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.

The future of wireless and the case for exploring verticals in 5G

CdGpWwtW4AAQjhTAs we outlined last month in our guide to the challenges facing 5G and IoT, the connected devices of the future offer real potential to make existing businesses, services and utilities more efficient and more effective — better tailoring the service they provide.

In the wireless industry, the reality is that there is limited appetite to pursue the new generation of wireless technology (5G) for the industry’s own sake. Despite rapid takeup of LTE (4G) cellular technology, shrinking profit margins are affecting infrastructure spending, leaving finances that may not look attractive to investors and cause difficulties for a further round of investment so soon after completing the last round of upgrades.

The real business case for 5G, therefore, needs to come from the vertical industries that will benefit from the technology.

The rationale behind this was recently vindicated by the results of the European Commission 5G socioeconomic project Real Wireless contributed to, announced in Brussels on the 9th March 2016 (which we explored in more detail in a separate blog post). Our work found that, for an approximate deployment cost of €56 billlion, 5G can be expected to generate benefits of €95.9 billion across automotive, healthcare, transport and utilities alone — per annum.

However further quantitive evidence is required for a vertical-orientated business case to be established, and it falls to the wireless industry to lead the way in kick starting this process.

Any eventual solution will need to account for not only what dynamics are at play in the verticals, but also expert input from the leaders in these vertical industries on how they will evolve in the coming decades. It’s therefore crucial that the other verticals that could benefit from 5G are stakeholders in the development of this technology, to ensure they can fully benefit.

As chair of the executive committee for Cambridge Wireless’s Future of Wireless International Conference, I believe this year’s conference will provide an important opportunity for the industry to come together and explore how wireless can impact these verticals. Not just the cost savings each vertical can enjoy, but the challenges 5G will need to overcome, the opportunities that exist and — crucially — the common themes that span across these vertical industries enabling platforms of scale.

The Future of Wireless International Conference 2016 will be held at The IET, Savoy Place, London on 21–22 June. More information and registration details can be found here: http://www.cambridgewireless.co.uk/futureofwireless/

Technology and retail: how wireless is key to bricks-and-mortar shopping

3174937547_838753c182_oThe media love a good “the high street is dying — online shopping is the future” story. Compelling headlines that talk about the death of one industry in favour of another make for an entertaining read, and who wants the truth to stand in the way of a good headline?

The reality is that bricks-and-mortar shops are not disappearing. On the contrary, retailers and property owners are taking actions to encourage people to use the “real” experience of shopping to complement the online experience. However, the retail stores of today are significantly different to those in the past in how they attract and retain customers. Although each shop will have its own unique strategy for attraction and retention, the key trend of 2015 points to improving the customer experience and we at Real Wireless see technology playing a crucial role in achieving this.

For stores with big budgets, the technology can often be headline grabbing and quirky, and can potentially offer consumers experiences they don’t typically see every day. Harrods, for example, installed augmented reality window displays for its Tissot watch range.

But, of course, most stores are unlikely to want to invest in technology like that, certainly not at the early stage of any technology initiative. However, the premise of using tech to improve the customer experience remains important to every store. So, most retailers are focusing on how to capitalise on a piece of technology that almost every consumer has in their pocket nowadays — the smartphone — in a way that enhances the experience and ultimately improves business performance.

As consumers become more accustomed to using smartphone technology, they increasingly expect retailers to replace loyalty cards with a digital app, provide personalised discounts based on the consumer’s own preferences, interact with consumers through social media, accept contactless payment, let consumers themselves scan items to speed up the checkout process, and roll out countless other enhancements. At the same time the customer may want to do online comparisons and get an opinion from their friends through social media before making the purchase, so the customers need to be able to get online.

The key to capitalising on smartphones lies in wireless connectivity — not just Wi-Fi, but 3G and 4G too. If a retailer fails to meet today’s consumer’s connectivity needs, they risk losing out on sales. But by addressing those needs, retailers can enhance the customer experience, driving brand loyalty and, ultimately, improving sales.

To help retailers get the most out of good connectivity, Real Wireless has published a report detailing the importance of wireless for the retail industry, the business case for generating a return on technology investment, and how to overcome the challenges that any rollout will face.

