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The press room for the Windows Phone 7 announcement was packed, so I was politely turned away – and so I could see the real unveiling of Windows Phone 7, on the streets of Barcelona (in fact in front of the hotel where the press announcement was made). It was a struggle… Want to read the beamforming paper in Russian? Download the Russian version here, along with an addendum Thanks to Alexey Zaytsev (alzaytse@cisco.com), WiMAX Consulting System Engineer at Cisco Systems, for the translation! Copyright ©2010 Senza Fili Consulting. All rights reserved. Please notify us if you find this content anywhere but at www.senzafiliconsulting.com. Reproduction of full articles from RSS feeds is prohibited without permission.
As a greenfield service provider new to the telecom market, deploying a new technology and a new type of service, Yota’s success is remarkable. The company has avoided the common trend among emerging market operators of focusing on basic fixed broadband connectivity in underserved areas. It is instead offering mobile broadband connectivity in cities where 3G is available, and where wireline broadband, including residential fiber in some areas, is available and cheap.  Usage levels among Yota's customers We have just published a paper that explores what made Yota’s achievements possible, and what lies at the core of its unique market approach. We looked at the market in which it operates, at how it is building and expanding its network, and at the proposition it offers to its customers in terms of services, devices, content and applications. We also widened the scope to follow Yota’s activities in markets outside Russia and to look at future prospects. You can download the PDF of the paper here. Copyright ©2010 Senza Fili Consulting. All rights reserved. Please notify us if you find this content anywhere but at www.senzafiliconsulting.com. Reproduction of full articles from RSS feeds is prohibited without permission. As WiMAX operators deploy new networks or expand existing ones, they face multiple choices in the selection of base station equipment. How can WiMAX operators choose the hardware solution that is most cost effective and has the faster return on investment (ROI)? We addressed this question by analyzing the capex and opex requirements for a five-year period, using radio access network (RAN) equipment with multiple input, multiple output (MIMO), beamforming (BF), and a combination of MIMO and BF. MIMO equipment is less expensive, but requires a higher number of base stations. BF and BF+MIMO equipment costs more, but requires fewer cell sites to provide the same coverage and capacity. Despite the higher RAN equipment costs, BF lowers the overall capex and opex as it requires fewer cell sites. In the BF case, 49% fewer cell sites are required in Year 1, and 20% in Year 5. For the BF+MIMO case, the reduction in cell sites is even larger, ranging from 57% in Year 1 to 34% in Year 5. Fewer cell sites result in a 20% reduction in the discounted RAN costs over five years in the BF case, and in a 34% reduction for the BF+MIMO case. You can download the PDF of the paper here. Copyright ©2010 Senza Fili Consulting. All rights reserved. Please notify us if you find this content anywhere but at www.senzafiliconsulting.com. Reproduction of full articles from RSS feeds is prohibited without permission. See our latest article on Fierce Wireless here or read on. Mobile data plans have started to evolve. U.S. mobile operators, under pressure from exploding traffic volume in their networks and grappling with network congestion, have recently announced new service pricing for voice and data. Though it is still unclear what the net effect of the new pricing will be on subscribers, the new plans set an important departure in the approach to voice versus data service plans. Subscribers may be able to get cheaper voice, but data pricing shows no comparable decrease. More importantly, operators have started to require that subscribers have a data plan with some device types–mostly smartphones. Mobile operators seem to acknowledge that they can offer a better deal to their subscribers for voice services, which are substantially more profitable (with the exception of SMS, which on a per-bit basis may give an even better return than voice), but they have chosen not to extend this change to mobile data plans. Why didn’t data prices go down? Two reasons may explain the new approach to data. Mobile operators want data to become an integral part of subscribers’ service plans. They are willing to charge less for voice, as long as subscribers pay on average more for data. This reflects a more balanced approach in splitting revenues between voice and data–with operators less willing to have voice subsidize data services. As data services become more mature and widely adopted, this is an approach that is no longer sustainable. The second reason is that mobile operators cannot afford to lower data plans, as they may lead to a downward spiral in ARPU, at a time when they need to deal with an unprecedented growth in individual user traffic. Initially the bulk of the growth in data traffic was generated by iPhone users, who now use more than 500 MB per month. With the introduction of new devices including Android-based smartphones and the higher number of applications, mobile data is rapidly becoming a mainstream consumer