ADV
VERT
CONTENTS
CENTREFOLD FEATURE
LOOK inside
20
Mapping the Small Cells Network
14
Anatomy of a Mobile Operator Zain is a group operator that has expanded and retracted, and is now taking a technical lead in its area, despite a challenging economic and political environment.
4 TMNQUARTERLY
24
The small cells ecosystem
Our four page centrefold feature delivers a visual representation of who plays in the small cells market, and where.
FEATURE
FEATURE
A maturing market requires product and service integration across a growing number of partners. Infographic produced in association with ip.access.
FEATURE
18
Small Cell Deployment Challenges Infographic produced in association with TMN partner iBwave outlines key deployment challenges for small cells, highlighting the importance of the indoor environment.
FEATURE
22
Small Cells Market Determining progress in small cells depends on where you stand, but there are unmistakable signs of market maturity and development.
FEATURE
26
Network sharing Network sharing never took off in the way many predicted following the economic crisis in 2008. But if the economic spirit is once more willing, the technical flesh is ready to deliver.
FEATURE
EDITOR Hello and welcome
Hi!
to Issue 2, 2013 of The Mobile Network Quarterly.
35
Market focus // Brazil
30
Test disruption New market entrants want to disrupt the old market model of the drive test, using device based applications and tools to benchmark operators publicly.
A troubled market gears up for worldwide exposure. How is it getting itself ready for three major events, guaranteed to bring in valuable roaming traffic, in the next four years?
From our Correspondent 07 USA 08 Australia 10 Germany/Japan 11 Nigeria
39
Picture Story Mapping network design in Chicago, from Keima Wireless.
Thank you for a tremendous response to our first issue. It was great to be able to meet so many readers face to face at Mobile World Congress and get all your feedback on what we could do within these pages. As we said at launch, we want to use this Quarterly to present information in as visual manner as possible, and this issue we have taken on the small cells market to try and pull out how the industry ecosystem is developing. We’ve called it ‘Mapping the Small Cells Network’, and for extra value we’ve included two smart market infographics in association with partners iBwave and ip.access. Of course, you have to have some words as well in amongst the pretty pictures, and this issue takes a look at some interesting developments in the way users are being utilised to deliver insight into the actual customer experience of the network. It promises to be quite disruptive to the traditional way of doing things, as long as the privacy aspect remains uppermost. That’s our cover story. This quarter TMN will be at the Small Cells World Summit in London as well as at the LTE World Summit in Amsterdam, so do come and say hello. We’re at www.the-mobile-network.com
Commercial Director: Shahid Ramzan Email: shahid@the-mobile-network.com
As well as writing about the network, we want to be a network. So please get involved: write something, leave a comment, come to one of our events.
Editorial Director: Keith Dyer Email: keith@the-mobile-network.com Creative Direction and Design: Shona Gow // hello@shonagow.co.uk // www.shonagow.co.uk
KD
Keith Dyer keith@the-mobile-network.com
© 2013 TMN Communications Ltd.
TMNQUARTERLY 5
FROM OUR CORRESPONDENT
FROM OUR CORRESPONDENT
CORRESPONDENT : Anon
“From Our Correspondent” collects writing from around the world, covering mobile network stories in local markets.
If you would like to contribute to this section, mail TMN’s editor keith@the-mobile-network.com
6 TMNQUARTERLY
KD
USA Sprint Nextel, a multi-billion dollar mish-mash of disparate spectrum assets, differing technologies and a mid-market position may seem to be an unlikely prize, but a fight has broken out over this pot of wireless gold in any case. Although Softbank has had a $20 billion offer tabled for Sprint since last October, US satellite TV player Dish upset Softbank’s CEO Masayoshi Son with a rival $25.5 billion offer. Dish’s plan, and that of its billionaire Chairman Charles Ergen is purportedly to mash up Sprint’s spectrum with Dish’s, creating a TV-broadband play to rival that of the cable operators. Meanwhile, Softbank fancies building out into the lucrative US mobile market, as it expands on its strategy to diversify away from Japan.
Much to everyone’s delight, this has turned personal. Son has called Egren an amateur, and his bid “illusory”, and cast continued doubt on Dish’s lack of mobile know-how. “Can they improve the Sprint situation without any know-how, without any track record in our industry?” Mr. Son said.
