.3m, to both Vodafone (1452-1472MHz) and Three (1472-1492MHz). This sale was rumoured to have cost the MNOs almost £100m due to growing demand for data and the increasingly sparse quantity of sub-6 GHz spectrum available.

We have even seen many more spectrum trades as a result. I actually orchestrated the very first post-auction spectrum trade between companies in the UK in January 2009 between Broadnet UK Ltd and Luminet (formerly Urban Wimax), where I was CTO at the time. We acquired a 28 GHz Fixed Wireless Access licence (2 x 128 MHz) which contributed considerably to Luminet’s revenue stream since 2009 where we used 28 GHz Point-to-Multipoint kit to provide connectivity to businesses in London.

The introduction of indefinite licences means this will be an interesting time for network operators, a situation that many will be watching closely. It remains to be seen just how much these Ofcom licence fee proposals will impact the value of spectrum licences, but I for one am glad to see these new changes come into effect.