service. In the U.S., smartphones now represent over 30 percent of shipments and the percentage is likely to go further up. Traffic generated by these devices is also quickly catching up with that from iPhones. In Russia, mobile WiMAX operator Yota sees over 1 GB per month data traffic from subscribers using their HTC smartphone. For laptops, this figure is a staggering 13 GB per month. A large–and rapidly growing–portion of this traffic is video. This is what worries operators worldwide: with email and Internet access, traffic growth is bound by the limited requirements of the application; with video or even audio content takes little effort for subscribers to enter in the realm of the GB/month. Mobile operators are delighted to see that their subscribers love mobile data services–and that are willing to pay for them–but at which point does the growing popularity of data and video affect profitability of the mobile data? It does not take long, as a quick back-of-the-envelope calculation that compared delivery costs and revenues on a per-MB basis. The revenues per MB can be computed as a function of the monthly fees, for different levels of traffic. Revenues can be compared to the delivery cost per MB, which we estimate at $0.015 for HSPA, $0.005 for LTE and $0.003 for WiMAX on the basis of our analysis of mobile operator and vendor data. The delivery cost per MB depends on many variables that are specific to different operators–and in particular on the network utilization level–and therefore are subject to variability. Our values are therefore only indicative and on the low end in comparison with other estimates we have come across. It has to be kept in mind that these estimates do not include costs such as customer acquisition and support, or network core operations, which are shared with voice.
After being caught by surprise by the sudden growth in mobile data, mobile operators have started to realize that, to profit from it in the long term, they need to strike the right balance between pricing and traffic, and limit the scope of network expansion to increase capacity. If they raise the prices too much they risk losing subscribers. If traffic is too high, congestion and the need for expensive upgrades ensue–and profitability is threatened. If they spend too much on network expansion, they will hurt profit margins. One solution that mobile operators have timidly started to mention is the introduction of traffic limitations. Subscribers have been grown accustomed to flat-rate unlimited services–for both data and voice–and it will be difficult to wean them off this type of plans. Unless strict–and likely to be highly unpopular–caps are introduced, they will only affect a small fraction of subscribers. For instance, on AT&T mobile network, 3 percent of subscribers use 40 percent of the bandwidth, according to the operator. Traffic caps may be useful in managing these 3 percent subscribers, but they miss large opportunities for improving traffic. Increasing the efficiency of the network is crucial to manage traffic in ways that benefit both subscribers and mobile operators. Mobile operators no longer have to transport traffic through a passive, best-effort channel. They can use tools like quality-of-service and traffic prioritization, subscriber policies, compression, deep-packet inspection to give subscribers more control over their mobile online experience while increasing the perceived network capacity through to a more efficient use of resources. The rigidity of traffic cap can be avoided by using a more flexible approach in which traffic flows are actively managed depending on data and infrastructure requirements and operators data policies. And in the process, mobile operators can escape their dreaded fate as commodity providers, and leverage data management to differentiate their offering from competitors and extract more revenues from data services. The tools to actively manage traffic are available today, yet heir implementation is taking a long time. Mobile operators are rightly concerned about the reception among subscribers who may see traffic management as a way to limit their freedom, while in fact it is more likely to result in a more fair use of network resources. Transparency and subscriber education of what managing traffic entails is going to be the next step for mobile operators to gain better control over data services and their profitability. WiMAX is only available for licensed bands (2.3 GHz, 2.5 GHz, 3.5 GHz and others in the future) for which a certification program has been defined by the WiMAX Forum. What if an operator wants to use the same core technology (the IEEE 802.16 standard is defined for any spectrum band up to 6 GHz) in an unlicensed band such as the 5 GHz band or the US 3.65 GHz ones? Of course the equipment will not be certified, but it can still provide the functionality and performance of WiMAX technology. For operators that do have no access or insufficient access to licensed spectrum, the ability to use WiMAX technology in license-exempt bands is quite attractive as they can benefit from features and price levels of WiMAX equipment. In a paper that was just released, I discuss the advantages for operators looking to use equipment based on IEEE 802.16e in license-exempt bands and present case studies from three operators, Adam Internet, Azulstar and Towerstream. You can download the paper here. As always I look forward to