Mobile coverage in rural areas – a step in the wrong direction? UK currently has around 54,403 mobile phone masts dotted around the country — many of which are on land leased to the major telecoms companies by local landowners.

4,000 leases are due to expire this year, and this could lead to serious consequences for  telecoms companies and consumers alike. In the absence of any regulation, lease renewal negotiations could lead to significant demands from landlords for rent increases in a large number of cases. Telecoms companies will then need to either pass on this cost to the consumer, through more expensive tariffs, or remove macrocells completely and create coverage or capacity gaps. The Telegraph recently wrote an article on this topic.

Macrocells are still vital to mobile coverage

Despite advances in small cell technology and Wi-Fi calling, macrocells remain the backbone of the mobile network, delivering the majority of the UK’s coverage and capacity.

There’s no alternative to macrocells, either, that doesn’t involve some form of relationship with a property or asset owner. In-building connectivity solutions like small cells and DAS do improve coverage and capacity in homes, offices and public buildings, but they will never replace macrocells entirely and do not provide wide area coverage in towns and around the countryside.

Operators need to protect their investment

Vital infrastructure is often expensive to provide and macrocells are no different. Operators naturally want to keep hold of their existing assets, given they’ve invested heavily in constructing macrocells in the first place.

Operators and landowners both know the difficulties with finding alternative sites for macrocells and obtaining planning permission and the time and cost associated with doing this would be significant — whilst the operators could resort to invoking code powers this is not a step that would be taken likely but it cannot be discounted completely as an idle threat.

How rent rises will affect mobile provision

The first impact of rent rises is likely to be felt by users in those locations where high costs force MNOs to remove macrocells, resulting in coverage or capacity gaps. Site closures aren’t going to happen overnight, though. MNOs will fight to keep their sites at rental levels that are either at or below the current level. But if landowners insist on increasing site rent by excessive amounts then users will no doubt have to bear the brunt of the costs through higher tariffs. Most likely the operators will pass some costs onto the users and absorb the majority but this will lead to less investment in new infrastructure in their networks and invariably lead to a negative impact on the digital economy generally.

Can the government intervene ?

The story of land rentals is an old chestnut in the mobile industry. The cycle of site acquisition, rental renewals and notices to quit will carry on as long the mobile industry exists — unless the government  is prepared to intervene to help regulate the rental levels that MNO’s pay for this essential infrastructure. At the same time, MNO’s need to realise that landlords and building owners should not have their genuine development plans for their land or property undermined by MNO macrocells that may have been on there for many years.

The reliance the British public currently places on their mobile communications and, within a few years, the reliance that the Police and other emergency services will have on their vital communications being carried by mobile networks suggests that this particular debate should be opened up and that representatives from the various parties (MNO’s Property owners and Government) can create a solid and sustainable basis that will help maintain mobile communications services throughout the UK.

The evolution of regulation for telecoms by 2020

Cell-TowerTelecoms regulation needs to evolve to cope with a rapidly changing industry — the traditional mechanisms are no longer working.

With mergers and new entrants complicating the marketplace, regulators must find a way to balance competition with encouraging investment and innovation while still ensuring consumers get the best service.

Greater knowledge and understanding of mergers will need to be developed, something that the current consolidation trend force. This will need to be knowledge that can be put in to practice, implementing it on a basis that does not distort competition, yields benefits to consumers, and still incentivises investment and innovation.

As a result many of these changes need to happen before 2020 to support the balance between traditional telecoms operators and OTT (over-the-top) players. At present there is a lack of symmetry on many issues such as switching, privacy and data protection, identification and safety which regulation will need to resolve.

By 2020 increased broadband rollout and superfast speeds coupled with new market entrants will have changed the fixed market — meaning that regulators will need to pay close attention to new issues as pricing, bundles, competition and barriers to entry.

Regulation in 2020 will also need to not be restricted to the management of present market conditions. It needs to play a role in supporting and encouraging the development of new fixed and mobile technologies — including 5G, G.FAST, TWDM-PON — in order to guarantee and improve the long term health of the industry. It will also need to be designed to support innovations in telecoms, particularly those that enable operators to begin investing in infrastructure that can support ultrafast dense networks.