The report, entitled Wireless and the omni-channel time bomb, is available free of charge from today.

The UK needs to address rural coverage – but national roaming isn’t the answer

This week has seen the UK government bring back proposals for national roaming, the idea being that those in remote villages and towns should be able to jump onto rival networks if their current provider isn’t delivering. It’s certainly an admirable initiative and one worthy of discussion – but national roaming isn’t the answer.

There has been plenty of discussion today on the pros and cons of this approach, with The Register doing a particularly good job of summarising the key reasons why this policy is well intentioned but not well thought through.

So rather than going over the same ground, we wanted to look at other potential, viable solutions to the problem.

LTE is coming

As part of the 4G licence award, Telefónica O2 has an obligation to provide “a mobile broadband service for indoor reception to at least 98% of the UK population and at least 95% of the population of each of the UK nations… by the end of 2017 at the latest.” And, perhaps encouraged by this obligation, all the operators have committed to meeting this target by the end of 2015. So much will change in the next year without further government intervention.

While LTE has been in big cities for a while now, it’s yet to reach much of the countryside or the smaller towns. But it’s on the way.

Real Wireless completed a project for the Scottish Government where we looked specifically at rural coverage and people will be genuinely surprised by just how good LTE coverage is.

We found that providing 95% of the population with indoor coverage, growing to 98% with gradual enhancements, is not beyond the reach of operators to achieve by the end of 2015. This is a huge improvement over 2G coverage, which even today only currently averages around 85% indoors. We also found that the average indoor mobile data speed available across Scotland will increase from about 2.5Mbps in 2012 to approximately 36Mbps by 2023.

The 4G roll-outs will reach 95% of the population surprisingly quickly, and there are ways to accelerate the rollout to 98%. However, it’s the final 2% that presents the most difficult challenge – but nor is this something national roaming would solve.

Rural coverage is expensive

Building networks is expensive, yet the UK already has amongst the lowest mobile infrastructure investment per head – something we touched on in a previous blog here. This is a real problem and one that puts us behind the rest of the world.

Technology has developed so that operators no longer need to invest in coverage over a wide area, to get service where users need it most – indoors. Vodafone’s open sure signal initiative is a good example of how this can work.

Targeted coverage makes it much more cost effective for operators to deploy sites and also avoids many of the planning challenges that can slow up installations. It’s this sort of technology that needs to be considered when addressing that final 2% figure, rather than expecting a blanket coverage approach. Such technology also provides operators with a way to continue to compete on coverage even as the share more of their wider networks, which is surely in the interest of consumers.

No easy answers

Rural coverage isn’t easy and the challenge has always been balancing the cost of network investment with the potential return. However with the wider rollout of LTE and the development of much cheaper, targeted ways of delivering coverage, there are viable solutions that need to be considered. It’s these approaches that need to be looked at by Government and operators in parallel, rather than pushing ahead with an approach that, while well intentioned, has some significant flaws.   Government needs to be aware of the risks of unintended consequences – just one example is the potential impact on national security flagged by police chiefs and the Home Secretary.

Calculating the true size of LTE in the UK

A recent comment from a colleague regarding LTE takeup in the UK, or rather lack of, temporarily shook my firmly held belief that we’ve seen good growth. After a series of discussions, it quickly became apparent that we were considering two different timescales – I was using figures that had been published up until that very week, he had used data from September 2013.

The reasons for the difference in our conclusions could be a topic in their own right: Had opening up the market to new competitors in late 2013 stimulated purchases? Were users more likely to buy their LTE devices over the Christmas period? Regardless of the reasons, when changing date range by as little as six months can alter the conclusions so significantly, there is clearly a need for any analysis to make use of the most up to date statistics.

For that reason, I wanted to share with you the analysis I conducted as part of this discussion.

Recent news reports have stated that O2 has “one million customers”, EE achieved 2,000,000 within fourteen months and Vodafone now serves 500,000 users. In a high profile move, Three recently upgraded all users to a LTE tariff free of charge, which would give them 7,900,000 additional LTE customers. However, its own figures put the number of users on its network with a LTE device at 1,700,000, which I would regard as the correct figure to use for this calculation.