hear your comments—what are your thoughts on deploying WiMAX technologies in unlicensed bands? Is there scope for adding a certification program for these bands? My understanding here is that certification is a must-have for products that operate in licensed bands, but operators operating in license-exempt bands are not quite as vocal in requiring certification (although I do know of a few exceptions…). I attended the mHealth Summit organized by the Foundation for NIH in DC on October 29-30 to get a sense of the progress in the use of mobile technologies to improve health care. It is a fascinating area where mobile technology can make a real difference in the lives of many people, especially in developing countries (see a paper I wrote recently on behalf of Cisco and Intel here). It was an interesting meeting for someone like me working on the m side of the mHealth, as most of the attendees were from the health care community. This allowed me to get a better understanding of the perspective and requirements of the health care providers. It turns out that for most of the applications presented the requirements are very easy to meet. Most of the applications are still based on SMS, the only mobile data service that is truly ubiquitous. For SMS-based applications the requirements in terms of network infrastructure, devices, or user training are very limited, but the functionality that these applications offer is also limited. Increasingly rural areas in developing countries have access to wireline and wireless broadband. This will open more exciting opportunities to deliver improved healthcare through richer applications built on more intensive data exchanges and real-time video. An increasing number of trials are focusing on such technologies, but few were represented at the mHealth Summit. Despite the promise, mobile health care applications appear to be moving slowly from the trial stage to full deployments. The Summit showcased a large number of promising applications, but in all cases they were still in early trial stage: available to few users, or still in development, and with very limited information on how effectively they improve care (compared to alternative, non-mobile solutions) and on what’s their ROI proposition to governments, health care providers and NGOs. Given that SMS have been around for decades now and that cellular coverage is good in most developing countries, we should be ready to move beyond trials to wide programs that use mobile technologies, available to wide areas and covering more than just a single condition or patient group. Applications alone are not enough; they need to rely on an ecosystem that includes patients, health care workers, health care agencies, governments, NGOs, and cellular other wireless providers. Patricia Mecheal, from the Earth Institute, insisted that we need to work in concert towards a common target, just like musicians do when they play in a symphony. This is a great challenge. As Vodafone’s Paul Davey remarked, “We need to find a common language”. Mobile and broadband operators, governments and health care agencies have only started to work together and still they have a very different view of the value chain, said Davey. The development of an ecosystem with a common language is a prerequisite to move beyond trials to full, nationwide deployments. Within such an ecosystem, it is crucial to ensure that applications work across networks, devices, languages. While solutions are available, proprietary solutions still seem to dominate efforts to ensure wide scalability and interoperability, although the trend is clearly for open source, standards-based solutions. Joel Selanikio, from DataDyne and developer of EpiSurveyor, gave the most compelling presentation arguing that most applications for emerging countries fail to take advantage of software approaches that can leverage already existing tools, and can scale to large deployments. Attempts at quantifying the economic and health benefits of mobile healthcare applications seem to be very sparse and uneven. Suzanne Clough from WellDoc presented an application for diabetes treatment with a well-thought evaluation process, but most presenters did not seem to have given much thought to the topic. The prevailing approach seemed to get a grant from an NGO, develop an application and showcase it in a trail; when done move on to the next trial. Perhaps not surprisingly, it was a representative of the pharma industry, Scott C. Ratzan, Johnson & Johnson, to remind the audience that we should not even get involved in a trial without developing a solid business model. NGOs and their research partners often make the case that a competitive market approach does not work in health care, and especially not in emerging markets. But why should it be the case? Health care systems in emerging market are subject to even tighter budget constraints than in developed markets and have an even greater need to deploy effective solutions. How could we get this approach to change to speed up effective, scalable deployments? I attended the mHealth Summit organized by the NIH in DC on October 29-30 to get a sense of the progress in the use of mobile technologies to improve health care. It is a fascinating area where mobile technology can make a real difference in the lives of many people, especially in developing countries (see a paper I wrote recently on behalf of Cisco and Intel here).
