CommsDay Magazine August 2014 edition

August 2014 • Published by Decisive • A CommsDay publication

SATELLITE BOOM

A bust in the making?

AFRICAN SATELLITE

On the up and up M2M

The case for dedicated networks PUBLIC SAFETY

LTE to the rescue?

ROAD TO RECOVERY

A chat with new Vodafone Australia CEO Inaki Berroeta

COMMSDAY MAGAZINE

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4 Cover Story

Vodafone CEO Interview

Published several times annually.

CONTRIBUTIONS ARE WELCOME GROUP EDITOR: Petroc Wilton FOUNDER: Grahame Lynch COVER DESIGN: Peter Darby WRITERS: Geoff Long, Richard van der Draay William Van efner, Grahame Lynch, Tony Chan ADVERTISING INQUIRIES: Sally Lloyd at sally@commsdaymail.com EVENT SPONSORSHIP: Veronica Kennedy-Good at veronica@mindsharecomms.com.au ALL CONTENTS OF THIS PUBLICATION ARE COPYRIGHT. ALL RIGHTS RESERVED CommsDay is published by Decisive Publishing, 4/276 Pitt St, Sydney, Australia 2000 ACN 13 065 084 960

Features 9 A satellite bubble?

14 Why satellite is still Africa’s best chance 17 What is the best network for M2M? 19 LTE creates an emergency for TETRA 21 Smart cities 23 The cloud and the network

INTERVIEW WITH VODAFONE AUSTRALIA’S NEW CEO

Consolidating a comeback Three years ago, Vodafone Australia was on the ropes, suffering massive subscriber losses in the wake of high-profile network outages and customer care problems. In 2012, the company brought in turnaround king Bill Morrow as a new CEO, charged with mapping out a road to recovery; this year, Vodafone Romania veteran Inaki Berroeta has taken over from Morrow to complete the comeback. Berroeta sat down with CommsDay group editorial director Petroc Wilton to lay out his vision for the company.

CommsDay: Where would you describe where Vodafone is right now?

Inaki Berroeta: My first take on the company [is that it’s] a business that is recovering, with an amazing job done last year in terms of rebuilding our network. But there’s still a little bit of history in terms of the perceptions that some customers have about the problems that the company was having a couple of years ago.

Today, the situation is that we are sitting on a very good network and we need to work on convincing customers to try it, and to see it as an alternative to what they’re currently using – and at the same time, to make sure the [customers] who’ve stayed with us get fantastic service, [so] we are able to keep all of them with us.

The company, in the last two years after all the problems that we had, went

through a significant loss of customers; last quarter, we still lost a few customers... but now we are in a position where we are very close to getting some traction in the market again.

We’re not like we were two years ago, or last year, losing hundreds of thousands per month.

I also think that we still have work to do, especially in

the commercial capabilities of the business, and that is what we are concentrating on; better service, better points of sale in more places. We are present in many areas where we have new network but... we can still not commercialise because we don’t have a commercial presence, our network presence is much larger than our commercial presence. And we need to

match that. That will be, really, the war that we’ll be [fighting] this year.

CD: The smartphone market in Australia is well saturated... if you want more customers, more or less, you have to take them from a competitor. Can you expand on your strategy for doing that – any particular points of weakness that you think are ready to exploit, or any particular Vodafone strengths?

IB: As you said, this is a saturated market... but at the same time it’s one that, for the last couple of years – because we were off the market – did not have a lot of alternatives for customers. That has changed; and it has changed at a time when customers have different demands in terms of how they’re using their phones.

This is [now] the data world of the smartphone.

These two things happened at the same time, which means that there is an appetite for customers to really consider how they’re using their mobile phone, what is their relation with their operator and how much value they’re getting out of it. You see many operators are still here talking about ‘equivalent dollars’, but that only refers to voice, when this is no longer a voice world.

And you see how some people are falling behind; it is important to understand that a lot of customers will be challenged, a lot of customers that... are really enjoying the capabilities that their smartphones give them are really discovering how those capabilities require a different type of relation with operators.

And that is where Vodafone very strong, because not only are we committed to developing a good network, we’re committed to developing performance and quality, especially, in data. And we also bring that to our contracts, where we are providing more data than any other operator at a very good value – and not

“We are the company for the heavy mobile data users who demand high performance, with good value, on their smartphone. That’s how we’re going to position our brand.” only that, but because we know some customers are still reluctant [to join Vodafone] because of our [historical] experience, we give them a 30day money-back guarantee.

Nobody uses it! But it’s good to have it there.

CD: If you’re offering more data for the same cost... you are essentially driving down the cost of data in the market. How do you strike that balance between keeping that competitive edge, but still keeping a focus on profitability?

Your EBITDA actually came up in the last quarter, so clearly that’s going in the right direction.

IB: There are several things to look at. One of them is that 4G is a technology that enables us to provide more data with a lower cost structure, that’s the reality; the technology’s there to provide faster speeds, but also to make the cost to carriers more affordable. We have a very good spectrum strategy in terms of how

we’re managing [it], so we’re very confident that what we’re offering in terms of data is something that we can afford and manage and make profitable. You will see the profitability of the business will be very healthy.

But at the same time, we want to be very good value for our customers; and the demands of the customer in this market have changed dramatically. There are still plans in the market that have 200MB – which is the amount of data it takes you to do a speed test on 4G! – which is something that will have to change. And I think that we understand what the current usage [patterns] of our customers are better than our competitors, and we’re trying to make that into a package that provides value to our customers and is also good business for us.”

PW: What’s your vision for what the Vodafone brand in Australia should stand for – perhaps in a couple of years?

IB: Our company is aiming at the customers that use a smartphone, especially in metro areas. If you love your smartphone, if you’re not going to rural Australia, you want to be on the Vodafone network. That is how we want to position the company: we are the company for the heavy mobile data users who demand high performance, with good value, on their smartphone. That’s how we’re going to position our brand.

We want to build, also, not just on marketing communications but on how we deal with our customers, in terms of

transparency; make things really simple and clear to the customers. What you see is what you get... no tricks, no catches.

We want to be very transparent there, and we are working a lot on customer experience; really focusing the company, especially, on the customers that we have today, and making sure the service they get is top. That is where our brand is going.

CD: You mentioned that you’ve got network, now, in places where you’ve got no commercial presence and that you’ll be building out more points of sale. Can you expand a bit on that?

It’s very simple. If you go to Newcastle, we have a fantastic network, [but] our presence in terms of points of sale is really small. So that’s something we need to fix. Newcastle has a population of half a million people – two stores for half a million people is not enough!

If you look at the main cities – Melbourne, Sydney, Perth, Brisbane, Adelaide, we have more or less good coverage, though I think we could do a little better in Perth. But then when you go to the next twenty cities, our presence is quite limited. Two years ago, we didn’t really have a network in those cities; today, we do have a very good network in those cities. And those are areas where, with a combination of online and retail presence, we need to be more reachable for the customers.

CD: Any particular demographics, or business sectors, that you’ll be concentrating on?

IB: Our average customer is a

woman in her late thirties... [but] we have a pretty open demographic. We have very young people but we have a lot of people in their fifties and sixties as well – we have customers everywhere. What we’re going to [target] more is independent, self-employed [customers]... entrepreneurs, home-office businesses, SMBs.

“Our average customer is a woman in her late thirties... [but] we have a pretty open demographic. We have very young people but we have a lot of people in their fifties and sixties as well” We’re going to work in the business segment, but mostly with customers [who have] only a few lines. And the other area we’re working on is companies who have their people bring their own phones... so rather than have a contract with Telstra and pay them a fortune, they’ll just give each employee an allowance and the employees bring their own devices.

We have a dedicated call centre in Tasmania for these customers, and I think that also makes a difference; a lot of customers prefer to talk to people in their own cultural context.

CD: The Red roaming package was an initiative that really capitalised on the international strength of the Vodafone group and, I guess, also goes to your point that the way people want to consume data is different now.... are there any other ways in which you’re hoping to bring the resources of the larger group to bear?

IB: Of course, we have the benefit that we have very strong shareholders... we have the Vodafone group on one side, and Hutchinson on the other. And I think the advantage that we have by having these two groups is that on one side, we have access to a lot of expertise and best practice in many, many different markets, and a lot of the work that’s been done here in technology around the network has been possible because we brought resources from Hutchinson, and we also brought resources from Vodafone, and we built a very good network in a very short amount of time. We’re able to provide these roaming agreements because we have the roaming network of Vodafone, we also have the roaming network of Hutchison, and this enables us to have very competitive offers for Europe but also for Asia.