In the UK, we now have 82.7 million mobile subscriptions in total, whilst roughly 44.1 million adults own/use a phone (94% of population). Depending on which of these figures you prefer to reference in the term ‘LTE penetration’, the statistics yield either 6.3% or 11% as total penetration.

As a result, the state of LTE in the UK in April 2014 can be reasonably stated as:

  • Having over 5.2million subscribers
  • Penetrating around 10% of the population (either 6.3% or 11%)
  • Covering a third of the population indoors
  • Covering 41% of the population outdoors

 All of this has been calculated without even taking in to account MVNOs, due to lack of data. But with Tesco following Three in offering free 4G to all its customers, we can confidently say that the true figures are likely to be even higher than these.

I’d call that healthy take-up for 12-18 months, personally.  

 

Further reading:

Slovenia’s 4G auction sets example for rural broadband

As the Slovenian regulator announce the results of its 4G spectrum auction, there are lessons for the rest of Europe in how we deliver broadband  - both mobile and fixed – to remote communities. 

http://www.akos-rs.si/public-tender-with-a-public-auction-for-assigning-radio-frequencies-for-the-provision-of-public-communication-services-successfully-concluded

Real Wireless worked with the Slovenian regulator AKOS  to help judge the impact that coverage obligations would have on the auction. From our experience working with Ofcom on the UK auctions, we were able to advise on how the potential costs would vary depending upon a number of factors, including the specifics of the Slovenian population distribution and geography, the current situation of existing operators and the capabilities of the network technologies involved. 

Part of the EU’s Digital Agenda sees countries aiming to provide broadband at up to 30Mbps to citizens by 2020 – an ambitious target and one made particularly challenging by the cost of fixed-line service provision to remote communities. 

http://ec.europa.eu/digital-agenda/en/scoreboard

An integral condition of the auction was that one operator would be obliged to provide rural mobile broadband coverage to a high proportion of the population. Building on this, we found there was an opportunity to further reach specific remote communities who are currently missing out on fixed broadband services via in-home wireless gateways, at little incremental cost. As a country where a number of communities are based in radio-unfriendly, mountainous environments, using small cells to provide 4G coverage was an ideal alternative to expensive fibre. 

While other countries such as Germany have seen the potential for enhancing rural services via a mobile broadband coverage obligation, the explicit linkage between specific underserved communities in this project for Slovenia bodes well for joined-up fixed and mobile policies in other nations.

To find out more get in touch

http://www.realwireless.biz/contact/ 

The hidden secrets of the UK’s 4G Auction

The UK’s 4G auction was completed in February and Ofcom published detailed information on the bids made in the auction soon after. I thought it would be interesting to sift through this information in order to bring out the story of what happened in the auction and see if there were any indications of the mobile operators’ wider strategy.

So I put my deerstalker on and went through the data looking for clues. I was lucky with the auction design which let operators switch between a number of different types of spectrum ‘lot’. I’ll explain below how each time an operator jumped between different lot types, they left vital clues behind to unravel the secrets of the auction. However, this is still a work of deduction (though not detective fiction I hasten to add) and although the conclusions might not stand up in a court of law, I hope they make interesting reading.

A brief description of the auction design (skip if you’re already familiar)

Ofcom issued hundreds of pages of documentation about the auction, but I thought it would be useful to condense it into a few points. Ofcom auctioned two basic types of spectrum:

  • low frequency spectrum in the 800MHz band, better for penetrating walls and providing good quality reception inside buildings (important because a lot of mobile broadband use takes place in the home or office) but a substantially lower amount of spectrum – 2x30MHz – on offer.
  • higher frequency spectrum in the 800MHz band, less good at providing good quality reception inside buildings, but the larger amounts on offer – 2x70MHz  and 1x50MHz – means faster download speeds can be provided than with 800MHz.

The 800MHz band was split into two categories. One category had a coverage obligation – to cover 98% of the population by the end of 2017. The other category was free of any coverage obligation. The 2.6GHz band was split into 4 categories including paired spectrum and unpaired spectrum.

In the auction, participants bid for combinations of spectrum “lots” in the different categories and specified how much in each they wanted. Most of the bidders had caps on how much they could buy in total and in specific bands. This was done to ensure that market would be competitive after the auction.

