Capitalizing on the indoor coverage opportunity – Oliver Bosshard, Managing Consultant

Something like 80% of mobile data traffic originates indoors. Contrast this with only 5% of RAN capex allocated to indoor coverage. At the same time, less than 2% of commercial and public buildings are currently covered by dedicated indoor solutions.

Unsurprisingly, in the vast majority of commercial buildings, mobile coverage remains weak or non-existent. This is clearly a challenge for both enterprises and operators, as many of the latter feel the business case for DAS or small cell deployment fails to stack up. Why should they invest more for diminishing returns? At the same time, most enterprises will argue it’s up to the carrier to provide reliable coverage and capacity inside and out.

From a carrier perspective, the problem is that, while mobile data usage continues to rise, ARPU growth rates have stalled and, in some markets, started to fall in absolute terms. The divergence of growing data consumption and diminishing ARPU is starkly reflected in network investment. MNOs in markets with low ARPU invest less in their network compared to markets with higher ARPU (e.g., the APRU in the US is more than double the ARPU of the UK).

But out in the world of enterprise, the natives are getting restless. For landlords and businesses, the need of good indoor connectivity is becoming increasingly urgent. Residential tenants see connectivity as essential as any other utility, and for most businesses ubiquitous connectivity is mission critical. Which is why many enterprises are willing if not always able to invest in their own infrastructure. There are plenty of examples of enterprises willing to pay for services that operators simply don’t have the processes or the sales team to deliver.

At Real Wireless, we have seen increasing interest in both venue-owned distributed antenna systems (DAS), and the use of small cells as dedicated indoor coverage solutions. From a technology perspective, small cells would appear well placed to solve the challenge of indoor coverage for most businesses. However, with the growing adoption of ‘bring your own device’ policies in the enterprise, multi-operator capability is also emerging as a crucial requirement. For many businesses, there’s no point installing a network that can only be used by subscribers associated one particular operator.

For larger-scale deployments, like stadiums, DAS remains the solution of choice. However, large DAS systems are expensive, and labor-intensive to deploy, requiring long installation periods and specialist expertise. Currently, the cost base makes DAS only suitable for very large premises such as stadiums, while its limitations in terms of cost elasticity and scalability mean its addressable market is unlikely to reach down into any but the largest companies or premises. Looking ahead a little, however, it’s worth noting that, with the advent of virtualization, the distinction between small cell and DAS technologies will become increasingly blurred.

So far, however, few mobile operators seem to have been enthusiastic about deploying small cells as a means of encouraging enterprise take up or reducing churn. This is partly because, in spite of the relative maturity of small cell technology, operators have been slow to incorporate them into their enterprise packages and many seem to believe that the business case does not stack up. There is undoubtedly an opportunity here for someone to come up with an innovative solution or a disruptive new approach to drive new revenues with indoor small cells. This, however, involves the recognition of new values chains and the elaboration of commonly understood commercial templates to distribute deployment costs across specific groups of stakeholders.

For example, when deploying a network to ensure coverage and capacity in a new shopping mall, it is clearly in the interests of the operator, the mall owner, the retailers and retail app firms to ensure ubiquitous coverage. So it’s clearly in the interests of all these businesses to share the costs of deployment. However, it’s equally true that the manner in which these costs are distributed is not something that should be reinvented for each and every shopping mall. This means abandoning outmoded business models, and more collaboration, partnership and revenue-sharing.

Ultimately indoor coverage is not something operators can afford to sideline for much longer. Absence of indoor coverage is already having a huge commercial impact and, like we have said, the enterprise (and consumers) are getting restless.

Solving the Wi-Fi challenge on trains

4479165212_390daa988d_oIt’s been just over a year since the government announced its ambitious target to have free Wi-Fi on trains by 2017. While the intention is obviously a good one (who doesn’t want connectivity on trains?) there are still significant barriers in place that are hindering the country’s changes of getting anywhere close to that target.