This role will also need to extend to ensuring that less-profitable ventures, such as the extension of fibre in to rural areas, are not overlooked at the expense of new technologies and super-fast city networks.

Crucially, this is not just a challenge that the regulators themselves need to tackle. Governments also need to evolve mobile spectrum policy, enabling quicker access to spectrum for operators and balancing the needs of new entrants and incumbents. This needs to extend beyond national border, particularly in Europe where the EU needs to be implementing uniform regulation across member states to limit distortions in competition.

The need for governments to play a part in the evolution of telecoms regulation in coming years highlights how rapid the requirements of this challenge need to be met. We may be discussing the regulation of 2020, but steps need to start being taken in 2016 if we’re to be fully prepared — particularly as regulators’ remit will need to expand.

Originally published on TechUK as a guest blog during Telecoms2020 week.

Are UK mobile phone users paying too little?

17470913285_bbda8cf99a_kDuring the launch of its new iD MVNO service, Dixons Carphone suggested that UK customers overall overpay on their mobile bills by more than £5bn each year. If you look at Ofcom’s figures, which state that the UK has around than 83.1m mobile subscriptions, then you can assume that this £5bn figure equates to an additional £60 per year for each person who owns a phone.

While that news will undoubtedly raise the collective eyebrows of mobile phone users, we would argument that if users paid more, the mobile industry would be able to offer substantially more benefits in return.

Users will undoubtedly object to paying more for what they already consider to be pricy smartphone contracts. But when considering the fact that UK mobile operators receive four times less average revenue per user than Japan, two and half times less than the US and one and a third less than the rest of Western Europe, maybe UK users are still paying less than they really should?

The lower average revenue per person generated by UK consumers translates almost directly into a lower spend on networks by mobile operators in the UK compared with other countries. A 2013 report in to Europe’s telecoms infrastructure found a 34% difference in investment per head between Europe (£111,000) and the US (£167,000). What’s more, the report found that European investment is declining at a rate of 4% per annum. The lower spend shouldn’t be surprising — the money to invest has to come from somewhere, after all.

Without the money to invest, operators cannot roll out their networks to deliver the coverage and capacity we need. Since poor coverage costs UK businesses over £30m a week as employees waste time hunting for mobile phone reception, the need to eradicate black spots has never been more pressing.

Without the money to invest, mobile operators are cutting costs by sharing networks, resulting in little differentiation between competing operators — something that could reduce competition out of the market in the long term. We used to have unrivalled levels of competition with five operators, but that number is soon likely to reduce to three.

The challenge for mobile operators is to persuade customers to use their voice and data services more to generate additional revenue for investment. The benefit to users of mobile is around 8–10 times that to the operators — a great investment in anyone’s money.

It’s time for operators to keep the vendor community on track

With the dust starting to settle on the Nokia and ALU news, it’s clear that this won’t be the last M&A story we’ll be talking about this year. Mergers amongst operators are becoming rife and the moves in the vendor sector mirror this.

We’ve already talked about the good and bad sides of operator mergers with one particular aspect being the impact on innovation. With multiple competitors watching every move in an attempt to capitalise on any mistakes, can we blame any operator that doesn’t want to experiment with an unproven technology?

In the vendor world, the picture is much more complicated as operators need both global scale and interoperability alongside innovation and new ideas. So what is the impact of fewer vendors on operators and what does this mean for the industry?

The importance of scale for the mobile industry cannot be overstated. Products needs to be developed for a global audience and, more importantly, in line with global standards. So on face value, bigger vendors with an increased reach and larger R&D teams.

As the industry gears up for 5G, we need lots of dynamic, fresh thinking and innovative companies driving new standards and approaches. Bigger companies are not always best placed to deliver this.

Additionally, less choice brings risks for operators, who may seek to second-source, but are often beholden to investments in single-vendor ecosystems. In particular, it’s a guilty secret of the industry that standards give no guarantee of inter-vendor interoperability: indeed this is the exception rather than the norm.

So where does this leave operators?

