Author: Clara Priou

Faster allocation of bandwidth required to support LTE growth in Latin America

Less than half of Latin American countries (excluding the Caribbean) have been
allocated additional spectrum in order to launch 4G-LTE, according to GSMA Intelligence [1] research. This trend shows the underlying need for additional spectrum capacity in the region to enable operators to launch LTE services and partly explains why Latin America is lagging behind the rest of the world in terms of LTE deployments.

More importantly, while LTE can be deployed in a variety of frequency bands in the region, there is a clear consensus towards the allocation of the AWS band (1700-2100 MHz), the APT700 band (700 MHz) and the IMT-extension band (2500-2600 MHz) to achieve regional LTE spectrum harmonisation.

[2]

Additional MHz capacity required to foster mobile broadband adoption

Over the past two years, mobile broadband connections in Latin America have grown by more than 100 million, crossing the 150 million connections mark in Q2 2013 and expected to reach half a billion by the end of 2017. Offsetting low fixed-broadband penetration in the region, mobile broadband services are being widely adopted and we anticipate that one in two connections in Latin America will be running on mobile broadband networks within the next three years.

However, while LTE networks are being rapidly deployed in other global regions – and beginning to take share from 3G in many countries – LTE deployments in Latin America are still lagging behind mainly due to the slow allocation of additional spectrum in the necessary bands.

Over the past three years, only 41% of countries across Latin America (excluding the Caribbean) have been allocated additional frequencies for LTE in a variety of bands, with only nine markets witnessing LTE commercial launches to date. Mobile operators in 13 regional markets are still awaiting the allocation of additional bandwidth indicating that there is a need for further spectrum capacity.

23 mobile operators have commercially launched LTE networks in Latin America with the vast majority of them running on ‘capacity bands’ (high frequencies, above 1 GHz), ranging from 1700 MHz to 2600 MHz.

However, only 425 MHz of spectrum in the 2500-2600 MHz band has been auctioned since January 2010 to eight operators across Brazil, Chile and Colombia that jointly represent just over 40% of total connections in Latin America. Last June, Colombia auctioned a total of 60 MHz of FDD spectrum in the 2600 MHz band with two blocks of 15+15 MHz assigned to both Claro (America Movil) and new entrant Direct TV.

Furthermore, ‘coverage bands’ (lower frequencies, below 1 GHz) are yet to be allocated in the region with the exception of some countries in the Caribbean, Bolivia and Ecuador. As a result, AWS and the IMT-extension band are the two key bands that have been largely selected for LTE use across the southern countries in Latin America – which represent a combined 72% of regional connections.

Higher frequencies typically allow mobile operators to cover urban and suburban areas where data traffic is dense and substantial network capacity is required, but operators also need spectrum in the 700 MHz band to deliver cost-efficient indoor city coverage and rural coverage. Lower frequencies require fewer base stations than capacity bands to produce greater geographic coverage and tend to be more cost-efficient.

AWS is building momentum until 700 MHz becomes widely available

There is a clear momentum around the allocation of AWS (1700-2100 MHz) as a region-wide band, which seems to be the best feasible alternative for many countries until 700 MHz becomes widely available.

A total of 480 MHz of AWS spectrum has been assigned to date across Chile, Mexico, Ecuador, Uruguay, Colombia, Paraguay and most recently in Peru and Bolivia. This frequency band is also on the auction agendas of regulators in  Argentina, Venezuela, El Salvador and Honduras.

It is important to note that, while this additional spectrum will mainly be used for LTE deployments, a number of operators (notably in Chile and Mexico) have used AWS spectrum to deploy 3G technologies. Nevertheless, the widespread allocation of AWS spectrum for LTE (which started with Canadian operators Bell, Rogers, Telus, Wind and Sasktel) shows good progress towards achieving spectrum harmonisation in Latin America, enabling regional LTE roaming and wider economies of scale for device manufacturers.

Several US operators are also gravitating towards AWS spectrum to increase capacity in their existing LTE networks – including AT&T, Verizon and T-Mobile/MetroPCS – which will further help to achieve LTE roaming on the continent. However, it is important to note that the AWS band is not being used in Brazil – which alone represents 39% of total connections in Latin America – as it follows the European consensus around the 1900 MHz and 2100 MHz bands.

Network investments and the availability of compatible equipment are expected to spike once more countries allocate digital dividend spectrum in the 700 MHz band. Apart from the early allocations of 700 Mhz in Ecuador to CNT (under APT band plan) and in Bolivia to Entel and Tigo (under USA band plan), the region seems to be leaning towards harmonising around the APT700 band plan starting with Brazil and Chile in early 2014. Other countries that have committed to APT700 include Mexico, Colombia, Venezuela, Panama and Costa Rica, while Argentina, Uruguay and Peru are reportedly likely to follow.

The widespread adoption of the APT700 band plan across Latin America would further help to ensure global economies of scale, which would bring down the cost of mobile devices and network equipment production, while reducing interference issues along borders and promoting international roaming. A study conducted by the Mexican regulator, Cofetel, also shows that adopting the APT700 band plan would result in the faster expansion of network coverage than the US 700 band plan. Under the latter, it would take a minimum of 2.5 years to deploy a network covering the entire population of Mexico City, against only 1.5 years under the APT700 band plan.

[3]

% frequency bands (MHz) used in Latin American LTE deployments, as of August 2013 (excluding the Caribbean)
Source: GSMA Intelligence

Other frequency options for LTE in Latin America

A number of other bands have also been assigned for LTE use in the region, including 450 MHz (only in Brazil for rural coverage), 1800 MHz (launched in Dominican Republic and Venezuela), 1900 MHz (in Uruguay, Venezuela and Paraguay) while 900 MHz and 800 MHz may be selected for LTE use in the near future.

This shows a fragmented LTE spectrum scenario in Latin America at present with almost ten different bands required to be supported by device and chipset makers. However, the allocation of spectrum in the 1700-2100 MHz, 700 MHz and 2500-2600 MHz bands shows a clear path towards achieving regional LTE spectrum harmonisation.

[1] http://www.gsmaintelligence.com
[2] https://www.mobileworldlive.com/wp-content/uploads/2013/08/aws1.png
[3] https://www.mobileworldlive.com/wp-content/uploads/2013/08/aws2.png

Intelligence Brief: Urban mobility super-app remains a distant dream

The opening weeks of 2019 have already delivered big announcements from the likes of Daimler, BMW, Seat and Uber. All of them seem to be betting big on smart urban mobility [1] and all aim to create the ‘platform of platforms’ in the city transport space through newly announced ventures.

A decade after Uber brought taxi booking to our mobiles, fresh traction in the space suggests a new wave of innovation might be round the corner for smart urban mobility. Just look at a handful of the announcements made in the last two months:

Daimler and BMW
The automotive behemoths, after concentrating on an ecosystem of services adjacent to mobility (parking; car rental; electric vehicle charging, taxi booking), announced at MWC19 Barcelona that they are going after the integration of all into one mobile app.
This is expected to merge 14 different services into one later in 2019.