I was recently at an event called Going Underground a couple of weeks ago discussing the ins and outs of connectivity on trains. What’s clear from that event is that there are technical challenges with on-board Wi-Fi that won’t go away. Wi-Fi’s access technology “Carrier Sense Multiple Access – Collision Avoidance” (CSMA-CA) is not designed for high-density environments, such as busy commuter trains in rush hour with high capacity demand caused by a large number of concurrent users. In other words, when everyone on a train is trying to use on-board Wi-Fi at the same time to stream live sport or the latest Game of Thrones episode, we drive Wi-Fi into its limitations.

The technical limitation in such a high usage scenario lies in the way the Wi-Fi access points and devices interact with each other. To avoid data collisions, devices “sense” the Wi-Fi channel — listening to see if another device is transmitting data. Once a device sees that the channel is busy, it backs off to avoid collision of data, and a counter starts to count down before the device checks again to see if the air interface (the channel) is available. So, when too many users try to transmit data, devices start to go through a downward spiral of repeatedly backing off and trying again, thereby reducing the AP efficiency by 50% or even much more depending on the number of users trying to access it — resulting in less capacity per access point for more concurrent users.

Peak hour trains on busy commuter routes in particular take a triple whammy when it comes to on-board Wi-Fi:

  1. The sheer number of people trying to access a single access point overloads the system
  2. The sheer amount of bodies in one train can attenuate the signal between the access point and devices, rendering it poor (meaning low efficiency) to useless
  3. Peak trains tend to be full of commuters whose data needs tend to be far greater than non-commuters, which, again, overloads the system

Small cells, in particular femtocells, might be a better solution than Wi-Fi because they are more efficient when handling a high number of concurrent users and high traffic — but that still doesn’t solve the the backhaul challenge. Performance is always limited to whatever the backhaul can achieve, which is typically 4G. Hence, if there’s no mobile coverage, the whole on-board connectivity system — whether it’s Wi-Fi or femtocell based — is useless. Connectivity systems could use satellite backhaul for rural locations, but that in itself is a very expensive option. Alternatively, connectivity systems can use on-board repeaters, which don’t need backhaul and bring the signal outside the train to the users inside. On-board repeaters, though, still rely on reasonable outside coverage.

However, none of these technical challenges are insurmountable, with the exception of the inherent Wi-Fi technology challenges.

We do believe that the main barrier to enhancing on-board connectivity is the business model. We also believe that the requirement for trains should be on-board connectivity and capacity, independent of specific technology (such as Wi-Fi). At the moment, mobile network operators don’t have a revenue incentive to cover railway tracks or install on-board equipment because in a world of fixed and all-you-can-eat data packages, the average revenue per user (ARPU) doesn’t increase with incremental coverage and capacity on trains.

Therefore, the business case is the biggest bottleneck at the moment to improving on-board connectivity. If the government truly wants to provide Wi-Fi on 90% of journeys by 2018, it will have to manufacture a business case through regulation in order to kick things along.

Our own research a few years ago found that a clear business case could exist if the industry looks beyond Wi-Fi to mobile connectivity as a whole. We also found that on-board equipment deployment is cheaper than improving outdoor coverage to such a level that users inside the train could be served from outside. A business case would therefore have to clearly list the benefits to multiple parties, including advertisers (amongst many others), who would be able to clearly see the opportunity for ad revenue based on the length of passenger journeys, and rail companies, who could use the connectivity to improve day-to-day operations to become more efficient.

MWC 2016 conclusions

Now the dust has settled from Mobile World Congress (MWC) 2016 and everyone has hopefully recovered, it’s a good time to look back on the big stories from the show this year. It’s easy to get caught up in the buzz of the show, but the big stories at MWC are a great indicator for where the wireless industry is focusing its attention.

So what caught the eye of Real Wireless’s experts this year?

5G
As expected, 5G grabbed most of the headlines at the show, with Real Wireless CTO Simon Fletcher giving a number of presentations on the topic — including one that drew together our work on the EC’s 5G socioeconomic report, with the outcomes of last summer’s FWIC conference.