It was an interesting meeting for someone like me working on the m side of the mHealth, as most of the attendees were from the health care community. This allowed me to get a better understanding of the perspective and requirements of the health care providers.
It turns out that for most of the applications presented the requirements are very easy to meet. Most of the applications are still based on SMS, the only mobile data service that is truly ubiquitous. For SMS-based applications the requirements in terms of network infrastructure, devices, or user training are very limited, but the functionality that these applications offer is also limited. Increasingly rural areas in developing countries have access to wireline and wireless broadband and this will open more exciting opportunities to deliver improved healthcare through richer applications built on more intensive data exchanges and real-time video. An increasing number of trials are focusing on such technologies, but few were represented at the mHealth Summit.
Despite the promise, mobile health care applications appear to be moving slowly from the trial stage to full deployments. The Summit showcased a large number of promising applications, but in all cases they were still in early trial stage: available to few users, or still in development, and with very limited information on how effectively they improve care (compared to alternative, non-mobile solutions) and on what’s their ROI proposition to governments, health care providers and NGOs.
Given that SMS have been around for decades now and that cellular coverage is good in most developing countries, we should be ready to move beyond trials to wide programs that use mobile technologies, available to wide areas and covering more than just a single condition or patient group.
Applications alone are not enough; they need to rely on an ecosystem that includes patients, health care workers, health care agencies, governments, NGOs, and cellular other wireless providers. Patricia Mecheal, from the Earth Institute, insisted that we need to work in concert towards a common target, just like musicians do when they play in a symphony. This is a great challenge. As Vodafone’s Paul Davey remarked, “We need to find a common language”. Mobile and broadband operators, governments and health care agencies have only started to work together and still they have a very different view of the value chain, said Davey. The development of an ecosystem with a common language is a prerequisite to move beyond trials to full, nationwide deployments.
Within such an ecosystem, it is crucial to ensure that applications work across networks, devices, languages. While solutions are available, proprietary solutions still seem to dominate efforts to ensure wide scalability and interoperability, although the trend is clearly for open source, standards-based solutions. Joel Selanikio, from DataDyne and developer of EpiSurveyor, gave the most compelling presentation on how so many applications for emerging countries fail to take advantage of open-source software approaches that can leverage tools already existing and can scale to large deployments.