SEAT and IBM
Unveiled the Mobility Adviser app at MWC19, which will use IBM Watson AI to help commuters make decisions about their daily transportation options, from scooters and bikes (the so-called micro mobility) to cars and public transport. The initiative is currently at a proof-of-concept stage.

Uber integrates public transit into its app in Denver
It’s no secret that Uber has been trying to integrate public transport routes and ticket purchases as well as the option to rent electric scooters into its app, while also trying to find its way more into our lives through food delivery with Uber Eats.

Here Technologies’ SoMO app
Announced in January, SoMo is an app connecting various on-demand mobility services, offering the option of sharing taxis with selected people, all on top of Here’s core mapping service. It plans to integrate more mobility service providers with SoMo and expand to new cities in the near future.

The common denominator of all these ventures? The creation of a ‘platform of platforms’ for urban mobility that allows commuters to plan their journey end-to-end and through one single app.

Can these companies really live up to their promises? Probably not. Consider the following:
Taxi sharing companies won’t make friends with cities any time soon
The Ubers of the world have been finding it really hard to operate even basic services in many cities due to protests from established competitors and conflict with local regulation over licensing of drivers. One can imagine the challenges of integrating local public transport data, especially when few cities’ transport authorities offer open APIs.
Uber’s Denver deal, to name one example, happened after seven years of Uber’s operation across cities of the world and is still at early stages. There is really no particular reason to be optimistic about the prospects of other players attempting to do the same thing across cities.
Micro mobility vendors’ future in question
Early endeavours in the micro mobility space are disheartening. Emblematic companies Bird and Lime both found it difficult to protect their assets from vandalism, so wide availability of scooters and dockless bikes in cities remain an open issue. In addition, the viability of the business model has been questioned due to small margins, hence talk about Uber buying one or the other. Therefore, even in the buyout scenario, an Uber, Lyft or Grab would have to subsidise their micro mobility business unit due to different margins.
Adjacent tasks provided over third-party apps add complexity
Bringing all urban mobility service providers under one application is not enough. The commuter is still required to perform a number of related tasks separately (mapping; navigating; planning; paying for ticket fares) which are tricky to integrate altogether in one app.
The reasons for this are that few cities offer mobile ticketing services for public transport: mobility apps are not necessarily good at mapping and rely on other apps, such as Google Maps; and payments over existing mobility apps often redirect users to PayPal or mobile banking apps.
All of these add complexity in the end-user experience and there is no development in sight that suggests their seamless integration will be achieved at scale.

Mobility through a single pane of glass is still a far away dream
Of course, integrating multiple means of transport (private, shared and public) and related services into one vendor’s app is a step in the right direction. However, the real value for commuters lies in offering this capability while integrating with all other mobility apps, even competing ones, through a single pane of glass type of platform that can operate independently of the geographic location.

If an app works in London but not in Paris or even in Bristol, is it really valuable and can it scale?

In reality, integrating all these services in one single pane of glass type of application is a far away dream due to inherent limitations in the respective companies’ partnership strategies and business models. For example, a typical European city has around five taxi booking apps and another five bike sharing services, which might not actually operate in the adjacent city or country. In other words, this is a highly fragmented market and further integration is needed.

But without any significant breakthrough, further market concentration such as the move by Daimler and BMW, can only lead to merging just parts of the mobility experience, without any visible way out of the location and multi-apps constraints.

Such a compromise which delivers an inferior user experience should not be accepted.

There is a market gap to fill: what would a breakthrough look like?
Clearly, there is a market need that aspiring entrants are so-far failing to address. Potential propositions might include a “connector” app which will interface with all competing mobility services providers and the adjacent ones, such as payments and mapping.

Of course, this “connector” app would have to be offered for free in order to incentivise companies to on-board. So the question is how to make money from that.

Interesting elements in that direction arise from Iomob, a Spanish start-up; Citymapper; and the Here Technologies’ Open Mobility Marketplace. However, more time is needed to assess their real potential in the market.

Another type of breakthrough would possibly be a solution that enables secure personal data and personal mobility preferences portability across applications. Blockchain presents some interesting attributes on digital identity, but nothing has emerged so far that would be applicable in the short-term.

Until there is a substantial shift in the market, some incremental improvement in our mobility experience is not bad at all, but it’s far from ideal.

– Christina Patsioura – senior analyst, Emerging Technologies, GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.

[1] https://www.gsmaintelligence.com/research/?file=d2e2f4b417a6a0f60d32b3dec01e7274&download

Why emerging markets hold the key to smartphone success for Microsoft-Nokia

NEW ANALYSIS: Microsoft announced this week [1] that it is acquiring Nokia Devices & Services for $7.2 billion, a bold move by the software giant aimed at strengthening the position of Windows Phone in a smartphone market that continues to be dominated by devices running Android and iOS. This deal is expected to close in Q1 2014 subject to shareholder and regulatory approval.

In this analysis, we look at the strategic rationale for the acquisition, focusing on the next wave of mobile growth driven by demand for data services in fast-growing markets, and assess how well Microsoft-Nokia is positioned to benefit from it.

 

What is the strategic rationale behind Microsoft-Nokia?

From a Microsoft point-of-view, there are two main reasons for the acquisition, which are intricately intertwined. The first is to consolidate its mobile position. For many years it has articulated the importance of being firmly in the mobile space, but has largely been unsuccessful throughout a number of platform iterations, leaving it increasingly irrelevant in the post-PC era (which, of course, it dominated during the 1990s and 2000s). Its share of global smartphone sales (through Windows Phone) languishes under 5%. Nokia has been its principal supporter since the formation of their strategic partnership in February 2011. Both firms have essentially bet their respective futures in consumer mobile on this, so we see the acquisition as a logical extension from partnership to full integration.

The company has positioned itself for the future as a ‘devices and services’ business. While this can be read a number of ways, we believe the most prescient is in a mobile context where it seeks to control an integrated ecosystem of hardware, software and content/services to challenge the ecosystems of Apple and Google. While it can claim to have control over two of these without Nokia, this deal provides it the missing piece in hardware. In addition, Nokia provides a ready-made, proven capability in supply chain management, marketing and distribution. The alternative (if it was even considered) of investing in all of these on its own would have been extremely difficult and costly, and a particularly unpalatable option for Microsoft given an increasingly impatient investor base looking for clear success in mobile.

The second, and directly related, driver behind the deal from a Microsoft perspective is the need to expand its presence in emerging markets. Microsoft’s mobile presence is largely in Europe and the US via Nokia’s Lumia smartphone range. While these are high value markets, in many ways they are also the most challenging as it has a very low market share despite smartphone penetration having already passed 50% (leaving it to play catch up, not lead); it is trying to compete in the mid and low tiers where there is entrenched competition from Android; and the lock-in mechanisms employed by other ecosystems are enhanced by high mobile operator subsidies.