Bidders could switch between lots of different types, at a fixed rate that stayed the same during the auction.  For example, the one 800MHz lot with the coverage obligation had twice as much spectrum (2x10MHz) as the four 800MHz lots without the obligation (2x5MHz each) and bidders were able to switch from the former to the latter at a rate of 2:1.

At the beginning of the auction, bidders specified how much spectrum they would initially bid on at the reserve price, and this set their eligibility – how much spectrum they could bid on in the next round. Bidders could reduce the amount of spectrum they bid for as the auction progressed (thus reducing their eligibility as the auction progressed). However, bidders were not allowed to increase they amount of spectrum bid on, i.e. bid more than their eligibility.

There were a number of phases to the auction and I focus on the primary bid rounds and the supplementary bids round, which are the most important for determining the winners and giving clues as to their wider strategies.

In the primary rounds, prices increased round by round (and demand fell in response) until the total demand for the spectrum equalled the amount available – there were 52 primary rounds. The supplementary bids round is a single round that follows the primary bid rounds. It gives bidders greater flexibility to express how much they are willing to pay for spectrum, consistent with how they bid in the primary bid rounds.

The overall progression of prices and demand in the auction

Before looking into the detail, I’ve put together some charts to give an overview of how the bidding ran in the primary rounds. The first chart shows how the prices changed round by round for 800MHz and 2.6GHz and the second chart shows the total number of lots demanded in each category.

Evolution of lot prices in the primary rounds

Evolution of total demand for lots in selected classes in the primary rounds

 

The competition for 800MHz spectrum

In round 16, Everything Everywhere, the UK’s largest operator, becomes the first operator to reduce its demand for the more valuable and strategically significant 800MHz. It then stops bidding entirely on 800MHz spectrum in round 24.

At this stage in the auction EE risks missing out on 800MHz spectrum if the price were to keep rising substantially. However it may be a smart move if it brings the bidding on 800MHz to an end more quickly (and more significantly at a lower price). EE will be able to modify how much it bids in the supplementary bids round, though its room for manoeuvre will be limited. . Moreover, EE has a substantial amount of 1800MHz spectrum, which it is already using to offer 4G services, and it may see this as a good back up if 800MHz becomes too expensive.

H3G is the second major operator to drop out of bidding for 800MHz in round 30. H3G knows it is very likely to win at least one block of 800MHz spectrum, because of Ofcom’s competition rules which limit the amount of 800MHz spectrum that O2 and Vodafone could win to 2x10MHz and because it is better placed than EE which dropped out of the bidding for 800MHz earlier.

The final burst of activity in the two 800MHz categories determines which out of O2 and Vodafone is likely to get the spectrum with the coverage obligation.

Interestingly, before the auction started, O2 argued that the price per MHz in the two 800MHz categories should be the same, whereas Vodafone argued that there should be a discount on the price of the lot with the coverage obligation. If the value of 800MHz spectrum were similar for Vodafone and O2 we should expect O2 to be willing to pay more for the lot with the coverage obligation than Vodafone.

As I said before, bidders could switch between 800MHz lots with and without the coverage obligation at a rate of 2:1. Now, if the extra cost due to the coverage obligation were minimal (e.g. if an operator would have met the coverage targets with or without the obligation) the coverage obligation would be worth twice as much as the lot without – reflecting difference in spectrum between the two lots.

However, the ratio of the starting (reserve) prices is significantly lower at 1.11 because Ofcom was cautious about the cost of the coverage obligation when setting the starting point.

So, excess demand is much greater for the coverage obligation lot early on in the primary rounds because it is relatively cheap compared to the other 800MHz lot. This causes the relative price of the coverage obligation lot to rise and it reaches 2 in round 40. At this point, Vodafone switches to the lot without the obligation and supply equals demand in both 800MHz categories as a result.

The case of the 2.6GHz lots

The bidding on 2.6GHz spectrum is seemingly straightforward, but there’s a twist at the end which any writer of detective fiction would be proud of (OK perhaps I’m exaggerating a little here). Up to round 27, the available 2.6GHz spectrum is more than three times oversubscribed and there is little change in the bids of the major operators. Then, Vodafone cuts its bid for paired 2.6GHz spectrum in half to 2x20MHz, and marginally increases its bid for unpaired spectrum (to 45MHz).