Meanwhile, Egren has responded with his own set of cultural assumptions, pointing out that Japan is about equivalent to one California, and that SoftBank would struggle in a US consumer and corporate culture. Not only that, the company has complained that SoftBank has been leaning on US institutions not to back Dish’s offer, as they would then be cut out of a getting a piece of the public offering of Chinese e-commerce company Alibaba Group Holding, in which SoftBank holds 33%. Dish then sent a letter to the FCC asking if “SoftBank is trying to force its offer on Sprint’s shareholders by underhandedly seeking to undermine a superior bid.” Not only that, but Dish played the “Chinese card”, waving the spectre of Chinese involvement, however indirect, in the outcome of the Sprint deal. Just to reinforce the point, the company also took out full page ads in a bunch of our national papers urging the authorities not to “outsource our national security”.
With Sprint’s board due to meet in June, this saga keeps on getting better and better for those not involved in Sprint, whose employees are just hoping for a quick and acceptable resolution. TMNQUARTERLY 7
FROM OUR CORRESPONDENT
Australia:
Australian spectrum auction “failure” We got our turn for a bit of global scrutiny when our 700MHz and 2.6GHz spectrum auction results were announced in early May.
ANSWER
Not all of it was welcome for our regulator, the Australian Communications and Media Authority (ACMA), which was left to explain to the world’s press why 2x15MHz of the 700MHz spectrum remained unsold. Answer: because Vodafone decided not bid due to what some termed the extremely high reserve prices set by ACMA. Stefan Zehle, CEO at Coleago Consulting, got under the skin of our ACMA with the following analysis (in brief – ACMA has damaged the Aussie economy by not listening to the industry). The main problem was that the auction of digital dividend spectrum was estimated to deliver a net benefit to the Australian economy of between A$7bn and A$10bn. Of course this estimate assumed that all of the spectrum will be allocated to mobile. In the event one third of the APT band plan 700MHz spectrum remains unsold whereas 100 per cent of the cost of freeing up the spectrum has been incurred. Therefore potentially several billion dollars of benefit to the economy has been lost as a result of setting reserve prices above the level where weaker operators can earn a normal return of capital employed. The damage the ACMA has inflicted on the Australian economy does not end there. Since VHA (Vodafone) ended up without spectrum it will further weaken their relevance in the market. Since competition is likely to have been weakened this will reduce the “consumer surplus” from the digital dividend i.e. the benefit consumers would gain in form of lower prices. Of course the most direct impact is the lower auction revenue for the
8 TMNQUARTERLY
Government. The Australian government budgeted in revenue from the auction at least equal to the total reserve, i.e. AS$ 2,894 million. In the event the auction raised only AS$ 1,964 million, i.e. 32 per cent below the target. The ACMA’s failure could hardly be more complete. Yet, it was widely predicted that with these high reserve prices spectrum would remain unsold, in fact Vodafone said it would not bid unless the reserve prices are lowered. The outcome says a lot about politicians’ lack of understanding of how investment decisions are made and also demonstrates an unwillingness to listen to the industry.
As you’d expect, good honest Aussie battler Chris Chapman, ACMA chair, wasn’t having that, and pointed out that Vodafone had already said it had not intention to bid for 700MHz spectrum even before ACMA set the reserve price. Additionally, Voda had also not bid for any spectrum at 2.5GHz, even though that had a relatively low reserve price. So, he concluded, price was not the issue. He also said that Zehle’s analysis of the cost to the economy through reduced competition was also off the mark. Yet down here in Oz, we know that all the operators had indeed complained about the reserve price. Optus described it as “unworkable’’, and said the government’s asking price was more than three-and-a-half times the price of wireless spectrum in similar markets. No chapeau, Mr Chapman.
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The Sober Reality of Small Cells There are many questions from the industry with regard to Small Cells. What is it? What defines a Small Cell? Small Cells vs. Small Cell Systems: when, where, and how?