We found many vendors claiming to be 5G ready or compliant, essentially a marketing trick but an important one for those keen to demonstrate they are completely up to date with developments in 5G (or what they believe 5G is) in this fast-paced market.

Some particularly interesting demos included those that highlighted current developments in 5G, for example the 5GIC/University of Surrey 5G demo on the Cobham stand, demonstrating how a massive multi-antenna array can serve many connected IoT users within a cell. The demo could scale to show the impact of more simultaneous IoT users in a cell and what the required throughput would be to serve them. Another demo saw 1 Gbps LTE throughput based on the aggregation of five channels of 20 MHz, each supporting 2 x 2 MIMO streams and 256 QAM based on LTE Advanced.

These demonstrations are still examining the technology capabilities and more in-depth analysis would be required in future to determine the more practical impacts in these environments such as analysing the most appropriate propagation models and impact of clutter and terrain at frequencies above 24 GHz.

There are encouraging signs of nascent engagements with verticals, though not fully linked to 5G, with efforts being directed towards establishing common technology platforms. We highlighted before the show that the industry needs to play its part in liaising more closely with vertical industries to ensure 5G reaches its full potential. Regional administrations such as the European Commission were vocal on needing to see meaningful evidence of progress on this if they are to justify their level of investment to their citizens.

Has the industry demonstrated enough progress?

Our thoughts are that verticals have made a good start, but must do more to define what 5G will mean for them. After all, it’s the verticals themselves who are going to benefit most from 5G, so it makes senses for them to be involved as much as possible. Our job at Real Wireless is to bridge the gap between the technical and the business aspects, which is what we’ve been doing through numerous workshops with the European Commission.

LAA, LTE-U and MulteFire
LAA LTE, MulteFire and LTE-U featured prominently from a number of vendors — LTE in licence-exempt spectrum and LTE — Wi-Fi co-existence was the topic of much discussion throughout the week.

We were made aware of a trial in Nuremberg, Germany, which apparently attracted visits from many MNOs who are keen to see LAA LTE in action. We also saw some manufacturers starting to offer 3.5 — 3.7 GHz TDD Wi-Fi or LTE solutions, driven mainly by the 3.5 GHz band / Citizens Broadband Radio Service rules that the FCC adopted in April 2015.

The demonstrations we saw were mainly concerned with obtaining the best possible performance from these technologies, but this leaves many questions unanswered regarding how to ensure “fairness” when Wi-Fi remains the most densely deployed technology in the unlicensed bands.

Small cells
For yet another year, small cells have still not seen the levels of takeup analysts predicted, which could be a risk to vendors that are increasingly being pressured to demonstrate a return on investment.

That said we continue to see some genuinely interesting innovations in the sector, including CommScope (who acquired Airvana in 2015) re-using spectrum over multiple radios within the same cell, cells that offer four times more capacity than before, and IP Access’s innovative small cell infrastructure sharing approach. The Small Cell Forum also presented its annual update including a focus on the enterprise market, reflecting the trends we’ve seen over the last 6 months.

The missing trend
Ahead of the show we released a report on two of the biggest issues facing the industry this year; 5G and the IoT. Both are at very different stages of development but, as we explained, 2016 will be a pivotal year if either is to be a success — and the industry needs to make some big decisions if they are to reach their potential.

While 5G was clearly one of the strongest trends, the noise around IoT was not on a similar level. As we’ve seen with small cells, lots of noise around a topic at MWC does not necessarily translate in to real world development and maturity, so this is not necessarily a sign that the trend is in danger. However, it does raise questions over whether it has lost some of its steam in recent months. In the light of various proprietary and non-cellular approaches continuing to grow their deployment footprints; is the operator community really confident the NB-IoT solutions will come to market quickly enough, within the right regulatory environment, to create a competitive advantage?

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Real Wireless managing consultant Oli Bosshard (left) and principal consultant Saul Friedner (right) at MWC 2016

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.