The situation is very different in the developing world. Mobile penetration is still under 50% overall, with smartphone penetration under 10%. Internet penetration is just under 30% and rising fast, with much of this driven by mobile, specifically featurephones (often still using 2G networks). Given the vast population in these regions, even if internet penetration were to plateau at 60% of the population (for context, it is now around 80% in the developed world), this implies an incremental increase of around 2 billion internet users on current levels – more than double the number that currently exist across the entire developed world. The twin forces of economic growth (and rising real incomes) and declining device prices are likely to combine with the utility benefits of using the internet to persuade basic and featurephone owners to migrate to smartphones over the next 3-5 years (see Scaling Mobile for Development: harness the opportunity in the developing world [2]). Of course, quite aside from design and pricing, this will require intensive and sustained marketing. Microsoft has little consumer brand awareness and usage in many developing countries (due to low PC penetration). In contrast, Nokia is a relatively well known and established brand, with Microsoft seeking to leverage this by positioning Nokia’s featurephones as an ‘on ramp’ to the higher-end
Windows Phone.

Lastly, Microsoft will acquire the right to license a stable of Nokia patents (valued at EUR 1.65 billion through the deal for an initial 10 year period). While these lack the headline-grabbing ability of the wider Devices & Services acquisition, they represent both an important technology enabler (in designing its own products and features) and defensive buffer (from competitor licensing agreements) for Microsoft, particularly those that are required for core mobile communications, common smartphone feature sets, and that have long validity periods.

Figure 1: Global mobile and internet users
Source: GSMA Intelligence, ITU

[3]

 

What does it mean for the mobile ecosystem?
We believe that Microsoft should focus on disrupting the mid to low-end mass-market space where Android is in a stronger position than iOS (at least until the rumoured low-cost iPhone appears).

The need for more affordable smartphones is a key priority for mobile operators in both developed and developing regions. This trend is notably illustrated by Bharti Airtel’s call for $50 smartphones targeting emerging markets and MetroPCS’s 4G for All initiative in the US. The wider availability of more affordable smartphones would not only attract high consumer demand (further boosting market share) but would also help operators to reduce subsidies and increase data revenues (in turn helping to preserve margins).

Prior to Nokia’s acquisition, Microsoft’s interest in low-cost smartphones was evidenced by its 4Afrika initiative [4], which led to a partnership with Huawei to deliver low-cost smartphones (priced at around $150) to a number of countries on the continent. It is important to note that Vodafone’s operations in Africa (through its Vodacom subsidiary) are now generating a joint EBITDA greater than its operations in Southern Europe, underlining the importance for handset manufacturers to focus on demand in fast-growing markets.

Android is the de-facto operating system that encompasses a wide range of affordable smartphones that have fallen well under the sub-$150 price mark – a ‘sweet spot’ that Chinese OEMs in particular are focusing on. Microsoft could boost the adoption of affordable smartphones based on Windows Mobile by betting on Nokia’s experience in developing affordable devices. Traditionally, Microsoft has been a ‘high volume – low price’ player while conversely Apple has been a ‘low volume – high price’ player. To compete against iOS and Android, Microsoft should therefore compete in the lower prices segment that is Nokia’s stronghold – one where margins have been relatively healthy as well. Windows-based Lumia smartphones are already available around the $200 price point and well-positioned with first-time buyers.

Last year, Microsoft revealed that it was providing Nokia with financial backing to develop smartphones cheaper than the Lumia 610 to compete with Android. At the time, such decisions were seen as a move to regain momentum in large countries such as China or Russia where Nokia’s market share halved year-on-year. According to MTS in Russia, Nokia’s share of smartphone volumes in the country dropped from 32% in Q1 2012 to 14% in Q1 2013, yet Nokia’s lower cost Asha range was the second most popular OS for mobile devices (behind Android) with 8.4% share in Q1 2013 against 8% for iOS. According to the operator, the share of Windows Phone also increased by one percentage point to 5.7% in Q1 2013 in a country where smartphone retail prices averaged $327, twice the average price of a mobile phone at $170. This example in Russia reflects the momentum that Microsoft-Nokia could build if Windows-based smartphones were falling under the $100 mark.

If Microsoft-Nokia sticks to its ‘high volume – low price’ philosophy to address mass-market demand and build market share in fast-growing markets, it does have a chance to get close to its 15% market share target of an anticipated 1.7 billion smartphone market in 2018.

[5]

Figure 2: Revenue share by handset manufacturer1
Source: GSMA Intelligence

1 Other includes HTC, Huawei, LG, Sony Mobile and TCL Communication

[1] http://gsmaintelligence.us2.list-manage.com/track/click?u=56402d3944a50175491cb92fb&id=0f264b5c51&e=5dbfdfe4ec
[2] http://gsmaintelligence.us2.list-manage.com/track/click?u=56402d3944a50175491cb92fb&id=077ff81733&e=5dbfdfe4ec
[3] https://www.mobileworldlive.com/wp-content/uploads/2013/09/nsoft1.png
[4] http://gsmaintelligence.us2.list-manage2.com/track/click?u=56402d3944a50175491cb92fb&id=e8f6aeb532&e=5dbfdfe4ec
[5] https://www.mobileworldlive.com/wp-content/uploads/2013/09/nsoft2.png

Intelligence Brief: My MWC19 Barcelona resolutions

At the start of the year, I spent some time outlining my mobile and communications related resolutions for 2019. Rather than make predictions, I wanted to highlight some aspirations and commitments for how I’d work with and think about the industry: you can think of them like a combination of predictions and wishes with a little self-direction. If you missed the column, you can check it out here [1].

With MWC19 coming up in less than a week, I wanted to return to the resolution framework.

Anyone who has been to the show before knows that it offers an incredible opportunity to engage with the entire breadth of the mobile industry, but that it’s so massive that unless you go in with a plan you won’t make the most of it. Consider my resolutions the core components of this year’s plan.

Get to every meeting on time
Yes, this is the equivalent of a New Year’s resolution to run a marathon every month.

Possible? Sure.

Probable? Nope. Unless you’re a logistics genius who can manage to arrange all your meetings in proximity to one another, you will always arrive late to some. But, if we look at MWC19 meetings as part of an ongoing engagement, then leaving early (in order to get to the next place on time) is just an invite to follow-up. That’s my story and I’m sticking to it.

Focus more on devices
I’ve never been a mobile device analyst. And, as much as we all might consider ourselves amateur smartphone analysts when the newest Apple or Samsung devices get launched, it takes a very sharp focus and market understanding to map out the intrigues and implications of an ever expanding device landscape.

But it’s that expanding landscape that makes it all the more important to understand what MWC19 tells us on the device front. 5G business models. IoT business models. Smart home business models. They all hinge, to some extent, on what goes on in the device world.