The other thing is the availability of what other markets are doing – how they’re doing prepaid in Indonesia, how they’re doing prepaid in Italy – being able to learn from different markets and pool resources is a huge benefit of having these two shareholders.

CD: Vodafone Romania isn’t completely dissimilar to Vodafone Australia in terms of company size, although the revenues are different. Was there anything in your experience there that you think can be brought to bear on your challenges in the Australian market?

IB: Yes, revenues for Vodafone Romania were a little over A$1 billion. It’s a very

low-ARPU market... the company there had over eight million customers. It was big in enterprise – about 40% of revenues were coming from enterprise. And in terms of employees, it was a similar size; about 3,500.

There are many [learnings], of course, that you accumulate from experience. What I think was good there was some of the work that we did around our brand, some of the work around commercial efficiency as well – a lot of the things we did there around retail, and how retail is managed, I think we can use here as well.

CD: You’ve said that data, and data usage, will always be your main focal point – but that you’ll always offer speeds at least equivalent to competitors, if not better.

And right now, at least, you have the spectrum to do that in some of the cities. But Telstra is... capitalising on its future spectrum advantages; they invested in [digital dividend] spectrum, they’re bringing Cat 6 devices to market, they’re obviously positioning as a future speed leader. Can you give more detail on how you answer that, or at least prepare for it?

IB: The speed is a matter of, on the one side, devices – and Telstra does not manufacture devices, so whatever we can bring to the market everybody can buy on eBay. And I can guarantee that Vodafone can buy a lot more phones than Telstra! I think it’s kind of a market gimmick.

If you look at the way LTE is developing, a lot of it is around carrier aggregation or how you’re able to manage that spectrum; if you look at

the amount of customers they have and we have, the amount of spectrum they have and we have, I really don’t see a lot of competitive advantage. I think they will be able to provide fast speeds; when manufacturers deploy more technology, they will be improving their speeds – but so will we.

“We believe that universal service should ensure choice for customers, not just service... and that’s something that is not happening.”

CD: Can you talk a bit about the regulatory landscape? Vodafone has, for some time, been trying to raise awareness around what it positions as [mobile] competition issues in rural areas... [strategy and corporate affairs director] Dan Lloyd has made it very clear that Vodafone’s not out to change the past, but rather to shape policy and regulatory policy going forwards. Is this an area where you’ll personally be very active?

IB: Definitely. We believe the market has some areas that could be fixed to enable more competition. We’re not asking for more regulation; we’re asking for better regulation. Many times, the regulator exists not because it’s going to take a particular action but because by its existence, it triggers some market action that is beneficial for the market and for consumers. And that’s the part that we think is important, and that’s why the regulator needs to be there to ensure a better marketplace.

Today, Australia is a market that has some structural issues

that probably make competition difficult. And that means less choices for consumers.

There are many places in Australia where Telstra has built an infrastructure using public funds, and this infrastructure can only be used by Telstra customers.

We believe that universal service should ensure choice for customers, not just service... and that’s something that is not happening. We don’t agree with public money being used to create differentiation points.

Another thing is, where Telstra has monopolistic infrastructure, we need to ensure that there is a reasonable commercial offer for everybody.

For example, transmission costs in this market are still a big issue.

CD: But you’re talking about the way things are run going forward, not going back and re-examining existing arrangements?

IB: No. I think it should be a forward-looking exercise.

CD: Are there any areas in which you’d like to reinforce your staff, either at executive level or down in the trenches?

IB: The main changes are around building commercial capabilities; most of those changes are made with internal talent, and sometimes, when we think it’s appropriate, we’ll look in the market as well. It’s a very normal process in that sense. And I also think we’re quite lucky in terms of the talent that we have – we’re a good employer... and people are seduced by the challenge!

Flying high The satellite sector is awash with investment money, with a new generation of high-throughput spacecraft poised for launch over the next two years. But is there a bubble in the making? Geoff Long talks to some leading industry figures to find out

A

ndy Start, president of Inmarsat's global government business, summed up the thoughts of many when he suggested that there's never been a more exciting time to be in satcomms. Speaking at the Australasia Satellite Forum in Sydney, he described “something of a renaissance in the industry.” Hyperbole aside, there is evidence that the sector is about to enter a new phase, with a number of highthroughput launches set to redefine what satellite can offer in terms of capacity and price.

Inmarsat has already commenced the launch of its next generation service Global Xpress, which promises mobile broadband download speeds of up to 50Mbps.

However, it won't be alone. The likes of Intelsat, Thailand's iPSTAR, Optus, SES, NewSat and newcomers Kacific Broadband and O3b are all in various stages of launching new satellites and services that they believe will shake up the capability available in the Asia Pacific region.

NewSat’s Jabiru

“In terms of what that means for the customer, it's starting to make a real transformational change in terms of how much capacity people can have and at what price. How much mobility they can have with how much weight,” says Start. “The high-throughput satellites are starting to make it possible to have very, very high data rates into really quite small terminals. That's going to really transform the accessibility of the industry.”

Start notes that the first of the satellites forming Inmarsat's Global Xpress network was launched last December, with global coverage expected by the end of 2014.

It's part of a US$1.6 billion programme and, according to Inmarsat, marks the first time a commercial operator has utilised Ka-band radio frequencies to deliver a global satellite service. The first spacecraft currently sits over the Indian Ocean re-

gion and provides coverage on the west coast of Australia.

According to Start, funding for the programme wasn't an issue.

“Satellite still represents a very interesting long term investment where the capital markets can put an investment in and see a return over 10 or 20 years,” he says, echoing the thoughts of a number of satellite executives on the current state of funding.

Terry Bleakly, Intelsat's regional VP for Asia, is similarly buoyant about the investment environment for satellite. He points out that Indonesia's state-owned Bank Rakyat Indonesia (see Sidebar “Banking on

Satellite”) is even going so far as to invest in its own satellite – believed to be the first time a bank had gotten into satellite directly. “So if banks are starting to buy satellites now and going into that business, it must be a good business,” he quips.

Intelsat, which celebrates its 50th year this year, has also been active in the region of late, having launched five satellites in Asia Pacific in the last three years. The global operator has its own high-throughput play – Epic – which it claims will be capable of delivering between 30 and 60 GB of throughput.

“The first two Epics that have gone up had forward orders or over

Banking on satellite One of the most interesting satellite ventures announced in Asia Pacific of late is by Indonesia's state-owned Bank Rakyat Indonesia, which wants its own satellite to run and expand its banking operations across the archipelago. Should it go ahead, it will be the only bank in the world that owns and operates its own satellite.

Already, BRI has signed agreements with US satellite manufacturer Space Systems/ Loral to build the satellite and with France's Arianespace to launch it, with the launch expected in 2016.

BRI provides services to more than 50 million customers and already uses satellite communications to connect more than 9,800 conventional outlets as well as more than 100,000 e-Channel outlets. BRI said the scale of its operation requires support equal to 23 satellite transponders. It currently leases from nine satellite service providers in Indonesia but expects its needs to increase in the future.

BRI will utilise an existing Indonesian ITU satellite filing at the 150.5o E orbit location for the service, and noted that maintaining the continuity of the filing was one of its aims. Some transponders of the service will be specifically allocated to the interests of the government of the Republic of Indonesia.

Known as BRIsat, the service will reach Indonesia and ASEAN countries, East Asia (including most of China), most of the Pacific and stretch down to Perth in Western Australia. It will have 36 x 36MHz C-band and 9 x 72MHz Ku-band transponders.

In addition to the use of BRIsat for supporting BRI’s operation, some of the transponders will also be used by the Indonesian government for direct communication with or between Indonesian representative offices in the countries within the satellite service coverage, notably China, Hong Kong, Japan, Cambodia, South Korea, Macau, Malaysia, Myanmar, Taiwan, Thailand, Philippines, Singapore, Vietnam, Papua New Guinea, and Australia.

BRIsat will be owned and self operated by BRI, which pointed out that the encryption process and the control of channels will be completely managed by Indonesian institutions.

US$800 million, so we see the demand,” says Bleakley.“We think our Epic play is a very innovative play.

It's a play that's for carrier grade connectivity. We're not talking about broadband to the home – it's providing high throughput capacity at the service level that will provide telecommunications companies and media companies the ability to get to points that they couldn't at a cost per bit that they couldn't get before.”

Asia's first real high-throughput satellite play – the IPSTAR system launched back in 2005 by Thailand's Thaicom – could also be about to reignite its efforts in the HTS space.

Phil Cross, sales director for IPSTAR Australia and New Zealand, says there are plans afoot for an IPSTAR-2, with financing unlikely to be an issue.