Attempts at quantifying the economic and health benefits of mobile healthcare applications seem to be very sparse and uneven. Suzanne Clough from WellDoc presented an application for diabetes treatment with a well thought evaluation process, but most presenters did not seem to have given much thought to the topic. The prevailing approach seemed to get a grant from an NGO, develop an application and showcase it in a trail; when done move on to the next trial. Perhaps not surprisingly, it was a representative of the pharma industry, Scott C. Ratzan, Johnson & Johnson, to remind the audience that we should not even get involved in a trial without developing a solid business model. NGOs and their research partners often make the case that a competitive market approach does not work in health care, and especially not in emerging markets. But why should it be the case? In fact, health care systems in emerging market are subject to even tighter budget constraints than in developed markets and have an even greater need to deploy effective solutions.  Yota's international ambitions Yota is probably the fastest growing WiMAX operator today. A few months after launch, it has reached the 200,000 subscriber mark in early October, and has become EBIDTA positive. At the ITU meeting a couple of week ago, it announced a trial for the new mobile WiMAX version, 16m, and a new WiMAX phone to be launched. Yota is moving at a fast pace these days—and its ambitions are no longer limited to the Russian market. Yota has announced that it will extend its operations to Belarus, Nicaragua and Peru. I talked to Yegor Ivanov, Director of Business Development, about how Yota plans to manage this expansion. Just as they did in Russia, Yota does not feel constrained to follow established industry rules. I think I found out why. Most people at Yota do not come from the telecoms industry and this seems to be working to their advantage. They believe they can change the way the game is played, and have tried to do so in Russia already with remarkable success. In the new markets, Yota is not partnering with a local operator, the most commonly followed path for international expansion. Yota has a controlling stake in the local greenfield operators, established partnerships with non-operator players, and are trying to duplicate the Russian model where it makes sense. In Belarus they have complete ownership of the operator. In Nicaragua, Yota’s retains 75% of the ownership, in Peru 88%. Yota believes that it is easier to work with a local partner that is not an operator (i.e., less potential for conflict) and with strengths that Yota can more effectively leverage. In Nicaragua, Yota is working with a distribution player that has a good understanding of the specific domestic market. In Peru, Yota has worked with a partner to get the desired spectrum allocation. Yota will use the same RAN vendor, Samsung, in all the new markets to keep a tight time-to-market schedule. Yota got the spectrum in Nicaragua in September and they plan to be live in Managua by the end of the year. They have a few Russian engineers on the ground to ensure that all they learned in the Russian deployment will be used in the new environment. In both Belarus and Nicaragua, Yota has access to 60 MHz of spectrum in the 2.5 GHz band, the same band they use in Russia. For the backhaul, they mostly rely on fiber, with wireless backhaul were fiber is not available. In Managua, they believe fiber is available to connect the planned 20 base stations. At the same time, the competitive environment may different, so Yota’s marketing approach is not necessarily the same as that used in Russia. In Belarus, Yota will mostly duplicate the Russian approach, leverage the same media content partnerships, and offer comparable plans. In Nicaragua, however, a different approach is needed. There, as it is the case in many Latin American countries, voice may be just as important as data in getting market share. Voice calls, especially international ones, are typically very expensive. An operator that offers low cost call is well placed to attract customers. So Yota will be shifting the focus from media content, which has a key role in their Russian service proposition, to VoIP. VoIP will be offered from service launch, while it is still not part of the service plan in Russia (the WiMAX connection can be used for VoIP of course, but Yota does not yet offer its own VoIP service, as far as I know). It will be interesting to see how this approach works in different markets. Life can be difficult for greenfield operators without an established local presence in the industry, but this may also make it easier to introduce innovation and competition as they do not have legacy ties. At the ITU show in Geneva last week, there was a lot of talk on IMT-advanced technologies as expected. At this point, both WiMAX and LTE are obvious candidates for inclusion. The timing is still uncertain, but inclusion seems to be uncontroversial for both technologies. What is interesting however is that the TDD/FDD split, with WiMAX using TDD and LTE using FDD is somewhat breaking down. The WiMAX camp is pushing to have an FDD version of WiMAX as an IMT-2000 and as an IMT-Advanced technology (WiMAX TDD is already an IMT-2000 technology). Support for FDD is included in the IEEE standard—so nothing new from a standards perspective. Is there a market for FDD WiMAX though? Not much to date and this is mostly because TDD is almost universally accepted by WiMAX operators as the best option for the inherently asymmetric data traffic they have to transport. Besides, there is currently no beamforming solution available for FDD wireless interfaces (either WiMAX or LTE—and this constitutes an advantage for WiMAX, although one that is seldom acknowledged). So the only reason to use FDD WiMAX is linked to regulatory requirements. Some WiMAX operators may have to use FDD in their allocated spectrum, but to date it does not seem that there are enough of them to justify FDD WiMAX 16e product development. On the LTE side, there is a growing interest for a TDD version of LTE, mostly driven by China Mobile, but relevant to other mobile operators too, which often have TDD spectrum and do not know what to do with it. TD-LTE is currently being trialed in China by multiple vendors. Chipsets are being developed by Qualcomm, Ericsson, Huawei, Sequans, Altair. TD-LTE will support MIMO, but beamforming as well and will, like FDD LTE, use channel sizes up to 20 MHz. A femtocell prototype from Nokia was also on display in Geneva in the China Mobile’s booth. Combined (TDD and FDD) chipsets in subscriber devices will make it easier to roam across TDD and FDD networks. With China Mobile’s commitment, TD-LTE has gained the needed momentum, but it still uncertain where and how TD-LTE will be deployed in other countries. At this stage, TD-LTE appears to have better prospects than FDD WiMAX, but it is interesting to see that while it is not possible at this stage for WiMAX and LTE to converge into a single standard, they seem to increasingly cross paths and move in the same direction. Often operators do not want to disclose too much about what they do. But one topic that is guaranteed to get even the most guarded operators to open up is the price of end-user devices. In my latest report, Getting WiMAX in the Hands of the Subscriber, based on a detailed survey of 74 WiMAX operators, operators were eager to express their views on this topic. For over 80% of them, cost is a critical factor in the selection of devices, followed by technical performance, quality and time to market. (Surprisingly, in the age of the iPhone, design did not score very highly). Device prices are truly crucial to the success of operators. I have talked to several operators that have to put on hold expansion plans until the price of devices reaches an acceptable point. If the price is above a threshold, there is simply no business case. Typically, fixed operators limit themselves to business subscribers, with higher ARPU, higher margins and lower churn. When the CPE price goes down, they move to the most attractive residential markets first, and eventually move to cover broader areas. For cellular and mobile WiMAX operators this is clearly not an option. They need to reach business and consumer users from launch, and they need affordable devices to do so. This is the case even if the operator decides to subsidize the device. And WiMAX operators are trying to move away from the device subsidy with long-term contract model, towards a more flexible system (the subscriber buys the device and uses it with a monthly or pay-as-you go contract). In this model, expensive devices may drive potential subscribers towards competing operators.  Which WiMAX operators participated in the survey? So what prices do WiMAX operators expect? They expect USB dongles to be about $40, which is in line with current volume-based pricing. For desktop CPEs, they are looking for a $75 price tag for an entry-level model. This is a price that many operators appear to be able to secure already, but it is well below the prices that others report, especially when using WiMAX-based products in non-certified spectrum bands. In these cases, volumes tend to be lower, so costs are likely to be higher. Interestingly, WiMAX operators expect entry-level mobile phones to also be priced at around $75, excluding subsidies. This could be a reasonable expectation for a bare-bone phone (no cellular interface, limited functionality, small screen). In the same survey, however, operators indicate clearly their preference for powerful, feature-packed devices, with advanced data capabilities. It is not realistic to expect WiMAX to compete with GSM voice-centric services, so it makes sense for operators to show little interest for basic phones capable of only voice and texting. WiMAX phones should support web browsers and audio and music streaming in addition to texting and email capabilities to make the service compelling to users, in developed as well as in developing markets. These requirements are going to make it difficult for device vendors to reach the target $75. Operators also overwhelmingly want devices with Wi-Fi and 2G/3G cellular interfaces. This is going to drive the price further up. Furthermore, the rapidly growing market share for smartphones indicates that subscribers are increasingly willing to invest money in a powerful device. At Yota, the Russian WiMAX operator, HTC WiMAX smartphones are available for about $1,000 and the operator has sold thousands of them during the initial months of operations. This is clearly not a mass market device, but there appears to be definitely a market for it, in emerging markets as well as in developed ones. I would be interested in hearing what you think about the prices for WiMAX mobile phones. Do you think the non-subsidized $75 price point can be achieved? And if so, what are the devices that we should expect to see at that price? You can send me your thoughts at monica.paolini@senzafiliconsulting.com |
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