Faced with a smaller pool of vendors to choose from, operators need to wield their collective energies to ensure that there is a mix of vendors of all scales, by insisting on open interfaces and real interoperability in networks, and by encouraging small developers, not just in phone apps but deep in the heart of the network as well. This way we’ll continue to see the sort of innovation that drives our industry forwards, alongside the benefits that come from vendors with a global reach.

Carrier-grade Wi-Fi: a backhaul bottleneck by 2019?

Real Wireless was recently commissioned by Bluwan to analyse the emerging trends and technological challenges that carrier-grade Wi-Fi is creating.

The study, Carrying Carrier Wi-Fi: The Technology Challenges, emphasized the increasing reliance operators will be placing on carrier Wi-Fi over the next five years. In fact, our analysis reveals that carrier-grade Wi-Fi hotspots will make up more than 80% of all available access points in 2019.

The study also identified that data demands being placed upon Wi-Fi hotspots will increase dramatically in the coming years, driven by data-intensive applications like streaming content. In fact, according to figures from Cisco, the world’s hotspots will need to support a staggering 63 exabytes of Wi-Fi IP traffic each month by 2018.

While there is little doubt carrier-grade Wi-Fi will form a crucial part next generation mobile networks, operators need to be aware of how important effective backhaul provision will become. In particular, the affordability of backhauling such dense network hotspots will become an increasingly serious barrier.

To avoid this, our analysis identified eight key technology criteria that Carrier-grade Wi-Fi needs to meet in order to ensure they are both cost-effective and operationally efficient to deploy. These key criteria are:

  • < $1,000 per link
  • Flexible planning
  • Flexible capacity allocation
  • Low Total Cost of Ownership per Mbps
  • > 500Mbps throughput
  • High scalability
  • Low latency: < 10ms
  • Quality of Experience 

In the report, we then benchmarked a range of wireless backhaul technologies against these criteria to assess their suitability for tackling this challenge.

For more information on the findings, our full analysis, and our conclusions, please download a copy of ‘Carrying Carrier Wi-Fi: The Technology Challenges’ here.

2G and 3G are dead, long live LTE

Earlier this month, Verizon CFO Fran Shammo finally confirmed that the long delayed launch of VoLTE on their networks will happen in Q4 of this year.

This signals a turning point in the technology; it’s been a long and slow road to get here, but we’re finally at the point where it is starting to infiltrate the mainstream conscious.

Both AT&T and Verizon have committed themselves to offering phones that can take advantage of the new VoLTE technology by Q4 – and I’d hazard a guess that means it is certain to be a standard feature in both Apple and Samsung’s latest generation phones. This in turn will undoubtedly mean their competitors are not far behind with their own offerings.

So far no real surprises. The more interesting question, though, is when will we see the first LTE only devices? After all, many operators and handset manufacturers have made no secret of their desire to turn off 2G or 3G networks.

For the operators, supporting these now legacy technologies not only occupies valuable spectrum, but adds additional infrastructure rollout and maintenance costs.

For handset manufacturers, the need to make use of 2G and 3G networks adds additional modem requirements and costs. These in turn negatively impact battery life and phone size. We’ve recently seen several new companies emerge offering “LTE Only”, thin modems at very aggressive prices, which no doubt has piqued the interest of manufacturers.

Obviously switching over entirely to LTE has only been made possible with the introduction of VoLTE. The lack of voice support has meant that a circuit switch fall back has been a requirement up until now, therefore 2G and 3G networks were a necessity.

Another key barrier up to now has been LTE coverage. Obviously, until this catches up, we’re unlikely to see any operator in a hurry to offer handsets that only support LTE, as this would severely impact their customers’ experiences.  But, as we saw in our recent work for the Scottish Government, the speed with which LTE has rolled out means it won’t be long until it catches up – our estimates put indoor 4G coverage in Scotland at 95% by the end of 2015.

Verizon originally forecast the introduction of LTE-only phones to their network by the end of 2014, a prediction that raised more than a few eyebrows. Their updated forecast now pushes this out to early 2016.

I think this is not only likely, but perhaps a necessity; should they wait any longer, the ecosystem will be in place for a competitor to take advantage of their delay.