“We haven't experienced any major problems securing finance for Thaicom-6 and Thaicom 7 is underway. As long as you've got dishes pointing at roofs in the broadband industry it's a pretty good bet for a bank or an investment entity to put some money into that,” he suggests.

“We're at the point now where the business case warrants we can start the project for an IPSTAR-2 launch.

We'll probably start that project late 2015, early 2016.”

Ahead in the launch queue will be new satellites from Optus, O3b, and NewSat with its Jabiru-1 bird.

NewSat had a notably difficult time to finance its project, even going so far as to halt trading on the Australian Stock Exchange for a number of months while it shored up its investment backing. However, the company put such challenges down to being a relatively new player in the industry. In the end it raised the US$600 million needed for the project, which will launch next year, with the majority of funding coming from the US Export-Import Bank

Kacific’s Pacific footprint and its French counterpart, the Compagnie Française d'Assurance pour le Commerce Extérieur.

NewSat CTO David Ball says that despite the company's financing struggle, it was still a good time to develop new projects. “The investment community is still very positive on the satellite sector. They've seen the tremendous success stories of the past, some of the private equity investors and how that's travelled through the market. We've found it a little heavier here in Australia, where the investment community is still very focussed on digging up rocks and selling them to China one boatload at a time,” Ball explains.

Hoping to follow NewSat's lead in getting a project off the ground for the first time will be newcomer Kacific Broadband, which plans to launch new Ka-band satellite capacity over the Pacific region at the end of 2016. Kacific CEO Christian Patouraux claims that the market is currently still receptive to new ventures.

“What we see is there is a lot of money in the market for investment in satellite. If you offer a good differentiator, a good value for investors, there is definitely an appetite around the world, especially in this region,” Patouraux says.

Kacific Broadband only went public with its plans in December last year. It wants to launch Ka-band HTS capacity that specifically targets

the 40 million people in the Pacific including the Pacific Islands, New Zealand, eastern Indonesia and Papua New Guinea.

According to the company, the estimated total potential demand for bandwidth from Pacific Island states is 44Gbps. Today just 20%, or less than 10Gbps, of that demand is being met. Kacific plans to sell wholesale bandwidth and anticipates that telcos and ISPs will offer it to end users at speeds of up to 10Mbps and at price points as low as 5% of current costs. It expects to commission its launch vehicle and payload this year and to provide broadband services to

“Now everyone’s gone crazy again because there’s so much money around and there’s probably more capacity coming into the market.” the region by late 2016.

“We are the new kid on the block. When we set up this business we saw a substantial hole in the market in the region – specifically the Pacific nations and the Pacific islands.

This market has probably the highest discrepancy between supply and demand per capita. It's not a very large market but it's a very interesting market that craves for bandwidth. So we decided to address this market with a high-throughput satellite,” Patouraux explains. However, all of the activity and planned capacity begs one obvi-

ous question: is there a coming oversupply in the market? One person that will go on record to suggest a potential bubble in the wings is Glen Tindall, VP Asia Pacific for global operator SES. While SES isn't directly launching a HTS play in the region, it is a major shareholder in O3b, which has launched the first of 12 satellites that will provide highcapacity across Australia and much of the Pacific.

According to Tindall, the most likely scenario is that the extra capacity will get consumed – eventually – but there could be an oversupply in the short-term.

“We all went nuts in the early 2000s launching satellites and then it was we learnt our lesson and it all went quiet,” Tindall says. “And now everyone’s gone crazy again because there’s so much money around and there’s probably more capacity coming into the market.”

Tindall notes that SES has financed 13 satellites over the last three years, with money raising not an issue. Despite this, he sounds a note of caution.

“We spend a lot of time and effort getting the financials right. At the moment, I think with the world awash with money and the economy pretty good, it's not that hard to get funded. But I think when the tide goes out we'll see who's swimming naked.”

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African telecoms looking up With most of the inland African continent lacking high-speed terrestrial connectivity, many local service providers are looking to satellite. William Van Hefner reports.

W

hile the majority of the world hurries to bury its newest telecommunications infrastructure underground, the bulk of service providers in Africa seem to have nowhere to look but up.

Africa presents a unique challenge for telcos, wireless providers and ISPs attempting to provide international voice and broadband connectivity to their subscribers.

While a number of cities on Africa’s west coast and even a handful on the east coast have recently been linked to the outside world via undersea fibre-optic cables, the rest of the continent remains largely isolated and untethered.

Aging copper networks dotting the landscape are quickly being abandoned for cheaper and more reliable forms of wireless phone service by consumers. Direct fibre connections for end-users in the government and business markets are also being slowly rolled out. Although these technologies certainly have the potential for delivering high-quality voice and data service to customers, connectivity beyond the reach of the local loop

remains a costly and troublesome proposition.

In order to connect to international voice and data networks, telcos and ISPs have relied upon fibre-optic connections to the nearest subsea cable or more traditionally uplinked traffic via satellite. Unlike on most continents though, Africa’s geography and scattered population have combined to make delivery of service via satellite often the only viable economic option.

Relaying internet traffic via satellite also comes at significant cost in price and speed.

Extending fibre-optic connectivity hundreds, or even thousands, of kilometres inland is not only more expensive, but less reliable than using a fixed satellite service, which rarely suffers from service outages.

As in the rest of the world, voice traffic carried via satellite tends to be both expensive and come with inherent limits to quality. With fixed satellites being in a geostationary orbit 36,000km above the earth, latency is

a serious issue while trying to carry on a voice conversation. Under the best of circumstances, the speed of light itself will introduce a delay of more than half a second between calling parties – and deployments in Africa rarely enjoy the best of circumstances. The problem is often compounded by internal network latency or the need for more than one satellite “hop” to relay the call.

Relaying internet traffic via satellite also comes at significant cost in price and speed. Besides having to contend with the same latency issues that plague voice traffic, internet traffic of any speed approaching ‘broadband’ status is severely restricted due to the limited amount of bandwidth that C- and Ku-band satellites have available to them. By the time a carrier’s service actually reaches the end-user, it is typically reduced to speeds more associated with analogue dialup modems than with broadband access.

While VoIP may be driving down the cost of international voice traffic in many markets, African carriers are largely immune to such competition

due to the latency issue. Even in markets where carriers and ISPs have access to the newest subsea fibre networks, the enormous distance that IP packets must travel make VoIP unreliable at best in many countries, and certainly not viable for critical business or government communications in countries with the most serious latency problems.

Although the number of satellites being launched to serve Africa is continuing to climb, with bandwidth consumption roughly doubling on the continent each year there is little chance of supply exceeding demand anytime soon. Wireless providers offering modern smartphones have largely driven the market for internet bandwidth on demand, but with no single carrier consuming enough bandwidth to justify the launch of its own satellite a virtual oligopoly has flourished, keeping competition to a bare minimum and prices sky high.

Satellite costs in some countries have gone down by roughly half in recent years, but those cuts have largely been in response to the addition of newly-deployed fibre-optic cables rather than competition between satellite providers themselves.

There does seem to be some hope on the horizon. O3b (see previous article) last year launched the first four of what it eventually hopes to build into a fleet of 12 or more medium earth orbit satellites targeting Africa and the rest of what it considers underserved regions of the world. Backed by investors such as Google, SES and HSBC the company has already secured deals with a number of fixed and mobile operators in Africa to backhaul traffic directly from local uplink facilities to its satellites.

One great advantage that O3B has over traditional satellites with geostationary orbits is an enormous reduction in latency. By occupying an orbital slot only 8,000km above the earth, during its closest passes it can achieve latency delays nearly 5x lower than that of other satellites. Another advantage is bandwidth. O3b

labels itself as a “fibre in the sky” service, due to its ability to deliver up to 84Gbps via Ka-band, which it plans to make available once four additional satellites are launched in July 2014.

While O3B is not a publiclytraded company and much of its financial details are secret, initial pricing is reported to be somewhere between the cost of direct fibre connections and fixed satellite services. This makes the company’s product a much easier sell to telcos and ISPs furthest from Africa’s coastlines. Latency performance versus undersea fibre-optic delivery would also tend to favor countries in the southernmost regions of the continent, where IP packets must travel the greatest distances.

The majority of fibre deployments continue to target cities along Africa’s coastlines, with no plans in sight for anything resembling a coast-to-coast fibre-optic route.

One potential downside of the service is that the low cost of launching O3B’s relatively small and inexpensive satellites into a medium earth orbit tends to drive up the cost and complexity of hardware needed on the ground.