Focus more on enterprise
Did you read the last bullet? Cool. Replace “device” with “enterprise” and a lot of it holds. I’ve never been an enterprise analyst. And as I look at key operator opportunities around 5G and IoT, the enterprise plays a major role in whether or not the business model pays off, meaning that the enterprise story operators and vendors tell at MWC19 will be an important one to pay attention to.

Give up on lunch
Complaint Bragging is a cousin of Humble Bragging and you run into it a lot at MWC.

“There was so much traffic in our booth, I never had a chance to sit.”
“With five conflicting dinner invites, I don’t know how I’ll manage them all.”
“I had so many back-to-back meetings that I never managed to eat lunch.”

Personally, I’ve always been conflicted about the issue of lunch at MWC. Walking around and engaging in meaningful conversation takes fuel. No argument there. But if time is a finite resource, then the 30 to 60 minutes spent on lunch is time taken away from engagement with companies you may never learn about otherwise. Of course, debating this stuff in my head also takes time away from more important things. So, this year I’m just resigning myself to grabbing jamon and manchego where I can find it and carrying around some Clif Bars.

Look for LTE in support of 5G use cases
This is something of an extension of my New Year resolution to worry more about 4G: recognising that 5G will likely upstage the technology that will come to dominate mobile broadband connectivity over the next five years.

One way to ensure LTE gets the credit it deserves is to shine a light on the value it’s delivering. But let’s be honest here: in the middle of peak 5G messaging, the buzzed-about use cases are 5G use cases.

The good thing is that LTE (and its evolutions) should be able to support many 5G use cases, clawing back some of the spotlight and helping operators make the most of their 4G investments. I know I’m not the only one seeing this dynamic play out and know we should see 4G in support of 5G use cases at MWC19. If it’s there, I plan to find it in action.

Test the definition of “enabling tech”
At GSMA Intelligence, we’ve been describing edge networking, artificial intelligence (AI) and blockchain as “enabling technologies”, foundational supports for new network and service innovations.

The definition, however, implies that these technologies are being put to use as a critical support for things like 5G and IoT rollouts. To be sure, we’ll see AI, edge and blockchain announcements at MWC19 framed in the context of new mobile networks and services. But, the real test of the “enabling” moniker will involve turning this on its head. We’ll need to see major 5G and IoT launches invoke these technologies in some way. If they do, then I guess the definition holds. If not, we may need to look for new naming.

Catch a keynote
Confession time: I’ve never actually attended an MWC keynote. By the time I made it to haphazardly scheduled meetings and everything else, there’s never been time.

I’ve always told myself that anything important coming out of a keynote will be covered by Mobile World Live. To some extent, that’s fair. However, having just seen the musical Hamilton for the first time, I was reminded that live versions are just naturally better than soundtracks or recaps.

In any case, Rakuten’s Mickey Mikitani (Wednesday) and Microsoft’s Satya Nadella (Monday) are both people I look forward to hearing from. If nothing else, should a big announcement of some sort get made, it’s always nice to be in the room where it happened.

– Peter Jarich – head of GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.

[1] https://www.mobileworldlive.com/blog/intelligence-brief-my-new-year-mobile-resolutions/

Bangladesh: Asia’s untapped mobile broadband opportunity

NEW ANALYSIS: GSMA Intelligence [1] reports on how next-generation services in the country are dependent on new spectrum and a taxation rethink.

Bangladesh has ten times the population of the average European country, while the average citizen’s monthly income is less than one thousandth of the European equivalent. Yet the Asian country is one of the largest and fastest growing mobile markets in the world, and retains high-growth potential; currently only two out of five people have subscribed to a mobile service.

The country is home to 154 million people – falling somewhere between Russia (142 million) and Brazil (200 million) – with over 70% of the population living in rural areas on $2 per day or less. Bangladesh is the ninth-largest market worldwide in terms of mobile subscribers in Q1 2013 with 62 million ‘unique’ subscribers (i.e. people) actively using 112 million mobile connections (i.e. SIM cards). Market penetration based on subscribers stands at just 40%, compared to 72% in Russia and 56% in Brazil. This shows tremendous room for growth, and explains why the country ranked 46th worldwide in terms of annual connections growth in Q1 2013 is posting double-digit growth while Russia (183rd) and Brazil (111th) both recorded low single-digit growth.

Bangladesh is one of the few countries in Asia where the nationwide deployment of high-speed mobile networks has yet to be realised (Pakistan is another). Over the past decade, the top four mobile operators (Airtel, banglalink, Grameenphone and Robi) – which between them make up 97% of the country’s mobile connections market – have been offering data services solely on 2G-GSM networks. The regulator is expected to auction 3G spectrum in the 2100 MHz band in early September this year.

The introduction of mobile broadband networks is expected to positively impact the country’s socio-economic development. According to a Deloitte/GSMA study, for a given level of total mobile penetration, a 10% substitution from 2G to 3G penetration increases GDP per capita growth by 0.15%. In addition, the World Bank estimates that mobile broadband has a higher positive economic impact than fixed-line broadband, particularly in emerging markets.

How to unlock mobile broadband opportunities in Bangladesh?

As has been the case previously in other developing economies, a number of factors have to be considered in order to foster the adoption of mobile broadband services in Bangladesh – from spectrum management to taxation.

The timely allocation of sufficient, harmonised and technology-neutral spectrum is a prerequisite to rapid mobile broadband rollout and adoption in any country. As noted in our recent analysis, Asia’s APT700 band plan leads the way to large-scale 4G-LTE growth [2], the timely adoption of the Asia Pacific Telecommunity band plan for the 700 MHz band (APT700) could generate economies of scale that can bring down the cost of mobile devices and network equipment production, and also reduce interference issues along borders while promoting international roaming.

In September this year, local authorities in Bangladesh will auction a total of 40 MHz of spectrum in the 2100 MHz frequency band (10 MHz has already been allocated to state-owned Teletalk) with reserve prices set at $20 million per MHz. In contrast, 2100 MHz spectrum was auctioned at $14,445 per MHz in Thailand in October 2012 and at $1 million per MHz in Indonesia in February 2006. Even though circumstances at the time of auction in those markets were different, Bangladeshi operators are looking for more realistic reserve prices in order to avoid the situation seen in India in 2010 where mobile operators spent a total of $15 billion on 3G frequencies.

2100 MHz band reserve prices ($/MHz) vs ARPU
Source: GSMA Intelligence

[3]

 

 

 

 

 

 

 

 

 

 

In such a low-ARPU market (less than $2 in Bangladesh in Q1 2013), regulators should foster investors’ interest by ensuring that mobile operators’ spending on both spectrum acquisition and network deployments is aligned with potential return on investment. As has been previously noted in other markets – from Europe to India – mobile retail prices will climb in the face of unrealistically high spectrum prices and high taxation, slowing the pace of mobile adoption.

The Axiata Group told us that the upcoming spectrum auction “is a necessary enabler for deploying mobile broadband services”, however, it remains cautious on upside as “price for spectrum coupled with challenging market conditions could limit Bangladesh’s attempts to roll-out mass-market mobile broadband”. Overall, Axiata expects 3G services in Bangladesh to take off in two to three years.