Competition: the consumer’s friend?

For a relatively small country with 60 million inhabitants, the UK has four (or six, depending on how you count shared networks) operators competing for subscribers.

Add MVNOs in equation and the contrast between the UK and others – like the US – become readily apparent.

The immediate impact of this is good news for consumers. The options on offer mean UK operators need to prioritise low prices to stand out; in fact average revenue per user in the UK can be as low as a third of that in the US.

However the long-term consequences of this could well be hindering the UK – something that is often forgotten about when discussing how the market will develop.

Low pricing for consumers results in lower profitability for operators, which in turn means a lack of investment in infrastructure. This is compounded by the fact that constructing multiple networks results in an inefficient duplication of resources, which could otherwise be used to increase network coverage, capacity and performance.

So whilst we are a small country with a high population density, coverage continues to be a real challenge. Despite being nearly 40 times the size of the UK, the United States generally enjoys far more complete coverage.

Whilst consumers therefore see low pricing as beneficial and advantageous, in the long run they ultimately receive less ‘bang for their buck’.

With profit margins shrinking in a pricing race-to-the-bottom, operators are facing hard times. It’s not hard to see these figures leading to internal pressure for consolidation – which would in turn have a negative impact on competition.

Innovation too is hampered. After all, with multiple competitors watching your every move in an attempt to capitalise on any mistakes, can we blame any operator that doesn’t want to experiment with a non-proven technology?

One would hope that this situation would ultimately self-regulate, with operators folding in times of excessive competition and springing up when potential revenue is attractive enough, but the high stakes that are currently involved in entering or leaving the market make this unlikely.

But recent EC merger decisions suggest that we are beginning to see proactive steps taken towards resolving this. Rather than obsessing over operator numbers, the focus has shifted towards policing their behaviour at the wholesale level. The thought process being that this will encourage MVNOs to compete more intensely in retailing mobile services, whilst increasing efficiency in the underlying networks and allowing network operators to reap the financial benefits from greater economies of scale.

What is implicit in this is an increased recognition of the benefits that resource sharing can bring. However, I would argue that the EC regulators will need to start thinking about more the sharing of more than just networks.

By encouraging spectrum sharing we can begin to enable access to the wide channel bandwidths, that are likely to be necessary to meet future demand for mobile broadband, and avoid exacerbating the issues surrounding spectrum scarcity we may encounter in the future – something that Sweden, France and Mexico have already begun considering.

Small Cells: It’s all about the business case

At Small Cell World Summit this week, the Small Cell Forum announced Release Four. One particularly interesting part of CEO Sue Monahan’s presentation looked at the results of a recent survey into what it was that operators really want from the Forum’s Release Programme – and what documents they find the most valuable.

Carried out by Maravedis-Rethink, the research asked operators to consider what content from the Release Programme had proved the most valuable content and to provide their top three responses.

The overwhelming winner was the business case. Over half of operators surveyed are actively using the documents within their small cell business planning.

This probably won’t come as a surprise to many. For all the talk of technical challenges, offload and capacity, if there isn’t a strong commercial case for deployments then nothing will happen.

Real Wireless was commissioned to develop both the Enterprise small cell business case for Release Two and Urban small cell business case for Release Three. These are both areas which we often work on with our clients both within the wireless industry and in our work with wireless users such as cities, sports venues and transportation authorities.

In the wireless industry it’s easy to get distracted by the technology and we’ve heard of plenty of projects where things were going well until someone had to justify the commercial benefit. The work we carried out for Small Cell Forum modelled the comprehensive business case aspects, identifying the key reasons an operator would deploy small cells, the likely cost of deployment and under what circumstances it becomes profitable.

It’s this aspect that we all need to pay more attention to, as wireless becomes something that is integral to almost every location or business. Some building owners and management may ‘get’ the need for good wireless connectivity, or see the positive effect it can have on customer experience, but there are many who don’t – and even those that do may still have a difficult time justifying the expenditure. Similarly, some operators have yet to grasp the opportunities arising from widespread small cell deployments. It is for these people that proper business case analysis is a vital tool.

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: