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Sunday, March 30 2014

Why App Coverage Will Drive Everything

Given the smartphone’s ubiquity and our dependence on it, “App Coverage” (AC) is something confronting us every day, yet we know little about it. At the CCA Global Expo this week in San Antonio Glenn Laxdal of Ericsson spoke about “app coverage”, which the vendor first surfaced in 2013.  AC is defined as, “the proportion of a network’s coverage that has sufficient performance to run a particular app at an acceptable quality level.”  In other words the variety of demand from end-users for voice, data and video applications is outpacing the ability of carriers to keep up.  According to Ericsson, monitoring and ensuring performance of app coverage is the next wave in LTE networks.  Here’s a good video explaining AC in simple, visual terms.

Years, nay, decades ago I used to say coverage should be measured in 3 important ways:

  • Geographic (national vs regional vs local)
  • In/Outdoors (50+% loss indoors)
  • Frequency (double capex 1900 vs 700 mhz)

Each of these had specific supply/demand clearing implications across dozens of issues impacting balance sheets and P&L statements; ultimately determining winners and losers.  They are principally why AT&T and Verizon today have 70% of subscribers (80% of enterprise customers) up from 55% just 5 years ago, 84% of total profit, and over 100% of industry free cash flow.  Now we can add “applications” to that list.  And it will only make it more challenging for competitors to wrestle share from the “duopoly”.

Cassidy Shield of Alcatel-Lucent, further stated that fast follower strategies to the duopoly would likely fail; implying that radical rethinking was necessary.  Some of that came quickly in the form of Masayoshi Son’s announcement of a broad partnership with NetAmerica and members of CCA for preferred roaming, concerted network buildout and sharing of facilities and device purchase agreements. This announcement came two weeks after Son visited Washington DC and laid out Sprint’s vision for a new, more competitive wireless future in America.

The conference concluded with a panel of CEOs hailing Sprint’s approach, which Son outlined here, as one of benevolent dictator (perhaps not the best choice of words) and exhorting the label partner, partner, partner; something that Terry Addington of MobileNation has said has taken way too long.  Even then the panel agreed that pulling off partnerships will be challenging.

The Good & Bad of Wireless

Wireless is great because it is all things to all people, and that is what makes it bad too.  Planning for and accounting how users will access the network is very challenging across a wide user base.  There are fundamentally different “zones” and contexts in which different apps can be used and they often conflict with network capacity and performance.  I used to say that one could walk and also hang upside down from a tree and talk, but you couldn’t “process data” doing those things.  Of course the smartphone changed all that and people are accessing their music apps, location services, searches, purchases, and watching video from anywhere; even hanging upside down in trees.

Today voice, music and video consume 12, 160 and 760 kpbs of bandwidth, respectively, on average.  Tomorrow those numbers might be 40, 500, 1500, and that’s not even taking into account “upstream” bandwidth which will be even more of a challenge for service providers to provision when consumers expect more 2-way collaboration everywhere.  The law of wireless gravity, which states bits will seek out fiber/wire as quickly and cheaply as possible, will apply, necessitating sharing of facilities (wireless and wired), heterogeneous network (Hetnet), and aggressive wifi offload approaches; even consumers will be shared in the form of managed services across communities of users (known today as OTT).  The show agenda included numerous presentations on distributed antennae networks and wifi offload applied to the rural coverage challenge.

Developing approaches ex ante to anticipate demand is even more critical if carriers want to play major roles in the internet of things, unified (video) communications and the connected car.  As Ericsson states in its whitepaper,

“App coverage integrates all aspects of network performance – including radionetwork throughput and latency, capacity, as well as the performance of the backhaul, packetcore and the content-delivery networks. Ultimately, managing app coverage and performance demands a true end-to-end approach to designing, building and running mobile networks.”

Posted by: Michael Elling AT 10:37 am   |  Permalink   |  0 Comments  |  Email
Thursday, April 25 2013

The Law of Wireless Gravity

I've written about the impacts of and interplay between Moore’s, Metcalfe’s and Zipf’s laws on supply and demand of communication services and networks.  Moore’s and Metcalfe’s laws can combine to drive bandwidth costs down 50% annually.  Others have pointed out Butter’s law, coming from a Bell Lab’s wizard, Gerry Butter, which arrives at a more aggressive outcome; a 50% drop every 9 months!  Anyway those are the big laws that are immutable and washing against and over vertically integrated monopolies like giant unseen tsunamis.

Then there are the smaller laws, like my friend Russ McGuire at Sprint who penned, “The value of any product or service increases with its mobility.”  Wow, that’s very metcalfian and almost infinite in value because the devices and associated pathways can move in 3 planes.  I like that and have always believed in McGuire’s Law (even before he invented it!).

Since the early 1990s, when I was one of the few, if only, analyst on the Street to cover wired and wireless telecoms, I’ve been maintaining that wireless is merely access to wireline applications.  While that has been validated finally with “the cloud” and business models and networks have been merging (at least at the corporate level) the majority of people still believe them to be fundamentally distinct.  It shows in simple things like interfaces and lack of interoperability across 4 screens.  Thankfully all that is steadily eroding due to cloud ecosystems and the enormous fight happening in the data world between the edge and the core and open vs closed:  GOOG vs AAPL vs MSFT (and let’s not forget Mozilla, the OS to rule all OS’?).

Anyone who works in or with the carriers knows wireless and wired networks are indelibly linked and always have been in terms of backhaul transport to the cell-tower.  But over the past 6 years the symbiosis has become much greater because of the smartphone.  1G and 2G digital networks were all capable of providing “data” connections from 1998-2006, but it really wasn’t until the iPhone happened on the scene in 2007 along with the advent of 3G networks that things really started taking off.

The key was Steve Jobs’ demand to AT&T that smartphone applications purchased through the App Store have unfettered access to the internet, be it through:

  • 2G, which was relatively pervasive, but slow at 50-300kbps,
  • 3G, which was not pervasive, but faster at 500-1500 kbps, or
  • Wifi (802.11g), which was pervasive in a lot of “fixed” areas like home, work or school.

The latter made a ton of sense sense, in particular, because data apps, unlike voice will more likely be used when one is relatively stationary, for obvious visual and coordination and safety reasons; the exception being music.  In 2007 802.11g Wifi was already 54 mbps, or 30-50x faster than 3G, even though the Wifi radios on smartphones could only handle 30 mbps.  It didn’t matter, since most apps rarely need more than 2 mbps to perform ok.  Unfortunately, below 2 mbps they provided a dismal experience and that’s why 3G had such a short shelf-life and the carriers immediately began to roll out 4G.

Had Jobs not gotten his way, I think the world would be a much different place as the platforms would not have been so generative and scaled so quickly without unconstrained (or nearly ubiquitous) access.  This is an example of what I call Metcalfian “suck” (network effect pull-through) of the application ecosystem for the carriers and nothing exemplified it better than the iPhone and App Store for the first few years as AT&T outpaced its rivals and the Android app ecosystem.  And it also upset the normal order of business first and consumer second through the bring your own device (BYOD) trend, blurring the lines between the two traditionally separate market segments.

Few people to this day realize or appreciate the real impact that Steve Jobs had, namely reviving equal access.  The latter was something the carriers and federal government conspired to and successfully killed in the early 2000s.  Equal access was the horse that brought us competitive voice in the early 1980s, competitive data in the early 1990s and helped scale digital wireless networks nationwide in the late 1990s.  All the things we’re thankful for, yet have forgotten, or never entirely appreciated, or even how they came about.

Simply put, 70% of all mobile data access is over Wifi and we saw 4G networks develop 5 years faster than anyone thought possible.  Importantly, not only is Wifi cheaper and faster access, it is almost always tied to a broadband pipe that either fiber or becomes fiber very quickly.

Because of this “smart” or market driven form of equal access and in appreciation of Steve Jobs’ brilliance, I am going to introduce a new law.  The Law of Wireless Gravity which holds, "a wireless bit will seek out fiber as quickly and cheaply as possible.”  I looked it up on google and it doesn’t exist.  So now I am introducing it into the public domain under creative commons.  Of course there will be plenty of metaphors about clouds and attraction and lightning to go along with the law.  As well, there will be numerous corollaries.

I hope people abide by this law in all their thinking about and planning for broadband, fiber, gigabit networks, application ecosystems, devices, control layers, residential and commercial demand, etc…because it holds across all of those instances.  Oh, yeah, it might actually counter the confusion over and disinformation about spectrum scarcity at the same time.  And it might solve the digital divide problem, and the USF problem, and the bandwidth deficit….and even the budget deficit.  Ok, one step at a time.

Related Reading:

Not exactly reading, but comic Bill Burr's ode to Steve Jobs

Looking back at the number of laws Kurzweil got right and wrong (sometimes a matter of timing) looking back to 2001.

Posted by: Michael Elling AT 09:49 am   |  Permalink   |  0 Comments  |  Email
Thursday, December 29 2011

67 million Americans live in rural areas. The FCC says the benchmark broadband speed is at least 4 Mbps downstream and 1 Mbps upstream. Based on that definition 65% of Americans actually have broadband, but only 50% who live in rural markets do; or 35 million. The 50% is due largely because 19 million Americans (28%) who live in rural markets do not even have access to these speeds. Another way of looking at the numbers shows that 97% of non-rural Americans have access to these speeds versus 72% living in rural areas.  Rural Americans are at a significant disadvantage to other Americans when it comes to working from home, e-commerce or distance education.  Clearly 70% are buying if they have access to it.

Furthermore we would argue the FCC standard is no longer acceptable when it comes to basic or high-definition multimedia, video and file downloads.  These applications require 10+ Mbps downstream and 3+ Mbps upstream to make applications user friendly.  Without those speeds you get what we call the "world-wide-wait" in rural markets for most of today's high-bandwidth applications.  In the accompanying 2 figures we see a clear gap between the blue lines (urban) and green lines (rural) for both download and upload speeds.  The result is that only 7% of rural Americans use broadband service with 6+/1.5+ Mbps versus 22% nationwide today.

The problem in rural markets is lack of alternative and affordable service providers. In fact the NTIA estimates that 4% of Americans have no broadband provider to begin with, 12% only 1 service provider and 44% just 2 providers. Almost all rural subscribers fall into 1 of these 3 categories. Rural utilities, municipalities, businesses and consumers would benefit dramatically from alternative access providers as economic growth is directly tied to broadband penetration.

The accompanying chart shows how vital broadband is to regional economic growth.  If alternative access drives rural broadband adoption to levels similar to urban markets, then local economies will grow an additional 3% annually.  That's because new wireless technology and applications such as home energy management, video on demand, video conferencing and distance learning provide the economic justification for alternative, lower-cost, higher bandwidth solutions.

Related Reading

FCC Broadband Map

US 3G Wireless Coverage Map

The UK is Far Ahead of the US; Their deficient is our average

Rural Telcos Against FCC USF Reform

GA Tries to Reduce Subsidies, Again

 

Posted by: Michael Elling AT 08:09 am   |  Permalink   |  0 Comments  |  Email
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