High taxation is another factor in Bangladesh that is hindering current and future market growth. The country has one of the highest sector-specific taxation levels in the world, with operators paying up to 52% of their revenue in tax. In addition, since 2006, mobile operators have been paying an upfront tax on every new SIM connection – a tax that was revised from $10 to $8 per SIM in 2011 and further reduced to $4 per SIM this year. Therefore, moving to a sustainable level of taxes and other state charges on the ICT sector is a prerequisite to rapid mobile broadband adoption in the country.

Axiata also noted that “there’s a 10% to 15% upside in ARPU between a basic voice + SMS user and a data user in Indonesia and Malaysia respectively, so operators have an incentive to offer internet services”. However, when applying this benchmark to Bangladesh, such an upside would only increase monthly ARPU from around $2 to $2.30 which is unlikely to offset high operational cost in the short term. The operator added that “a mid-end smartphone priced around $200-$300 is a substantial component of the average income of an individual”, which is significant as “high smartphone cost limits mobile broadband traction”.

Democratisation of data

Given the lack of fixed broadband infrastructure, mobile is the main gateway to the internet for most developing countries. Around a quarter of people in Indonesia, for example, actively access the internet over a 3G mobile connection (see figure below).

Bangladesh has reached a similar internet penetration despite negligible 3G use, with most people using the internet over a 2G connection via featurephones or low-end smartphones. This suggests a strong latent demand for mobile internet access that will accelerate via the availability of 3G and the enhanced user experience gained through a higher speed connection with lower latency.

% of population with internet and 3G access, Indonesia and Bangladesh, 2012
Source: GSMA Intelligence, AIISP Indonesia, BTRC Bangladesh

[4]

 

 

 

 

 

 

 

 

 

Mobile operators and internet players are well aware of this, with the lines that define customer ownership increasingly blurred. Aside from core access to the network, mobile-enabled services targeting low-income populations are making use of mobile data, either through apps or the mobile internet. This has accelerated since 2011, particularly in the education, entrepreneurship and health sectors (see products and services [5] tracked by Mobile for Development Intelligence [6], and Digital empowerment in the developing world [7]), and we expect this to continue with increasing 3G coverage. Language and digital literacy remains a significant barrier in Bangladesh (literacy in Indonesia is relatively high at over 90%), although recent indications from the national telecoms regulator of its goal to expand internet access to near universal levels make an implicit case for government involvement to accelerate improvement in this area.

[1] http://www.gsmaintelligence.com
[2] http://gsmaintelligence.us2.list-manage2.com/track/click?u=56402d3944a50175491cb92fb&id=0ed98168b8&e=5dbfdfe4ec
[3] https://www.mobileworldlive.com/wp-content/uploads/2013/07/new-mhz.png
[4] https://www.mobileworldlive.com/wp-content/uploads/2013/07/Bangladesh2.png
[5] http://gsmaintelligence.us2.list-manage.com/track/click?u=56402d3944a50175491cb92fb&id=e1c154f359&e=5dbfdfe4ec
[6] http://gsmaintelligence.us2.list-manage.com/track/click?u=56402d3944a50175491cb92fb&id=e100a5e7cc&e=5dbfdfe4ec
[7] http://gsmaintelligence.us2.list-manage.com/track/click?u=56402d3944a50175491cb92fb&id=38d86cf3c4&e=5dbfdfe4ec

Intelligence Brief: MWC19 summed up in 5 pictures

MWC19 Barcelona has been over for a week now. That’s enough time to look back at the big themes, little themes, and everything in between in an effort to determine what mattered and what it all means.

That’s what my team is doing in its perennial MWC wrap-up. However, building from my resolutions [1] to focus on 5G use cases, the enterprise, devices, and enabling technologies, I’ve managed to sum up the entire thing in just five pictures, saving you a lot of reading.

To be fair, any one of these topics could be the subject of its own blog and its own photo journal. That’s what happens when you pull together 109,000 attendees and more than 2,400 companies across more than 120,000 square metres of exhibition and hospitality space.

But, if you’re looking for a quick snapshot (pun intended), here’s mine.

Phones, phones, phones (5G that is)
This year, MWC brought us folding phones, phones that were mostly battery and lots of 5G phones.

It was the latter that stole the show. In part, because of the sheer number launched: everyone from Huawei, to LG, Xiaomi and ZTE announced them, alongside prototypes from Alcatel and OnePlus. In part, because it’s these devices that will enable initial 5G use cases, especially if priced cheaply enough to put into people’s hands (like Xiaomi’s Mi MIX3, pictured below).

[2]

Rakuten
The only thing that was nearly as ubiquitous as 5G phones was Rakuten. The newcomer Japanese mobile operator announced a rash of vendor selections (it’s working with Altiostar, Cisco, Intel, Mavenir, Netcracker, Nokia, and Red Hat among others).

More importantly, with the opportunity to build a network from scratch with cutting-edge innovations, Rakuten painted a way of how networks can be built in 2019, and distinguished itself as the one operator every vendor wanted to be associated with (thanks to Keith Dyer, editor of The Mobile Network, for this snap of Rakuten founder and CEO Mickey Mikitani).

[3]

Network infrastructure and supply chain diversity
Do you recognise the building pictured below? It’s the Renaissance hotel close to where MWC19 Barcelona was held. It’s also where Huawei showcased its Consulting service, which was in addition to its trio of booths covering networks, consumer and enterprise segments in the Fira Gran Via.

[4]Heading into the event it was unclear whether the network security concerns around Huawei that have been floated in some countries would be a major topic at the show. They were addressed in some form by Huawei [5], its competitors [6] and even the European Commission [7]. Where the breadth of Huawei’s presence at MWC19 mimics its reach in global telecom networks, the discussions around the vendor in Barcelona were only logical.

AR: for consumers or the enterprise?
When Microsoft launched its original Hololens mixed-reality smart glasses in 2016, there were questions of whether it was an enterprise or consumer solution.

Sure, the price ($3,000+) put it well outside the reach of most consumers, but its lineage to Kinect (an Xbox add-on) suggested incredible consumer use cases.

This year, the launch of the Hololens 2 put consumer aspirations to bed with a focus squarely on the enterprise. With GSMA Intelligence research showing that AR/VR headset adoption among consumers essentially stalled [8] in 2018, this isn’t surprising.

[9]

Gaming: the poster child for 5G?
AR headsets might be most at home in the enterprise (for now), but AR-based gaming is another subject. And, combined with 5G? Well, that’s an ideal use case for everyone’s shiny new network. At least, that was a clear message from MWC. Sprint announced work with Hatch on 5G-based cloud gaming.

Intel, Sony Pictures and Nokia demoed a Spiderman-related VR experience thanks to 5G.

[10]

Deutsche Telecom had a collaboration with MobiledgeX and Niantic (above) that was always packed with people: someone even showed up late to a meeting with me because they were too busy playing.