H3G makes a similar move to Vodafone, in round 30, reducing its bid on paired 2.6GHz spectrum by more than half to 2x20MHz and increasing its bid for unpaired spectrum marginally. H3G also drops out of the bidding for 800MHz at this point, suggesting that prices could be nearing its underlying values or that H3G may be close to a budget limit –H3G had bid just under £1.5 billion, though it bid nearly £1.7 billion in the supplementary bids round.

In the next round, 31, it’s O2’s turn to reduce significantly the amount of 2.6GHz spectrum it bid for (both paired and unpaired). This still leaves substantial excess demand for the 2x70MHz of paired 2.6GHz spectrum available – H3G, Niche (BT), O2 and Vodafone are each bidding for 2x20MHz and EE for 2x40MHz.

Similarly there’s also substantial excess demand for the 45MHz of unpaired 2.6GHz spectrum – H3G, Hong Kong Telekom, Niche (BT) and Vodafone each bidding for 45MHz and O2 for 15MHz.

Things move steadily on until EE makes a dramatic grab for the unpaired 2.6GHz spectrum (and stops bidding on the paired spectrum) in round 38. EE is the only one left bidding for the unpaired 2.6GHz spectrum at the end of the primary bid rounds and Vodafone, O2 and Niche are the only bidders remaining for the paired 2.6GHz spectrum.

But, just one more thing, as Columbo might say. I’ve forgotten the supplementary bids stage. The final twist is that the positions at the end of the primary bid rounds are overturned in the supplementary bids round. So the final result is that Niche and Vodafone win the unpaired 2.6GHz spectrum instead of EE, while Vodafone Niche and EE win the paired 2.6GHz spectrum.

Conclusions

Ofcom should be satisfied with how the auction ran. Bidders did respond as economic theory predicts to changes in the relative prices of the different lots in the auction and it showed the importance of having a supplementary round to extract more information about what bidders were willing to pay. There is no clear evidence to suggest that bidders were trying to ‘game’ the auction, i.e. put in spurious bids to trick their competitors (although there are some bids that are more difficult to explain in the two minor categories I haven’t talked about).

The competition proposals did probably affect behaviour in the bidding for 800MHz, although there was still a reasonable amount of bidding activity and the overall amount of money raised, when corrected for population, was similar to other European 800MHz auctions.

Norwegian 2.1 GHz Spectrum Auction Over in Minutes

The Norwegian second auction of 2.1 GHz spectrum concluded in a single round yesterday, with all nine blocks selling at the reserve price of 5 million Norwegian kroner, resulting in all three winners having the same spectrum in this band – approximately 2 x 20 MHz. The winners were:

  • TeliaSonera
  • Telenor
  • Mobile Norway
There were actually five registered bidders in the auction, but two of them withdrew before the start of the auction, one just 24 minutes beforehand.
Full details are available on the NPT website.

ComReg Announces Results of Ireland Multi-band Spectrum Auction

ComReg, the communications regulator for Ireland, has announced the outcomes from its auction of 800 MHz, 900 MHz and 1800 MHz spectrum. In summary:

  • 800 MHz was licensed in three lots of 2 x 10 MHz to Meteor Mobile, Telefonica and Vodafone
  • 900 MHz was licensed in blocks of 2 x 5 MHz (Hutchison 3G) and 2 x 10 MHz (Meteor, Telefonica and Vodafone)
  • 1800 MHz was licensed as 2 x 20 MHz (Hutchison 3G), 2 x 15 MHz (Meteor Mobile), 2 x 15 MHz (Telefonica) and 2 x 25 MHz (Vodafone)
  • The total of fees raised was  €855 million
The licences come with conditions such as achieving 70% population coverage within 3 years and the need to have less than 35 minutes of network outage per 6 month period. The licences are fully tradeable and liberalised (i.e. technology neutral)

Ofcom finalises 4G auction rules

Ofcom today published its final rules for the 4G spectrum auction in the UK. Key points:

  • The combined total of reserve prices is £1.3 billion
  • Provisional application date is 11th December
  • Bidding begins in January
  • The outcome depends on the bidding process, but bidders should know what they have won and its cost in February/March
  • Ofcom expects resulting services to be launched in May/June
  • Press release
  • Full statement