A minimum of two satellite dishes with the ability to track each satellite as it travels at nearly 19,000 km/ h around the earth are needed at each customer location. Unlike fixed satellite dishes, tracking dishes are more costly and difficult to maintain reliably due to their use of moving parts. While these expenses will not likely have much impact on large carriers, it may make deployment by smaller ISPs and wireless carriers impractical.

What other options may be on the horizon? Google, which is also a major investor in O3B, is currently conducting trials on something they refer to as “Project Loon”. What lit-

tle public information has been made available about the project indicates that it will utilize a number of high altitude (about 32 km) balloons to deliver wireless internet service directly to consumers on the ground using an as of yet unspecified technology or frequency band.

The company has already conducted successful trials of the technology in remote portions of New Zealand and has indicated that Africa will be one of their primary targets of deployment, assuming that the project ever makes it beyond the trial phase. The goal is to eventually provide service worldwide, which would require what Google estimates to be “thousands” of the company’s floating wireless platforms. The project would also require an unknown number of uplink facilities around the world to link remote users to the rest of the internet.

But while Google puts its “poor man’s satellite” through real-world testing, the odds of the project changing the current dynamics of the African telecommunications marketplace anytime soon are slim, at best.

For the immediate future, fixed satellite service still looks to rule the air with O3Bb perhaps taking a small bite out of the satellite data market. The majority of fibre deployments continue to target cities along Africa’s coastlines, with no plans in sight for anything resembling a coastto-coast fibre-optic route.

With a growing, redundant supply of network connectivity in the way of undersea fibre continuing to be deployed, those living along Africa’s west coast in particular are already beginning to see incredible benefits in the way of increased internet speeds, reliability and reduced cost. But for landlocked counties on the continent, as well as for those who reside well-away from any coastline, it would seem that the only hope for the moment is to continue to look skywards.

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How to network M2M With hype building around the Internet of Things, machine-to-machine communications technology is shaping up to be big business – and telcos around the world are looking for a piece of the action. But will today’s cellular networks dominate the market, or are low-power, purpose-built M2M nets a key part of the puzzle? Petroc Wilton reports.

T

he Internet of Things – a state of all-but-ubiquitous connectivity between everyday devices, from fridges to cars to water meters – is coming. Telcos around the world, from BT to AT&T to Telstra, are investing in machine-to-machine communications; some, like Telstra, are looking to the sector to provide a new wireless growth area in markets where traditional consumer mobile is heavily saturated.

But while traditional end-to-end telco infrastructure is well-suited for certain M2M applications, a different ecosystem of network suppliers, owners and operators is on the rise, specialising in low-power, often longrange networks.

Something like a connected car, which provides plenty of onboard power for traditional radio kit and might need high and sustained throughput for downloading map data or entertainment content, might fit well with existing 3G or 4G networks. On the other hand, widely distributed networks of sensors on, say, water or power meters need to send only very small amounts of data per sensor at less frequent intervals – but may need to run for months or years on a single battery charge, That’s where companies like Sigfox, Neul, Truenet and Taggle come in. Based variously in Europe, the US and Australia, each develops specialised hardware – often designed to run independently of existing tele-

coms networks – for low-bandwidth, wide-areas, very power-efficient radio nets. A whitepaper from Machina Research, commissioned by Neul, suggests that Low Power Wide Area networks “have the potential to connect up to 60% of devices in 2022” – of a total 20 billion total connected devices forecast by that stage.

“It comes down to fundamental physics,” says National ICT Australia technology strategist Dr. Dean Economou. “With wireless, if you want a lot of bandwidth to go over a large distance, you’ve got to have lot of power. And what’s happening with LTE networks is that we want to have a lot of bandwidth, we want good coverage, so if you don’t want to use a lot of power, you’ve got to make the cells quite small...that solves the problem of us having indi-

“A different ecosystem of network suppliers, owners and operators is on the rise, specialising in low-power, often long-range networks.” vidual devices with high bandwidth that need to move around. But if you look at.. M2M, typically these things are sensors, or they’re doing some sort of telemetry... for those sensors, there’s not a lot of bandwidth [required].” “[Some] of those sensors are fixed

somewhere, so they can probably connect up to a power supply fairly easily, or maybe you run it on solar energy... and it probably does use the GSM system. But what happens when you’ve got hundreds, or thousands, of sensors on a structure like a bridge or something, or structures in remote areas that you’re trying to monitor, and you want them all to talk to each other? Do you wire them all up with high-powered radio devices, or do you come up with something very low-power, with batteries that last years and years [or that can be run off] solar, or something like that?”

“GSM, 3G, 4G; those things use quite a bit of power, up around a watt or something. Even the old feature phones, you might [only] get a few days out of [a single charge.] So that tech... is probably not a great solution when you’ve got thousands and thousands of low-bandwidth devices that want to talk to each other, or talk to something else... [where] you don’t really want to have mains power. If you are going to put batteries out there, you want to make sure that they last for years, and years, and years.”

Chris Andrews – CEO of Taggle in Australia – agrees that one size does not fit all. “Wi-Fi and Zigbee are... great radios in their own right, but they’re really designed around machine-to-machine networking where there’s a bunch of power

sources for machines close by. You network a building, it’s beautiful; you try and network a couple of square kilometres, it gets tricky; once you try and... is network large areas of towns, it’s almost impossible,” he says. “Frankly, the network cost just goes through the roof. It’s designed to do something very well, which is two-way communications of large amounts of data; it’s completely not designed to send small amounts of data at high reliability in an uncontrolled environment. For things like water metering, gas metering, temperature sensing, you have no control where the radio is, so you’ve got to have a lot of capability in terms of range in that radio. Mobile technologies are even more extreme. They’ve got great range, but they’re designed around high data-rate, high reliability two-way comms, and there’s a very simple rule – which is the further you want to send something at the same power level, the slower you’ve got to send it.”

“We fundamentally believe there’s a network layer missing, which is what we call low-power long -range networks and what Europe is now calling low-power wide-area networks,” adds Andrews. Taggle’s own network uses completely independent transmitters and receivers, in 900MHz class licensed spectrum, which Andrews says the firm is ‘extraordinarily efficient’ at using.

It’s in ongoing discussions with government and utilities about the possibilities of dedicating spectrum for very low bandwidth comms, and also with local regulator the Australian Communications and Media Authority about the possibility of using small amounts of guard band spectrum – which, says Andrews, Taggle is sufficiently low-power to use.

One of its tags will transmit hourly on an AA battery for about twelve years. “The bulk of the economics on the device side is about battery chemistry, not about physics!,” says Andrews, adding that a single Taggle receiver will cover an area that could take up to 1,300 repeaters in a com-

parable traditional mesh networking technology to cover.”

If such specialised low-power network hardware is going to be a major part of the internet of things going forward, though, the question for telcos is: should they partner with players in the growing LPWA space, or build their own solutions to compete against them?

While Taggle is currently not working directly with telcos, Andrews “absolutely” sees a place for partnerships – because the overarching IOT market will have a place for both high-bandwidth, secure path M2M links suited for high-end mobile networks, and for specialised

“The bulk of the economics on the device side is about battery chemistry, not about physics” lower-power connections. “It’s completely logical... the mobile phone space and the RFID space is where a huge amount of M2M growth is going to be, there’s a bunch of things like vehicle tracking which are perfect for mobile,” he says. They’re completely complementary; you could roll out a Taggle network into a mobile phone operator’s network very fast at low cost... if you go to Europe, you’ll see 2-3 major technologies being developed in this space in partnership with telcos.”

In the UK, for example, British Telecom has been working with Neuel on trials of the latter’s NeulNet system – using white space spectrum and promising very long battery life for terminal modules. “The Internet of Things market has huge potential, but existing short-range and cellular networking technologies are unable to meet the requirements of many applications we see,” BT Wholesale mobile strategy and portfolio development director Mark Harrop has been quoted as saying. “A networking technology that can provide deep indoor coverage, last for many years from a single battery, is simple to

use, and comes at the right price point is essential for realising the true potential of the IoT.” Not every telco, though, is in a rush to partner with LPWA players on M2M. In Australia, Telstra is looking to push M2M revenue back to double-digit growth – but, at least for the moment, M2M director Mike Cihra says it’ll stay focused on what it can do with its conventional cellular network.

“Right now, our focus... is still pretty grounded around the business of using our existing Next G and existing LTE infrastructure for deployments. It’s not a firm or committed position; if there were for any reason an important opportunity for us to pursue as it related to alternate types of network capability, I think that’s something that we would consider,” he says.