Putting aside questions around how 5G gaming will be marketed before 5G network coverage is ubiquitous, the allure of gaming as a 5G use case is understandable. Requiring high bandwidth and the low latencies that benefit from edge computing architectures, it ticks nearly all the 5G boxes.

– Peter Jarich – head of GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.

[1] https://www.mobileworldlive.com/blog/intelligence-brief-my-mwc19-barcelona-resolutions/
[2] https://www.mobileworldlive.com/wp-content/uploads/2019/03/GSMAi_MWC19_Blog_xiaomi.png
[3] https://www.mobileworldlive.com/wp-content/uploads/2019/03/GSMAi_MWC19_Blog_rakuten.jpg
[4] https://www.mobileworldlive.com/wp-content/uploads/2019/03/GSMAi_MWC19_Blog_renaissance.jpg
[5] https://www.mobileworldlive.com/featured-content/home-banner/huawei-boss-lays-into-us-security-scrutiny/
[6] https://www.mobileworldlive.com/featured-content/home-banner/ericsson-chief-takes-aim-at-europes-5g-policies/
[7] https://www.mobileworldlive.com/featured-content/home-banner/ec-vows-for-swift-resolution-of-5g-security-issue/
[8] https://www.gsmaintelligence.com/research/2019/01/future-of-devices-smartphones-ai-immersion-and-beyond/717/
[9] https://www.mobileworldlive.com/wp-content/uploads/2019/03/GSMAi_MWC19_Blog_hololens2.jpg
[10] https://www.mobileworldlive.com/wp-content/uploads/2019/03/GSMAi_MWC19_Blog_dt_niantic.jpg

Mobile data usage on the rise in the Middle East

NEW ANALYSIS: Mobile users in many countries in the Middle East are beginning to embrace mobile broadband services, yet a number of markets in the region still lag behind the global average in terms of 3G penetration, according to data from GSMA Intelligence [1].

While annual growth in mobile broadband1 connections in the region fell from 101% in 2011 to 61% in 2012, levels of mobile broadband penetration (as a percentage of total connections) in some Middle Eastern countries are now eclipsing their Western counterparts. Furthermore, the region now has 17 LTE networks spread across eight countries.

The most advanced markets in the region are Israel, where mobile broadband networks account for 63% of total mobile connections (as of Q2 2013), Turkey (59%), United Arab Emirates (55%) and Saudi Arabia (54%). In contrast, the average for Southern Europe stands at just 45%, while Western Europe has about half its connections on mobile broadband networks and in Northern Europe around three in five connections are mobile broadband.

Turkey has been one of the main mobile broadband growth engines in the region and all three operators in the country benefitted from significant data revenue growth in the year to Q1 2013. Turkcell has been particularly active in marketing data services, with its own-branded range of low-priced smartphones (the “T” series) contributing to a smartphone penetration of 22% at the end of Q1 – some 6.9 million devices. The operator has recently introduced a Turkcell-branded tablet, and is also offering innovative speed-based and shared data plans to further boost data consumption. Subsequently, Turkcell’s data revenue was up some 65% year-on-year to reach $778 million in FY2012-13.

Rival Avea (Turk Telecom) is pursuing a similar strategy. On its Q1 2013 Investor Call the operator’s Chief Marketing Officer Dehsan Erturk stated that “…mobile data revenue is the backbone of our revenue growth. Data revenue now constitutes 14% of total service revenues with a (traffic) growth of 55% on year-over-year basis thanks to smartphone campaigns and unique internet packages, addressing different customer segment user, various device types and data bundles.” The operator ran 40 separate smartphone marketing campaigns during 2012, and had 12 smartphones in its portfolio that were exclusive to Avea, including its own-branded Android handset, the ‘inTouch’. As a result Avea has the highest level of smartphone penetration in the country with 27% in Q1 2013. On the back of this, data revenue increased by some 79% annually to hit $348 million in FY2012-13.

Saudi Arabia is another country in the region that has witnessed rapid growth in data consumption in recent quarters. Second-largest operator Mobily (Etihad Etisalat) announced in January that the volume of mobile data traffic over its network reached 750 TB per day in Q4 2012, compared to 163 TB per day in 2011 and just 85 TB per day in 2010. This is due in large part to the development of its 4G-LTE network, which covered 4,500 sites at the end of last year. Significantly, of the 750 TB average daily data volume carried by Mobily during Q1 2013, more than half (400 TB) went via the 4G network. Data revenue for the operator was up 48% year-on-year in FY2012-13 at $1.85 billion, although this growth was surpassed by market leader STC (Saudi Telecom), which in Q1 2013 reported a 74% increase in data revenue over the year-earlier period. STC also reported that data traffic for Q1 2013 was up 176% year-on-year as a result of the launch of its ‘4G SPEED’ tariffs in the second half of 2012.

But many countries in the region have relatively low mobile broadband penetration, despite having some of the highest levels of overall mobile penetration in the world. In Qatar and Jordan, for example, mobile broadband connections make up just over 22% of total connections, despite the countries having overall mobile penetration of 179% and 148% respectively in Q2 2012. In Qatar, Ooredoo is counting on the increasing uptake of data services, having launched a 4G network in its home market in April; the same applies to Lebanese operators Touch (Zain) and Alfa (OTMT), which both launched 4G services in May despite Lebanon currently having just 7% of its connections on mobile broadband.

The greatest untapped potential for data appears to be Iran – despite having mobile penetration of 139.5%, the region’s most populous country has less than 1% of its connections on mobile broadband networks. This situation has arisen because only one of the country’s six operators, Rightel (Tamin Telecom), has been granted a licence to operate a 3G network; the licence gives them the exclusive right to offer 3G services until September 2014. However, since its launch in February 2012, the operator has struggled to gain a foothold in a market dominated by two big players, MCI (TCI) and MTN Irancell – and as of Q2 2013 has a market share of just 1%.

With 3G and 4G deployments increasing across the region, operators must ensure that they can effectively monetise their network investments in the face of competition from both their rivals and from the OTT messaging services whose popularity will inevitably grow as smartphone penetration increases.

Total mobile penetration and mobile broadband share, selected Middle Eastern countries, Q2 2013
Source: GSMA Intelligence

[2]

 

 

 

 

 

 

 

 

 

 

 

 

1 GSMA Intelligence’s definition of mobile broadband includes the following technologies: CDMA2000 1xEV-DO, Rev. A, Rev. B, WCDMA HSPA, TD-SCDMA, LTE, TD-LTE, AXGP, LTE Advanced, TD-LTE Advanced, WiMAX and WiMAX 2.

[1] http://www.gsmaintelligence.com
[2] https://www.mobileworldlive.com/wp-content/uploads/2013/07/Mobpen.png

Intelligence Brief: Is AI on a slippery slope?

There is a strong case to be made that artificial intelligence (AI) is now the most central topic in technology. While the computer science that underpins AI has been in development since the 1950s, the rate of innovation has gone through multiple step changes in the last ten years.

