Entries in LTE Predictions (3)


2011's Broadband Bonanza Means New "Explorations" in 2012

While researching for a profile on Paul Bunyan Communications several months ago, I was struck by the cooperative's 60-plus years of underdog status—a fitting 2011 year-end metaphor for many of the companies I talk to across the country. There, in Minnesota, was a cooperative that organized in 1950 to connect underserved areas, and was helped along in its goal by federal legislation that sought to improve rural telephone service. Now, as 2011 draws to a close and we look ahead to what 2012 will bring, many companies I've interviewed this year are still trying to reach underserved areas—this time with broadband—and doing so is part of the larger, national plan to bring valuable high-speed internet connections to every home and business, in every community. With the year ending, these companies and co-ops are also hoping that broadband subs will help offset landline losses; this may be the last year for such a ying-yang balance, too, as broadband growth slows and it becomes less likely these adds will be able to offset the losses going forward.

A sweeping dedication to broadband will certainly continue into 2012, but boy has the game gotten more complex.Thanks to the recent detailed analysis offered by our own Cassandra Heyne, I won't use this space to parse out the specifics of federal funding for broadband or other regulatory hurdles facing rural providers. But I would like to reflect on what 2011 has meant for the rural service providers, cooperatives, start-ups, and advocacy groups I've spent the year researching and interviewing. Whether the goal was to tap into vertical markets, harness the potential of the cloud, or test out new services and platforms, without a question the name of the game this year was broadband—how to build-out fiber networks, how to increase speeds, how to offers services via broadband, how to pool resources and efforts through alliances and consortiums, how to share resources and infrastructure, how to get into the data storage market, and so on. Ultimately 2011 centered on a challenge and a source of opportunity; both are captured in the phrase I heard over and over again—“broadband build-out."

2011: Betting on Broadband

Just last week, new ceo of 3 Rivers Communications David Gibson summed up one of the most fitting characterizations for rural and independent companies. In an interview for the Great Falls Tribune, he said that, without a doubt, “Fiber is the way of the future... When you replace all that copper [with fiber] the service quality is better; you get much faster broadband speeds. You can offer IPTV. It's just good all around, it's where we need to be to position ourselves.” But Gibson went on to note the snags in building out rural broadband—threats to funding by “problems... in the mechanics” of the new Connect America fund and threats of stiff competition from satellite and wireless broadband, encroaching cable companies, municipal-owned broadband and others.

This year, I've talked to rural co-ops, independent providers, advocacy groups and consortiums in Kentucky, Ohio, Minnesota, Tennessee, Virginia, Georgia, South Carolina, West Virginia, Texas and the Dakotas, and for all of them, broadband was central to their goal of providing new services and connecting unserved or underserved rural communities. In some cases, broadband meant better connectivity for local high schools, community colleges or universities; in other cases, there were advances in telemedicine, improvements for tribal communities, or farming technologies. But in every case, the directors and spokespersons I interviewed insisted that broadband brought with it the possibilities for a changed community and more vibrant opportunities for rural residents and businesses. And they had examples of these improvements... many, many examples.

The question remains, however, do these broadband build-outs actually mean more stability for the ILECs and co-ops, many who find themselves in an increasingly competitive market? Will all of the federal dollars in broadband grants and build-outs in 2011 equal more advancements to rural areas in 2012? Will rural providers need to delve more deeply into new options like LTE and cloud services to remain relevant? Or will fiber as the “way of the future” actually mean subscriber retention and added revenue? These are all questions to investigate in the coming year, by talking to the experts on the front lines: the rural providers themselves.

2012: Building on Broadband, Exploring New Territory

Just recently we've seen announcements about IPTV and LTE—two services that are getting attention from rural ILECs and co-ops who consider them potential golden tickets. Most likely, 2012 will bring more in-depth look at what these services might mean for the independent communications provider industry—most specifically for the rural companies I talk to regularly. LTE's potential is up in the air (pun intended), but IPTV has already become a key talking point for ILECs who want to attract and retain customers in their communities. Earlier this year, we ran the numbers and found that, for the companies who disclosed that they provided video services, “their rate of decline in access lines... was sharply lower than those in the survey who did not provide data on video subscribers.”

Several of the companies I profiled to this year—Palmetto Rural Telephone Cooperative and Paul Bunyan Communications, to name two—named IPTV as central to their business strategy going forward. Earlier this month, Texas ILEC Valley Telephone Cooperative announced that it would offer a hybrid IPTV service that combines HDTV, DVR and cloud services through a single TV input and interface. And last month, Griswold Cooperative Telephone Company announced it would use its hefty $12.7m RUS loan, in part, to lay fiber that would support advanced services like IPTV.

As for LTE, it will be interesting to see what comes of the partnership between rural ILECs/ rural cellular providers and Verizon's Rural 4G LTE Program. Just last week, Pioneer Cellular (of Kingfisher, OK-based Pioneer Telephone) announced its first successful end-to-end data test with Verizon's 700 MHz spectrum, and so far Pioneer is just one of 13 rural providers partnering with Verizon for use of its LTE network. The goal, of course, is to provide LTE services in areas where Verizon does not plan to extend coverage, and, through the program, rural partners are allowed to build and operate their own LTE network, using some elements of Verizon's core network. Just as cooperatives and partnerships have helped bring fiber to rural areas, it's possible that partnerships between small, rural providers and the Big Guys could supplement existing services and retain customers. It's possible.

Ultimately the influence of LTE in rural areas remains to be seen, but it is a step toward spectrum use that so many rural providers have looked into but not developed. In my own discussions this year, I have heard numerous company spokespersons say that they were currently “exploring the possibilities” of spectrum for a variety of services, but had not made any definite commitments. Perhaps 2012 will bear the fruit of these, and many other, “explorations.”


Streaming Video Wirelessly: More from TelcoTV and My Own Recent Experience

It Works Pretty Darn Well!

Two weeks ago I attended the annual TelcoTV event in New Orleans where, while I bemoaned the lack of concrete discussion about business models and…what was it..oh that’s right, profitability…I was impressed with the technological innovations that are constantly emerging. One topic of discussion that seemed to have more depth this year than in prior years was the prospect of providing video services over wireless networks, and what it might mean for traditional video providers.

I attended a panel called “The Impact of LTE on the Video Market,” and will share here some of the more interesting comments made by speakers from Nokia Siemens Networks, Clearleap, Verivue and Envivio.…and then I’ll share my own personal experience as a brand new Verizon Wireless LTE customer and cable cord-cutter.

Nokia’s Claudio Frascoli noted that already today 40% of mobile traffic is generated by streaming video, which means that 40% of data revenue is attributable to streaming video. That translates to 20% of ALL mobile revenue attributable to video today—and yet only 9% of wireless subscribers are using their handsets for video. This points to the very large revenue potential for streaming wireless video (in his opinion), assuming the networks can handle it (in my opinion)!

The panel moderator, Light Reading’s Phil Harvey, pointed out that the wireless network in the U.S. today is already at 80% capacity, but he and the other speakers were generally of the opinion that LTE will provide the necessary bandwidth and spectrum flexibility for operators to be successful.

Frascoli asserted that the three legs necessary for successful mobile video initiatives are now in place: 1) Incredible devices – “I don’t remember what my life was like before the iPad,” 2) Content “is becoming a very good proposition for consumers” via bundlers like Netflix and Hulu, and 3) LTE “is coming.”

He noted “We need to be ready to move 1 Gig per user per day in the near future,” and pointed out that Telia Sweden is offering a 30 Gig monthly plan whereas Verizon Wireless' top monthly plan is for 10 Gigs. Frascoli suggested that operators are leaving money on the table by capping their top data consumption plans too low.

He also said that intelligent broadband management will be needed to allow providers to offer added capacity when and where needed, citing last spring’s royal wedding as an example of an event that led to dramatically higher data usage as people used their phones to watch glimpses of William and Catherine…

Matt Smith, VP of Internet Television for Envivio, said that LTE networks will provide a stable, compelling architecture for video and that the capability to offer live, linear programming is also now emerging. “Years ago, video was called “television” and we all watched together…Now video is moving; eyeballs are moving. There’s no more Prime Time, it’s My Time.” He added that operators need to adapt the network to the content, not the other way around.

Obviously the engineers (admittedly from equipment vendors, but still) believe that it IS realistic to expect significant growth in mobile video usage and that the 4G networks (and beyond) will evolve to accommodate it. But how does it really work today?

A Real World Case

As it so happens, Verizon Wireless launched 4G LTE service in my New Mexico market several weeks ago and last week, following a particularly frustrating experience with Comcast’s customer service line, I jumped in the car and broke several traffic laws to get to the Verizon Wireless store. I chose a $50 (after rebate) Mifi hotspot by Novatel Wireless and added the $80/month 10 Gig plan to my existing voice account. I was out of the store in about 30 minutes (despite the fact that this store is ALWAYS packed) and a short time later I was surfing LTE. Literally. I came home, set the new device on my desk, entered the WiFi password into my laptop and was immediately online. By way of comparison, it took two long hours to set up my cable Internet connection last spring. (A few cocktails may have been involved but that’s not why it took so long! Making all the connections, running the wires and then waiting for a customer service person to find your device and activate it is time consuming and annoying!)

Now, my daily work consists largely of monitoring news, emailing people, crunching numbers, writing articles and uploading them—this doesn’t demand a great deal of speed or data usage in general. But I also like to stream NPR news all day, listen to music on Pandora in the evenings and watch the occasional TV show or movie via Netflix or Hulu (more on my recent Netflix experience below). As my regular billing cycle was ending on Monday following my purchase Friday, the salesman told me I could (try to) use all 10 Gigs in those three days before the clock would be reset. Perfect!

Over the course of those three days I watched six episodes of Bones and five episodes of House. I also watched some random footage of Andy Rooney and some other news related video…in other words I watched as much TV as I could stomach. By Monday night I had consumed about 3 Gigs of my 10 Gig allotment; an individual episode (45 minutes plus commercials) appeared to consume about 0.3 Gigs, though some shows were less. And only once for about 15 minutes did I suffer some pausing and buffering—the rest of the video was smooth and seamless—on Hulu anyway. In other words, it worked great! I am no longer a Comcast customer—not for video, not for Internet and not for voice—and there are no dusty, ugly devices littering my living room any more (doing the Happy Dance now!!).

As for Netflix, I had recently been having some issues streaming Netflix over the Comcast/WiFi connection. I again had problems when I tried to stream a movie from Netflix over the new LTE connection. That tells me the problem is with Netflix, not the connection…and they’d do well to fix it as I signed up for the $8/mo. Hulu+ plan yesterday…a few more bad experiences with Netflix and I’ll cut that “connection” as well…

My point here is not to bore you with my weekend activities but provide insight into the consumer mentality---as well as the threat that streaming video and LTE does in fact bring to wired video providers. Yes, it’s early days. Yes, the new 4G network isn’t loaded up. But I’m getting six Gbps speeds on average and all the functionality I demand. My latest Comcast bill was $163—that included three on-demand movies and my other video/Internet services. But considering a big chunk of that video cost is related to sports programming and other channels I didn’t watch—all I really wanted was movies on demand and the DVR for a handful of shows—I will now be paying about half as much per month for just what I want.

And at the end of the day, that’s what the new media/communications industry is about: My Time, not Prime Time. Microcast, not Broadcast. Recall in the nineties that mobile voice service was expensive and not always reliable…but eventually the providers and engineers fixed those issues and we all know what mobile voice did to wired voice service. The same is coming in broadband and video…it won’t happen over night, but I believe it will happen…and some day Apple or Google will own the rights to the NFL or MLB and you’ll order and stream the games from their stores…maybe over a 4G connection, or maybe over fiber, but it won't be like it is today. You watch.


Global LTE Subscribers Predicted to Top 300m by 2015

Development of Profitable Ecosystem will Take Time

A new report from Wireless Intelligence predicts that global connections to 4G LTE networks will reach 300m by 2015, representing 4% of all global mobile connections.  Juniper Research predicts that global LTE service revenues will top $200b by 2015.

"The Introduction of LTE Networks reflects the move the telecoms industry is making towards delivering cloud-based and converged services, and an improved user experience," said Joss Gillet, senior analysts at Wireless Intelligence and author of the report.  "Our latest forecasts show that LTE is being adopted by operators across the globe, but the pace of migration will be faster in countries where mobile broadband is on the political agenda and favorable regulatory developments are taking place - generally with regards to spectrum.  However, creating a profitable ecosystem around the networks will take time and it may take a few years for LTE services to live up to the hype."

"Subscriber uptake of LTE is initially being driven by demand for data-centric mobile broadband services, typically accessed via USB dongles and embedded devices for which operators will charge a premium," said Gillet.  "We predict that the introduction of voice over LTE (VoLTE) by around 2012 will mark the 'tipping point" for mass-market LTE handset volume shipments, which will accelerate LTE connections growth.  However, premium price points and limited availability means that we will see low LTE handset penetration in the short term."