“The majority of our services today are on our 3G, or Next G, networks; we’re starting to see some very specific interest from customers as it relates to LTE, and those customers are typically coming from automotive, [which] I think is the most important sector looking for LTE support for business,” he continues. “I would say that what’s in cellular right now is the anytime, anywhere connectivity requirement; whether it’s things that are on the move, in terms of a truck or a trailer or a car, or whether it’s things that are deployed in very large quantities independent of a manufacturing campus environment; things around vending machines, or infrastructure to support companies that are, for example, in oil or gas, or utilities... the vast majority of our deployments are... someplace with access to power. We are starting to have some asset-tracking devices now that do come with fairly significant long-life propositions around batteries, that could [have a lifespan] in excess of six months to a year; but by and large, the vast majority are somewhere where they’re power-assisted.”

TETRA’s own emergency LTE is muscling in on the lucrative mission critical communications sector currently dominated by public standards such as TETRA. Already, there are plans in the UK to shift all the country’s public safety communications requirements to a commercial LTE network environment. At the same time, a number of public safety agencies are beginning to explore the possibility of integrated 4G into their private mobile radio networks to support increasingly demanding data applications. Tony Chan reports.

E

arlier this year UK Broadband, a company owned by Hong Kong telco PCCW, demonstrated a proprietary wireless system from Huawei running so-called enhanced LTE in the UK. The exercise was designed to show UK authorities that the eLTE system was a viable replacement for the existing terrestrial trunked radio (Tetra) network serving the country’s emergency services, a network which the government plans to decommission starting in 2017 in favour of a new Emergency Services Network.

UKB aims to use its considerable spectrum holdings in the UK – 124MHz of TDD spectrum in the 3.5GHz and 3.6GHz bands – to secure the deal for the ESN in the UK, a potentially lucrative contact worth up to £7 billion over 10 years.

The official tender for the UK’s next generation ESN is expected to begin this summer with the replacement of the existing Tetra infrastructure as early as 2017. All of the UK’s mobile operators are expected to participate in the tender.

The UK’s complete replacement

of the existing network with an unproven LTE deployment for mission critical public safety communications has raised some eyebrows across the industry, to say the least.

Helge Lyngstol. “If you, in the future, are going to use commercial infrastructure, something has to be done with it, and I think that is a long, long way to go.”

When ESN’s existing operator Airwave spoke at the Critical Communications Europe 2014 event, few believed the scale and condition of the project was achievable in the tight time frame. “It’s impossible,” remarked Norway’s directorate of emergency communications Tor-

Lyngstol was referring to core PMR services that are currently not supported by standard LTE networks. Performance features of systems like Tetra include low latency voice connections, robust reliability, push-to-talk and group chats, and en-

hanced security and prioritisation.

While mobile standards bodies like the 3GG are discussing some of these features, and some are already in the standardisation process – such as relay and device-to-device – they won’t be official until 3GPP’s Release 13, which is expected only by the end of 2015. Assuming they are eventually finalised as part of LTE, it will take time for vendors to integrate the features into their networks and devices.

network is transformed into what Huawei has dubbed an “embedded” network, which UKB says offers better interworking with devices. Promised improvements of eLTE range from better voice quality using 3GPP’s high definition voice codec and faster call set up times of less than 300 milliseconds, to support for ‘pre-emption’ – which allows a

Even Tetra Critical Communications Association broadband group chairman Tony Gray (right), one of the leads working on getting LTE support for public safety networks, pours cold water on the UK’s aggressive strategy.

“No way,” he says of ESN’s project. “We’ve put a timeline together… which looks towards 2020 and maybe even beyond that – 2025.”

The overwhelming doubt around ESN’s chances of meeting its schedule doesn’t change the fact that LTE will definitely form a future part of public safety networks.

“It is clear that the users had wanted for many years new applications, new advancements, new technologies on their network. And it’s been clear that our existing technology hadn’t been able to provide all that LTE can,” says Mike Norfield, CEO of UK-based critical communications specialist Team Telecom Group.

For Norfield, the question isn’t whether LTE can support public safety, but what the cost might be of using it to do so.

In fact, UKB’s proposal with Huawei actually claims to address all the shortcomings highlighted by the industry regarding public safety LTE, albeit using a proprietary solution.

According to UKB, Huawei’s eLTE approach supports traditional private mobile radio services as well as LTE’s high data speeds.

With the eLTE system, the 4G

device to get on a base station even when the node is full – as well as necessary features from the PMR world including direct mode, prioritisation, multicast, and end-to-end encryption.

“It’s clear that our existing technology hasn’t been able to provide what LTE can” The question, though, is whether the UK government will put its trust in a proprietary system, largely untested in a live environment, for its public safety agency. And will the UK public let it?

The situation is further complicated because the UK government is mandating the use of a commercial LTE network. According to TTG’s Norfield, a private LTE network with a closed group of users may very well meet the requirements of public safety. “Actually when the LTE technology today is applied to a campus style environment like an airport, it will work. For instance, you will see communities in the aviation space, the next network they put in will not be a Tetra network, it will be an LTE private network... it can be proprietary, it can be [a] closed user group,

it can do all the things that you want it to do and have all the fantastic data applications,” he said. “But when it comes to public safety, you’ve got another issue… will the [UK] government invest in a dedicated LTE network with dedicated spectrum? Probably not, because the expense will be too high.”

The only option left for the UK government, to engage a commercial network operator as its supplier, is even more problematic because it would mean passing the question of cost and return onto the network operators.

According to Norfield, a company like Vodafone could technically build a robust and reliable network that might satisfy public safety standards, but it is unlikely they could do so at a cost level that would still give them acceptable returns. “At one operator, they ran six business cases for public safety LTE and failed every time,” he says.

Which opens up another question for the project. Will ESN pay for what network operators will charge them, especially when some of their staff may simply be playing games on their phones – which might be using the same high quality and expensive network reserved by public safety?

DATA DELUGE: Despite these challenges in the UK, there seems to be some urgency for more data connectivity. Current mobile data solutions in the private mobile radio space are limited to narrowband throughputs that can handle, with optimisation, a few streams of lowresolution video.

With the explosion of online video, social media, connected sensors and so on, the public safety industry is now facing a tsunami of information that it now has access to, but cannot use effectively.

“I feel right now like a surfer, and right behind me is a massive wave that is going to blow me off my surf board... the wave of data,” says Debo-

rah Weiss, CIO of the Emergency Services Telecommunication Authority for the Australian state of Victoria. “Like data everywhere, EMS data is changing... [but] unlike the rest of the industry, we haven’t embraced this change as they have. Data is growing in volume… [and] is also changing. More and more of our data is unstructured and this is data that is not managed.” Also changing, she adds, is the way that data is collected, shared and used.

But according to Weiss, not using the data because there is no data network is depriving public safety agencies of critical information.

“We have information that we can provide to the officers, we have operations data that we can share with the agency. But at this point, traditional voice is all we can accept at the moment,” she said. “I think about us as a bit of a clucking hen sitting on a golden egg. We are not hatching that egg, we’re not sending the chicks out to the world; we are sitting on data, but we are not using [it] wisely.”

calating incidents and how we dispatch more resources to the situation.”

Another easy data collection point is the officer’s vehicle, which can be fitted with local wireless network hardware coupled with sensors, Weiss said. “As soon as you enter that space, you become immediately situation aware, so what we are talking about is the same concept – the vehicle can create a wireless network.”

Motorola Solutions’ Steinberg goes a step further, pointing to the applications themselves as the key enabler for public safety going forward. “I think what is really important is the idea of contextual computing. So the device has got to be second nature, it’s got to do what it’s got to do without you and I knowing how to deal with it… I plan to study what we call high velocity human factors. That’s a fancy term

For Weiss, and for Motorola Solutions’ CTO Paul Steinberg, (right) the ability to access more data sources will be a key enabler for next generation public safety applications, such as the connected officer or the vehicle area network.

“The connected officer is a very interesting concept for me as a manager of the technology that supports the agency: the ability of the officer to have sensors, whether they are biometric, whether they are telemetric, use them to collect data, and then have us operationalise it and make sure the office is safe,” says Weiss.

“So we get to detect the heart rate of our officers, we can detect the oxygen level of our fire fighters... we can detect whether or not an officer has drawn her gun or not, whether she is running or standing still, whether she is horizontal or vertical… we have to work out how we manage this data, not only in view of officers’ safety, but also in view of es-

moment.”

ONE NETWORK FUTURE: All these applications are only possible when there is a high-speed data network to support the gathering and dissemination of data. In fact, TCCA’s Gray says that the critical communications space is putting all its eggs into the LTE basket – just not to the schedule of the UK government.

“We want to come away from the traditional situation… where there is Tetra, Tetrapol, P25, GSM-R and other technologies and standards that fundamentally do very much the same thing but in their own niche areas,” says Gray.

“We would like to see a future where a common global standard, based on commercial LTE, could address all of those markets as well as all of the commercial markets, and allow us in the critical communications sector to benefit from some economies of scale, driven by the size of those markets. We would like for the future critical users to be able to have broadband capabilities that are just as reliable, just as resilient, just as available as those they’re used to with their Tetra and other technology solutions.”

That is when the critical communications industry will really flourish, adds Motorola’s Steinberg.

[meaning that] the more stress that you and I are under, the less cognitive capacity we have to cope with other things,” he says. “It’s not rocket science. If you are a policeman or fire fighter, and you are under a lot of stress – either trying to stay alive or save a life – that is when you have the least amount of cognitive capacity to make the technology work to do what it needs to do for you. So the technology needs to figure out what the right thing is for you, situationally and in the context of the

“One of the gaps that I see is the applications development ecosystem.

The enablement that the Apple and Android do in terms of APIs and network capabilities... I think public safety [has] to get to a [a similar] point [with its] application ecosystem where innovation is going to come from anywhere – from the user themselves, from Motorola – in a standardised way, where they can request grades of service, where there is a progression and a lifecycle management approach for applications, where they can be validated, certified, vetted, and introduced with security and standard,” he says. “That application ecosystem is something that needs to mature.”

Smart cities for clever telcos The concept of ‘smart cities’ is gaining currency, but where are the opportunities for telco players?

Richard van der Draay reports.

W

hile much of the conversation around the concept of ‘smart cities’ is still a tad ephemeral, some recent developments may warrant a closer look. What exactly are the opportunities for commercial players? And will the Internet of Things provide enough of a platform for telcos and governments to step onto and really forge ahead?

In some circles, the idea of the smart city is understood as merely the next phase in the process of urbanisation that has been trending within policy spheres for considerable time. However, there is a move to distinguish the concept from other, more ICT-focused labels such as intelligent or digital cities, with a noticeable push to try to define the concept more around the role of human capital and education.

Together with social and environmental interests, these are proposed as some of the requisite key drivers of urban development.

Another approach to smart cities is to focus on business parks and business-oriented cities. An Australian example is the Tonsley development in South Australia, a partnership project initiated by the SA Department for Manufacturing, Innovation, Trade, Resources & Energy and Renewal SA, the urban renewal authority; the project sees the state government investing more than A$253 million in a scheme that aims to integrate industry, education, training, research, residential living and community interests. The collab-

oration is forecast to attract more than A$1 billion in private investment.

But these concepts of smart cities, focused on enabling commercial, social, cultural and urban development, need not preclude the notion of a wired city as the central model.

In fact, in nearly every conceivable scenario, connectivity could prove a vital source of economic gain, usually with a primary focus on the role of high-tech and creative industries.

If we focus on the idea of networked infrastructure, aimed at boosting economic and public policy efficiencies, a range of services to be provisioned presents itself. Included among these are business, housing, leisure and lifestyle services – and ICT offerings such as mobile and fixed phone, computer networks, ecommerce and high-speed internet services, fixed-line or otherwise.

“At the heart of every smart city initiative is ubiquitous connectivity, which very clearly marries up with core telco service capabilities,” says Market Clarity founder and CEO Shara Evans. “Wi-Fi networks form part of this connectivity grid, but in addition to telco-based services, can take the form of government-owned or sponsored networks, private networks deployed by local business, or even community networks established by residents — as well as public/private partnerships.”

“Smart cities are on the radar for government, telcos, utilities, vendors

and infrastructure providers for a wide range of reasons, including ubiquitous communications, energy efficiency, aesthetics, public transport (location tracking of buses, trains, taxis, parking space availability, traffic incidents), traffic management (including driverless vehicles), public safety and environmental monitoring, emergency response management, and lots more!” adds Evans. The common thread, again, is connectivity. “Communications technologies are the glue that enables all of these different applications. And, fundamentally, what we’re really talking about here is the emerging Internet of Things.”

Evans cites the example of the ‘Zero Site’ joint project from Ericsson and Phillips, which involves the placement of small mobile cells inside light poles that use energy efficient LED lighting. “These are special light poles that have [an inbuilt] cooling system, but even so are able to generate a savings of 80% in electricity use when coupled with smart controls. Apparently, there are a 100 times more light poles than telecom sites in the world, and this type of dual-purpose deployment would address issues such as mobile network densification, difficulties that carriers have in acquiring sites for mobile towers, and aesthetic issues — as well as saving energy.”

“Of course, backhaul from the light pole to a network access point is also required. The initial systems use fibre, but microwave could be

implemented as well. Hence, there is also a role for the use of telco, utility or municipal fibre to connect the light poles to the network cloud, as well as for telcos to deploy small mobile cells inside of the light poles,” adds Evans.

“In my view, successful smart city developments will involve an ecosystem of technologies, services and strategic partnerships. Telcos certainly can play a valuable role here.”

Innovation in wireless sensor networks is already being used to construct the technological framework of smart cities. The idea is to create a distributed network of intelligent sensor nodes, allowing the measurement of a variety of parameters.

This, in turn, facilitates a more efficient urban management where the data collected is transmitted wirelessly in real-time to users and city authorities. For example, residents can monitor pollution levels in a particular street or receive alerts when radiation levels exceed a certain mark.

Other such applications include smart ways for civil authorities to optimise the irrigation of city parks or to control street lighting. For instance, this technology would make it a breeze to detect water leaks or to have sensors installed in rubbish bins that transmit an alarm when they are nearly full and ready to be emptied or collected. Road congestion could be tackled using systems that detect the nearest available parking space, while it has also been argued that due to the revenuegenerating aspect, smart parking systems could be a prime motivation for building civic wireless networks.

Once in place, networks like these could be extended to include other types of sensing. For instance, the California-based company Streetline announced it would add road surface temperature and noise sensing capabilities to its smart parking portfolio this year. According to a Frost and Sullivan White Paper on the

company’s intelligent parking solutions, the firm is one of several companies currently teaming up with local-level governments in the US and Europe in a bid to resolve challenges around traffic congestion and parking availability through intelligent and innovative technology.

The report found that many such private-public joint schemes are delivering key results in smart parking in large cities such as Los Angeles, San Francisco, Chicago, and Boston in the US and Zurich, Amsterdam and Brussels in Europe – attracting a variety of other stakeholders. Premium car manufacturers are pushing into the smart parking sector, with alliances forged between parking operators and app providers.

“Innovation in wireless sensor networks is already being used to construct the technological framework of smart cities.”

In 2011, Streetline won funding totalling US$15 million from venture capitalist firms, enabling it to ramp up its sensor-enabled mobile and web-based smart city and smart parking services. The Frost & Sullivan research showed that the company had successfully adapted emerging technologies, such as the Internet of Things and had hit upon a solid business avenue for implementing its services while at the same time supporting urban improvement.

Similarly, a recent partnership between Optus and the NSW Department of Transport saw the telco providing Wi-Fi connectivity in the final section of Sydney’s train tunnels, enabling a range of mobile applications for commuters en route to their daily grinds.

Last April, NSW minister for transport Gladys Berejiklian announced the mobile phone reception switch-on for train customers.

Sydney Trains chief executive Howard Collins says that nowadays

many rail customers use their smart devices to stay in touch on public transport. “This project means [they] can also keep up-to-date with what’s happening on the network while they travel, [with the] updates on Twitter [and real-time apps].”

The mobile phone coverage project was undertaken in partnership with lead carrier Optus, along with Telstra and Vodafone.

One challenge with building smart cities is how to physically install the required infrastructure.

Building scratch might well be preferable from the point of view of council town planners and assorted agencies involved in infrastructure development; equally, private enterprise would hardly baulk at the prospect of landing exclusive contracts for developing connected greenfields centres. Take for instance, the Songdo International Business District, a smart city constructed from scratch on 1,500 acres of reclaimed land near Seoul in South Korea. The tenyear project is forecast to cost in excess of US$40 billion, making it one of the largest private real estate projects as well as one of the most expensive development ventures ever undertaken.

But whether greenfields or brownfields, Evans underscores the importance of coordinated infrastructure planning for a truly smart city. “Wouldn’t it make sense to dig up a road one time to do roadwork, install conduits for telcos and/or utilities, pipes for water, sewerage and gas, or any other civil infrastructure requirement?” she says.

“Unfortunately, I don’t see much of this happening. When I talk about this concept with the various parties, with few exceptions they always find reasons to describe why it’s ‘too hard’. But the reality is that, yes, it does take work but the reduction in unnecessary civil infrastructure work would result in massive savings, and a lot less disruption to local residents, businesses and visitors.”

The network and the cloud While there is no question that clouds need networks, the elasticity and on-demand nature of clouds is breaking down the traditional business model of networks. Tony Chan reports.

C

loud computing’s arrival into the mainstream market is changing every facet of the information and communications technology landscape. From the way corporations build and operate their IT infrastructure, to how networks are being provisioned and sold, cloud computing and its model of allocating resources on subscription and elastic consumption is bringing in a whole new set of variables to the business of technology.

For network operators, cloud computing can be a massive business opportunity since by definition, clouds require a network to be reachable by their users. It can also be a threat since it can commoditise connectivity and in some cases, reduce it to a non-commodity – essentially riding over the free public internet.

The problem is that there is no simple model for cloud computing.

To narrow down cloud computing into a singular, one-dimensional development is nearly impossible.

Cloud computing is used to power some of the world’s largest online services and content companies –

e.g. Google and Facebook. Cloud computing is also being deployed as infrastructure and platforms for rent by companies such as Amazon Web Services, Google, Microsoft, Rackspace and a host of others, including telcos such as NTT Communications, Verizon, AT&T, Telstra, Tata Communications, BT and more. Additionally, cloud computing forms the foundation for a growing ecosys-

tem of online business services.

At the same time, corporations are increasingly turning to cloud computing as a way to optimise their IT operations, leveraging both onpremise installations and third party sites in hybrid deployments.

Each of these cloud computing scenarios requires some kind of network connectivity. Each presents dif-

ferent challenges and opportunities for the telecoms sector. So what does cloud computing mean for the telecoms industry?

BIG PIPES: Cloud computing means big pipes. One of the biggest opportunities for the telecoms sector from cloud computing comes from the largest contributors to traffic growth: the internet content and over-the-top players. Companies such as Google, Facebook, Yahoo and Microsoft now operate global networks, rivalling those of many carriers, in order to connect together their data centres and to distribute their content to different regions.

Google, for example, operates a total of 13 datacentres across all major regions except Africa. All these facilities require connectivity to exchange data and synchronise content. That means really big pipes across the Atlantic and the Pacific, as well to South America.

This is obviously a huge opportunity for the telecoms industry. In fact, many of the biggest capacity sales in the Asia Pacific region in the past decade have involved internet content companies taking wavelength-level services on trans-oceanic submarine cable systems.

More recently, these ‘private’ networks are starting to outgrow the public internet. According to TeleGeography, private network bandwidth grew at a compounded rate of 55% annually between 2009 and 2013, outpacing the overall growth of international bandwidth (44%) during the same period. From 20% of the overall international bandwidth of 30Tbps in 2009, private networks accounted for 25% of 138Tbps of international bandwidth in 2013. According to those figures, private networks now account for some 38Tbps of international capacity, more than the entire market just four years ago.

“What our data seems to show is the demand growth of private networks has been faster than the [that

of] traditional internet backbone operators, especially on the big transoceanic routes... across the Atlantic and the Pacific,” says TeleGeography research director Alan Mauldin.

NEW PLAYERS: However, the sheer size and scale of the bandwidth requirements from these OTT and content providers has created a new dimension in the market place. Instead of shopping around for capacity, some of these firms have started to drive the market by dictating their own terms.

For Google and Facebook, that has meant going as far as to become submarine cable owners themselves when they were not happy with the availability or price of some routes.

The industry should expect to see further participation of these OTT players into the subsea space.

Google is now part of two subsea cable systems, Unity and Singapore Japan Cable, while Facebook is part of the consortium building the Asia Pacific Gateway intra-Asia cable.

What this means is that both companies now know exactly how much it costs to build a cable and have hired staff that understand the submarine cable industry – knowledge that tips the scales in their favour at the negotiations table, industry commentators pointed out.

That doesn’t mean there is no

more opportunity for wholesale players, Mauldin adds. “I guess, in a way, you can say that Google and their irk are now cutting their cost by building their own cables – that does reduce the customers for traditional wholesale players,” he says. “But you have to bear in mind that [while] they are investing in cables themselves, they still lease capacity on other cables too; they have to have both… they are going to need capacity on every cable, as with any other operator. Everybody has capacity on multiple cables, for diversity purposes. Just because they are building their own cable doesn’t mean it is the end of those companies having a need for capacity on other systems.”

The industry should expect to see further participation of these OTT players into the subsea space.

“The last cable across the Pacific was Unity built in 2010, that got started in 2008. At that point in time, the requirement from Facebook, Microsoft, and everyone else weren’t at the level that Google had, therefore, they were not willing to participate in a cable like Unity at that point in time,” says Mauldin.

“Since 2008, perhaps their view has changed – so if there were a cable last year, they might have been an investor. You can’t view it as ‘they are not investing in the Pacific’ because they have clearly brought capacity on multiple submarine cables right now and have a ton of capacity. Why haven’t they been investors? Well, there haven’t been any new cables.”

DATA CENTRE LINKS: But large transoceanic routes and large internet content companies are not the only market opportunities for telcos stemming from cloud computing.

With the increased reliance on data centres to host and run applications in the cloud, national and intraregional connectivity is also seeing a major boom.

According to KVH vice president of network strategy and architecture Gint Atkinson, the company’s DCNet – which provides connectivity between data centres – has mushroomed into a huge business. He says that KVH, which was originally focused on providing proximity hosting and low-latency networking services to financial institutions primarily in Japan, has now sold thousands of 10G and 100G circuits within and between data centres.

“One area [where] we have seen a lot of success is in the 100G and 10G connections. All those top players coming into Asia, especially in Japan, are looking at our 100G service… inside the data centres, we are seeing customers looking to reach out of the data centre and into other data centres using 10G services, and they want to tie these services together into a fully managed network service,” he said.

The success of KVH was due to the fact it was in the right place at the right time. According to Atkinson, the company had already laid fibre between key data centres within the metropolitan Tokyo area as part of its original business plan targeting low latency routes. When the demand escalated between those sites, it was simply a matter of lighting up those fibres.

KVH is now moving quickly to capitalise on the opportunity and expand its network to Hong Kong and Singapore from its home market of Japan. The firm is currently building its own fibre ring that will connect the three markets, with the aim of adding 100 more datacentre sites to DCNet by the end of the year.

CLOUD CONNECTIONS: What KVH sees as a very specific opportunity – inter-data centre connectivity – Global Cloud Xchange CEO Bill Barney sees as a wider market shift towards connecting together cloud infrastructure and services, particularly for corporations adopting cloud computing technologies.

For Barney, the opportunity is not just selling capacity, but also in taking on the role of a middleman between users and the applications hosted inside data centres.

“It’s essentially a way to touch clouds from our infrastructure,” Barney said. “We think the datacentre business is part of the ecosystem, but it’s a portion of the whole system, it’s not the whole. You need data centres, you need connectivity, you also need the orchestration layer.

Without the orchestration layer, and the customer facing capabilities, you actually can’t play in the segment. “

“Suddenly, we can compete with the computer companies, the software companies, and play in that space.”

“You can be a datacentre operator today, and you can be a fibre operator today, [but] this doesn’t necessarily give you a step into the ring of the cloud business. You basically have to bring everything together with the orchestration layer… because CIOs don’t want to buy the bricks from one guy and the mortar from somebody else. They want to get the whole package. That’s where we are going to put our focus.”

According to Barney, these types of services now allow traditional telcos like Global Cloud Xchange, formerly Reliance Globalcom, a chance to expand into a new business segment.

“The opportunity for us is to sell into a completely different segment of the market, so suddenly, we can

compete with the computer companies, the software companies, and play in that space… this allows us to compete in a much bigger market. If we can participate and get a portion of the cloud deployments going forward… even if each one of our customers were to give us 10% of IT budget they spend on compute, our company will double in size,” says Barney. “If you start to look at the opportunity for companies like us to play in that space, it would be a game changer – that’s why we are doing it, and hopefully [for] the next couple of years, we have a successful plan to get there.”

CORPORATE CLOUDS: Global Cloud Xchange is far from alone in its attempts to become the conduit for cloud adoption. It is becoming abundantly clear that corporate adoption of cloud computing – whether as a centralised internal hardware resource, an hosted application running on third party facilities, or a combination of both – is now making cloud connectivity a necessary part of the equation.

As a result, a growing number of carriers have rolled out programs to address the need for private networking into the cloud, many prompted by the actual cloud computing providers themselves.

Amazon’s Direct Connect feature, which allows corporate users to set up a direct link between internal datacentres and its Elastic Compute Cloud, now counts 43 carriers in its Amazon Web Services partner network. All these carriers have effectively productised what is essentially a very specific transport service between a customer’s data centre, office, or co-location environment to the AWS cloud.

Similarly, Microsoft has launched a private network partnership program for its Azure cloud called ExpressRoute. So far, Microsoft has signed up AT&T, BT, Equinix, Level 3, TelecityGroup, and Verizon as its carrier partners for ExpressRoute.

Interestingly, while Equinix, Level 3, and TelecityGroup support both

AWS and Microsoft, AT&T, BT and Verizon are so far exclusive to Microsoft.

At the same time exchange facility operators including Equinix and TeleCity, which previously provided interconnection services for carriers, are pouncing on the demand from enterprises customers seeking to connect into clouds.

Equinix has announced two initiatives – Cloud Exchange and Performance Hub – each architected to provide cloud connectivity.

Similar to GCX’s model, Equinix’ Cloud Exchange allows corporations to access multiple clouds from single or multiple locations, while the Performance Hub product goes a step further by providing data centre space inside the network exchange points to further reduce latency between corporate applications and cloud operators.

This is a market that GCX’s Barney is expected to accelerate going forward as the number of cloud facilities and services ramps up. GCX is launching its cloud connect platform initially with 28 cloud destinations – basically where corporations might host their own cloud infrastructure, or want to connect into to access cloud services.

LOCATION: For TeleGeography’s Mauldin, “cloud connectivity” services are simply traditional leased circuits under a new name, although what and where they connect to may have evolved.

“It seems there’s a lot of talk about cloud connectivity... it’s just another name for just a private line connecting a user into some place… all you are doing is taking a customer, and taking them in at Layer 2, to a cloud at some location. That is really just wholesale... providing transport capacity between two locations,” he says. “What’s changed is the places that people want to connect to. You still need to [connect to] the major internet hubs, the major internet exchanges, but you may also need to connect to specific datacen-

tres, specific buildings – that is one of the changes to wholesale, beyond the need to link to other networks, trying to link to specific sites.”

Location-specific connectivity is also a key focus for GCX’s Barney, who believes that cloud connectivity will evolve to address different cost structures and operating requirements.

“If they want a low latency route for a short period of time, or for certain times during the trading day for example, they can get that” “This is a natural evolution for networks. What we are trying to do is build that orchestration layer so that an enterprise customer can park storage somewhere it’s cheap, and yet they can have access to applications and server time right next to where their employees are to do stuff,” Barney said. “This is really going to be the opportunity, how you actually segregate the cloud, so guys can build hybrid clouds, because that’s where you are going to get the IT savings… The advantage we have is we run past 1800 data centres, and if you look at a kilowatt of power, there’s a 90% difference between the price at one end of that to the other.

So we’ve got places where we can drop people off where it’s in the middle of nowhere, but are cheap, all the way to places in downtown Hong Kong – what we want to do is give customers that choice.”

ELASTIC NETWORKS: While cloud computing is now a major driver of demand for network capacity, it is also changing the nature of the networking business. Just as the consumerisation of IT has led to major shifts in how enterprise applications are delivered and managed, adoption of cloud computing is leading to a ‘cloudification’ of the network.

So while CIOs must now contend with matching the availability

and user experience of online applications such as Dropbox or WhatsApp, the elasticity and ondemand nature of the cloud operating model is challenging networks to do the same.

This is one of the main themes behind the growing interest in and adoption of software defined networking, as more enterprises take up cloud infrastructure and services.

They are now looking to consume their networks in the same elastic and on-demand manner, according to earlier adopters of SDN such as KVH, Pacnet, NTT Communications, Verizon, and others. “[SDN] allows us to be more agile and put a lot more flexibility and control into our services. So now customers can have elastic bandwidth [and] get access to a larger number of routes across the network at different points in time. If they want a low latency route for a short period of time, or for certain times during the trading day for example, they can get that. And if they want cheap reliable bandwidth, they can get that at different times of the day,” says KVH’s Atkinson. “So adding a lot of elasticity and flexibility to services that are traditionally very rigid... is something that we are expecting out of SDN.” Similarly, Pacnet VP of product architecture for managed services Jon Vestal says that elastic consumption has proven itself as a driver for customer adoption.

“The initial use cases were cloud burst, getting into other cloud operators, as well as the disaster recovery aspect – customers need to have backup circuits, but they may not necessarily want to pay for those backup circuits when they are not using them,” Vestal says. “We are definitely getting to more customers. We see something similar to what we saw in the cloud world, where people came in and did a little bit of development, a little bit of testing, some touchy feely stuff to see how it works... we are starting to see that,

but we are also starting to see customers coming in and going straight into production.”

More importantly, perhaps, SDN empowers Pacnet to become part of the overall enterprise IT stack rather than just a provider of circuits.

“SDN has allowed us to have different conversations with our customers. Historically, we went and talked to them about providing a circuit from point A to B. Now when we go in and talk to customers, we are talking about how can their applications meet their specific business needs,” Vestal adds. “We are able to have the applications themselves determine what paths to use, what network performance they need.”

It’s a way to stay relevant in the industry, comments Ciena VP for product line management Kevin Sheehan.

“They see it as a stickier service.

Typical telcos today fear becoming a utility and being fully commoditised,” Sheehan says. “So anything they can do to add value to their service, and in fact, thereby make their service a little stickier, they are very interested in.”

works. Yet there remains uncertainty about how the characteristics of cloud computing can be successfully applied to the networking industry.

SDN is on the cusp of making cloud computing’s ‘as-a-service’ model a reality for networks, but it’s still too early to tell whether that will prove a profitable evolution for network operators. A profitable busi-

“Carriers have always sold circuits and bandwidth on long contracts to justify the initial heavy investment of building networks.” ness model for carrier-based SDN services will likely emerge eventually with the right pricing structure and operating model, but it is too early to tell just exactly what the settings will look like.

In many cases, carriers remain hesitant to introduce elasticity across their entire product portfolio, reserving SDN for specific offerings such as inter-datacentre connectivity for fear of cannibalising existing services.

CLOUD OF UNCERTAINTY: It’s pretty clear by now that cloud computing, in all its shapes and forms, is impacting many aspects of telecom infrastructure.

That fear is very real. Carriers have always sold circuits and bandwidth on long contracts to justify the initial heavy investment of building networks. Even bulk discounts are based on the length of the contracts as much as the amount of bandwidth.

From consumers overloading their broadband connections with online video, to Google building its own submarine cable, and the appearance of on-demand public clouds, cloud computing is having a profound impact on the networking business.

Replacing their entire revenue base with on-demand, pay-as-you-go contracts not only risks operators’ profits, but also presents significant challenges in dimensioning their network since their customers would have free reign over when they want to take up capacity and how much.

OTT players using cloud technologies now require massive global networks to tie together their content and services. Public clouds are now evolving towards semi-private, virtual private, and hybrid infrastructures that demand secure, dedicated net-

Somewhat surprisingly, though, Pacnet has seen more stability on their network with SDN then previously.

“We see the pipes being filled more consistently. The biggest challenge for carriers is how do we bal-

ance traffic. What we see is traffic... peaks and troughs during the day, and customers are committing at very high levels because they need to support their peak, which means that when they are not hitting their peaks, you have a lot of white space,” says Vestal. “With this solution, customers can now provision bandwidth as they needed and when they needed, we see our pipes being more solidly filled up, they aren’t overcommitting which allows us to sell more services on that same physical infrastructure.”

What’s beyond question is the fact that SDN and cloud computinglike network services are here to stay.

Almost every carrier in the world has deployed, or is looking to deploy, SDN in their networks.

While some are using SDN exclusively to improve their internal network operations, or to speed up service development and provisioning, it is highly likely that those features will eventually make it to the front end of customer facing systems – much like what is being offered today by Pacnet, NTT Com, KVH, and a host of others.

These types of services have the potential to truly disrupt the telecoms business, much like cloud computing technologies and services have changed the face of IT. But like cloud computing today, there are a lot of variables still left.

Cloud computing as an underlying technology has certainly enabled mega-scale service platforms like Google and Facebook, but as a product and service in itself – as in the public cloud offering – it is unclear what exactly the business model is.

As one analyst asked during a recent conference on cloud, “is there anyone making money from cloud besides Amazon?”

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