The technological reasons for this are well understood: the advent of neural networks; an increase in semiconductor processing power; and a strategic shift away from AI systems that rely on parameter-driven algorithms towards self-reinforced and multiplicative learning, machines that get smarter the more data they are fed and scenarios they negotiate.

Development has been open and collaborative. The benefits of AI in process efficiency and, potentially, accuracy are clear. For this reason, R&D activity, pilots and commercial deployments stretch to virtually every sector of the economy from healthcare to automotive manufacturing to telecom networks. A recent Vodafone survey indicated a third of enterprises already use AI for business automation, with a further third planning to do so. Take-up on this scale, at this rate, could put AI on a level with prior epochal shifts of electricity, the combustion engine and personal computing.

Two sides to each coin
Whether that actually happens depends on how the technology is managed. I spend a lot of time talking with major telecom and technology companies. While it’s clear AI is a major point of interest to nearly everyone, the discussion is still pitched in generalities. Paraphrasing:

AI is the Fourth Industrial Revolution
We know AI is big and we want to do something with it, but we don’t know what
We’re moving to be an AI-first company
How can we win with AI?
We’re a far more efficient company because of AI
The ebullient tone is to be welcomed.

Far less talked about, however, are the ethical and legal implications that arise from trading off control for efficiency. It’s fairly clear that cognitive dissonance is at work – the benefits blind us to the risks.

How do you answer these?

A crucial faultline is the balance between programmed and interpretive bias. That is to say, how much are machines programmed to act based on the way humans want them to act (reflecting our value sets) versus their own learned ‘judgement’? This has a direct bearing on accountability.

To make this point, let’s pose a series of questions that draw on how AI is being used in different industries.

Autonomous vehicles
If a self-driving car faces the inevitability of a crash, how does it decide what or who to hit? If that same self-driving car is deemed to be at fault, who bears responsibility? The owner? The car manufacturer? A third-party AI developer (if the technology was outsourced)?

Criminal justice
If an algorithm is tasked with predicting the likelihood of reoffending among incarcerated individuals, what parameters should it use? If that same algorithm is found to have a predictive accuracy no better than a coin flip, who should bear responsibility for its use?

Social media
If Facebook develops an algorithm to screen fake news from its platform, what parameters should it use? If content subsequently served to people’s news feeds is deemed intentionally misleading or fabricated, does responsibility lie with the publisher or Facebook?

I chose these for a number of reasons. One, these are real examples rather than hypothetical musings. While they emanate from specific companies, the implications extend to any firm seeking to deploy AI. Second, they illustrate the difficulty in extracting sociological bias from algorithms designed to mimic human judgement. Third, they underline the fact that AI is advancing faster than regulations and laws can adapt, putting debate into the esoteric realms of moral philosophy. Modern legal systems are typically based on the accountability of specific individuals or entities (such as a company or government). But what happens when that individual is substituted for an inanimate machine?

No one really knows.

A question of trust
Putting aside the significant legal ramifications, there is an emerging story of the potential impact on trust. The rise of AI comes at a time when consumer trust in companies, democratic institutions and government is falling across the board. Combined with the ubiquity of social media and rising share of millennials in the overall population, the power of consumers has reached unprecedented levels.

There is an oft-made point that Google, Facebook and Amazon have an in-built advantage as AI takes hold because of the vast troves of consumer data they control. I would debunk this on two levels. First, AI is a horizontal science that can, and will, be used by everyone. The algorithm that benefits Facebook has no bearing on an algorithm that helps British Airways.

Second, the liability side of the data equation has crystallised in recent years with the Cambridge Analytica scandal and GDPR. This is reflected in what you might call the technology paradox: while people still trust the benevolence of the tech industry, far less faith is placed in its most famous children (see chart, below, click to enlarge).

[1]In an AI world, trust and the broader concept of social capital will move from CSR to boardroom priority, and potentially even a metric reported to investors.

This point is of heightened importance for telecom and tech companies given their central role in providing the infrastructure for a data-driven economy. Perhaps it is not surprising, then, that Google, Telefonica and Vodafone are among a vanguard seeking to proactively lay down a set of guiding principles for AI rooted in the values of transparency, fairness and human advancement. The open question, given the ethical questions posed above, is how actions will be tracked and, if necessary, corrected. Big questions, no easy answers.

– Tim Hatt – head of research, GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.

[1] https://www.mobileworldlive.com/wp-content/uploads/2019/01/Jan-31-GSMA-AI-ethics-blog-Jan19-v2.docx-Chart.png

Intelligence Brief: Spectrum auctions – when do they pay off?

Since spectrum auctions in the mobile sector first became widespread in the 1990s, they have tended to generate one of two headlines. Either there is a “spectrum bonanza”, where more money is raised than expected, or “Government loses out” by getting less money than it was hoping for. In this respect, the record-setting high prices that UK and German operators paid for 3G spectrum almost 20 years ago still seems to influence some of the expectations amongst governments and industry analysts.

But when analysing spectrum awards, we should not lose sight of the impact on consumers.

A debate on this topic has persisted for years, with lots of discussions about economic theory and sunk costs. Do high spectrum prices – especially those driven by government policies rather than market demand – have an impact on the amount that operators invest in their networks or on the prices they charge to their customers? Or can spectrum awards be used to generate more revenues for public services without harming consumers of mobile services?

In fact, very little evidence has been gathered to determine how consumers are affected by spectrum prices. The research that has been carried out is generally inconclusive. We therefore recently published a study [1] that isolates the impact of spectrum pricing on consumer outcomes, including network coverage, quality and mobile prices. Looking at 229 operators in 64 countries (including both developing and developed markets) over the period 2010-2017, the research presents strong evidence of a causal link between high spectrum prices and negative consumer outcomes. Specifically, we found that:

High spectrum costs played a significant role in slowing the roll-out of next generation mobile networks in both developed and developing countries;
More expensive spectrum reduced network quality, as measured by download and upload speeds and latencies;
Countries that released spectrum early and in larger quantities saw quicker 3G and 4G network roll-out than countries that released spectrum later and/or in smaller amounts;
High spectrum costs are associated with higher consumer prices in developing countries, though this is not conclusive and so further research is needed.

What does this mean for spectrum policy?

[2]First, as economists are often fond of saying, “there is no free lunch”. governments that want to maximise revenues from spectrum auctions can continue to pursue this as an objective but they will now do so in the knowledge that it will have a negative impact on the development of mobile services. This is incompatible with other objectives to expand access to 4G and 5G as enablers of economic growth and sustainable development. Ultimately, policy-makers have to make a decision on what trade-offs they are willing to accept.

Second, auctions can deliver inefficient outcomes when they are poorly designed. One example of this is in relation to reserve prices. If these are set too high then precious spectrum may go unsold – as in the case of India (2016), Bangladesh (2018) and Ghana (2015 and 2018) – or force operators to pay more than they would otherwise. Another example is when governments artificially limit the supply of spectrum to operators, for example through set-asides (such as the German 3.5GHz auction in 2019) or large and mismatched lot sizes (such as the Italian 3.5GHz auction in 2018). The lesson from this is that auctions will not automatically deliver an efficient outcome if they are designed to achieve several objectives. Policy-makers must decide what their priorities are.

Lastly, spectrum should be released to the market as soon as there is a business case for operators to use it. In a market where long-term value, innovation and cost reductions are driven through short technology cycles (5G has been launched within ten years of the first 4G LTE networks), unnecessary delays to spectrum awards risk harming network roll-outs and leaving people behind. An up-to-date spectrum roadmap also alleviates uncertainty.

As we move into the 5G era, in many countries the temptation to maximise spectrum revenues will remain – the potential sums involved are often too large to ignore. But if governments want to ensure that spectrum is utilised to support affordable, high quality mobile services for the benefit of citizens, then the best way of achieving this is for operators to pay market-driven prices for spectrum that are not distorted by auction design or other policies.

We’ll know we are moving in the right direction when ‘high’ and ‘low’ auction revenues stop making the headlines and instead generate the same level of media interest as other aspects of spectrum management policy.

Kalvin Bahia – Economist – GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.

[1] https://www.gsma.com/spectrum/resources/effective-spectrum-pricing/
[2] https://www.mobileworldlive.com/wp-content/uploads/2015/08/spectrum-e1541504677165.jpg

Intelligence Brief: Should you care about CBRS?

Last week, the FCC approved five companies to begin initial commercial deployments of the Citizens Broadband Radio Service (CBRS) [1], which introduces a flexible model for spectrum sharing in the 3.5GHz band.

This development represents a major milestone in what has been a huge talking point in the US over the last few years. Nevertheless, CBRS is not widely understood elsewhere even though its implications are potentially wide-reaching. This makes it important to explore what CBRS means for mobile operators, as well as those companies outside of the industry, which will use CBRS as a testbed for deploying their own connectivity solutions.

How does CBRS work?
The CBRS initiative opens up 150MHz of the 3.5GHz band (3550MHz to 3700MHz) using a three-tiered approach to spectrum management:

Incumbents: Includes military, satellite providers and wireless ISPs. These users have the most rights over the CBRS spectrum.
Priority Access Licences (PAL): Holders pay to buy rights to a portion of the spectrum (70MHz), but can only use the spectrum when it is not in use by incumbents. The PAL spectrum auction takes place in 2020 using county-sized licence areas.
General Authorised Access (GAA): Users will be allowed localised access to up to 80MHz of spectrum as long as it does not interfere with incumbents or PAL holders. GAA spectrum will be made immediately available for commercial deployments.

The five companies approved by the FCC to start commercial deployments (Amdocs, CommScope, Federated Wireless, Google and Sony) are Spectrum Access System (SAS) administrators. Their role is to manage requests to use the spectrum at particular times and in certain areas, ensuring there is no interference between the three tiers.

How does CBRS benefit mobile operators?
In GSMA Intelligence’s report Region in Focus: North America (released this week), we look at the latest telecoms and broader TMT trends in the region, including a detailed look at CBRS’s potential impact on mobile operators. One key benefit will be the chance for operators to use CBRS spectrum to boost mobile capacity in congested locations. This is similar to how some operators deployed the unlicensed 5GHz band via Licensed Assisted Access (LAA).

Mobile operators seeking to enhance capacity will benefit from 3.5GHz spectrum emerging globally as a key 5G licence band. This means we can expect to see a steady release of new smartphones compatible with CBRS, including the latest iPhones and Samsung Galaxy devices.

Yet, CBRS’s potential extends beyond smartphones. It presents mobile operators with a chance to deliver home broadband services through fixed wireless access (FWA) technology. These deployments can be expected as early as this year, with AT&T already working with Samsung and CommScope to rollout FWA services using CBRS spectrum.

New opportunities, new players
CBRS will also drive change in other areas. For example, the use of localised spectrum licences makes it easier to deploy a location-specific mobile network, which allocates a dedicated slice of bandwidth for the sole use of a specific customer.

Demand for location-specific networks is likely to come from several enterprise verticals such as the manufacturing sector, which could use CBRS to support the high-speed mobility required by robots and vehicles as part of factory automation. There is also likely to be interest from industries involved in handling sensitive and personal data, attracted by the increased security offered by isolating their data from public networks.

CBRS also enables other solutions, such as neutral host networks. These are most common as localised deployments in busy places requiring ultra-high bandwidth (for example airports, shopping centres and stadiums). Several companies are trialling neutral host solutions including Wi-Fi hotspot operators (for example Boingo), equipment vendors and other localised network providers (Dense Air). CBRS allows neutral host networks to be deployed without mobile operators sharing licensed spectrum, easing commercial and technical obstacles.

Mobile operators are most likely to lead initial CBRS deployments. At the same time, operators can’t assume to be the default providers of connectivity. CBRS lowers the cost of entry to new providers, and many enterprises are taking this opportunity to experiment with deploying their own solutions. For example, Amazon plans to deploy CBRS at its Sunnyvale campus in California, building on a demo at AWS re:Invent 2018 where it showcased real-time surveillance cameras and smart meters.

What to expect next?
The initial commercial deployments of CBRS must run for a minimum of 30 consecutive days. SAS administrators will then report their findings to the FCC, ensuring their systems worked to prevent interference between users. After this, we will be closely watching out for further CBRS deployments as well as other key milestones, including:

PAL auction: PALs come with longer licence terms, larger coverage areas and greater rights than the GAA tier. However, the cost of acquiring PALs is likely to reflect these benefits. As such, the PAL auction will be a true barometer of demand for spectrum from those companies outside the mobile industry, which are deploying CBRS solutions in the GAA tier.
CBRS in 5G: CBRS will initially use LTE, with support for 5G coming later in the CBRS roadmap. This poses a dilemma to companies interested in deploying CBRS: move early on LTE or wait for 5G support? Many customers began planning their deployments when 5G was still a way off (reflecting the significant delays encountered by CBRS). It is therefore unlikely they will wait until CBRS supports 5G to commence deployments. This underlines the strong early demand seen by SAS administrators (such as Federated Wireless), which indicates LTE meets the initial CBRS requirements of most customers.
More spectrum sharing initiatives: If successful, CBRS could lead the FCC to pursue similar initiatives in other frequency bands. There will also be implications beyond the US, with many countries contemplating the merits of spectrum sharing initiatives. Some of these have already come to fruition, albeit in different forms to the three-tiered approach of CBRS. UK regulator Ofcom is enabling spectrum sharing through Shared Access and Local Access licences across four bands, while Germany’s Bundesnetzagentur has a gone a step further through reserving 100MHz of mid-band spectrum for local use.

James Joiner – analyst, Core Mobility Research – GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.

[1] https://www.mobileworldlive.com/featured-content/top-three/fcc-clears-3-5ghz-deployments/