H
ow can we address the mobile data explosion with Small Cells? The industry has to rethink the use of in-building wireless. The macro cellular network simply cannot keep up with capacity usage, especially when most of the spectrum use comes from within buildings. The Sober Reality of Small Cells is that not all Small Cells are the same. The same when/where segmentation that took place in Wi-Fi over a decade ago, is taking place for Small Cells. Conversations at Mobile World Congress in Barcelona this year highlighted the need to move beyond providing the basics of reliable indoor coverage and capacity. The fact is, Small Cells are blurring the lines of networks as well as the lines between enterprise and service provider Wi-Fi. The exploding use of smartphones and mobile applications has created major concerns with Enterprise use of Over The Top (OTT) Services. Is this the “death of the desk phone”? Will enterprise IT teams look to operators for support to handle BYOD and other mobility issues, and consider mobility as a service? If they do, they are looking at potential savings of $60 Billion over the next few years. In a recent survey conducted by YouGov, almost half of the respondents reported interest in Mobile Device Management as an operator-hosted service to manage, monitor, secure and support mobile devices in the enterprise,
Services Node to Mobile Core
Macro to In-Building Small Cell Coordination
and demonstrated an interest in Wi-Fi as a service from their operator. Use of Small Cells can indeed give mobile operators an inside advantage with enterprise customers. We are entering years of mobility and agile network services delivered by communications providers. We are indeed starting to see the emergence of a new role for the Mobile Operators. Beyond basic coverage and capacity, this is a battle for Apps and the Cloud. As we look to the 2020 Services Network – Enterprise customers will join in and mobile operators will help transition customers from a wireless world to a
Multi-Access
3G/LTE & Wi-Fi
Reliable Coverage & Capacity
mobile world as we transition from “OutsideIn to Inside-Out” network build-outs. What we do know is that multi-access Small Cells (3G+4G+Wi-Fi – as a market) are fast becoming a reality. Not all Small Cells are the same, and that is the sober reality. Ronny Haraldsvik is the SVP/CMO of SpiderCloud Wireless. Twitter: @haraldsvik www.spidercloud.com
TMNQUARTERLY 9
JAPAN
Sometimes different, sometimes the same
Here in Germany we are used to bucking the economic trend. Our economy balances and our industrial sector works on determined co-operation between workers and management, rather than ruthless private-equity led asset stripping. Accordingly, our main incumbent telecoms company revealed that far from seeing profits crumble in the face of the data crunch, spectrum crunch or any other crunch, profits had slightly increased in the first quarter of 2013. Indeed, the big pink DT said it had logged a net profit of $738 million in the first three months of the year, a number that was up 3.5 percent on the 2012 figures. The company achieved this despite revenues actually falling. Our operators seem to be getting very friendly as well. Telefónica Deutschland and Deutsche Telekom agreed a deal to share DT’s fixed line network, with Telefónica being promised “phased”
10 TMNQUARTERLY
access to DT’s VDSL and vectoring wholesale products over the next five years. Next off the block was Vodafone, which said it too would be using DT’s assets for a bit of fixed line action. Vodafone has its ex-Cable & Wireless assets in the UK to build upon, but requires a bit more of a boost to its mobile strategy in Germany. And for a while in April it looked as if E-Plus, diminutive subsidiary of KPN, and Telefonica might be taking things a shade further than sleeping in twin beds, and actually getting under the covers together. Although a proposed merger fell through, analysts picked up on a message that as a part of due diligence, the companies had thought perhaps a little network sharing could be on the cards. It’s a rumour that has proved quite hard to kill, despite Telefonica taking several opportunities to attempt to do so, as many think that some combination of the two players would let both compete on better economic terms with Big Red and Big Pink. As in most other markets, however, both operators are clinging hard to their network independence. Perhaps we’re not so different from everyone else after all.
The world got very excited by the news that the iPhone is now very popular in Japan. IDC Japan confirmed what many of us knew to be the case by stating that the iPhone was the top selling device in Japan in 2012. Wait a minute? Aren’t we all walled garden victims happily doing weird things on our Sharps and Fujitsu’s, consuming whatever the latest end to end service NTT DoCoMo has us hooked on. Isn’t it well known that we don’t want none of that Western Apple technical antiquity the rest of the world lapped up. We had touch screens years before iPhone, we’re carrying out payments and watching TV and doing all these things without Apple. Because we are Japanese, we are happy with operatorcontrolled devices customised for operator-controlled services. It’s just the Japanese way. Well up to a point. It seems that, in fact, given a choice, we’re just like everyone else and have fallen for Apple’s smooth edges, its colours, its very Appleness. You know who’s to blame? Women, that’s who. None of your sensible on-message men who appreciate the honest solid properties of a piece of NEC in their pocket. It’s women, with their appreciation for things like style and design that are lapping up this unpatriotic import. Well, it’s either that, or it could just be that, like every one else, Japanese consumers love a good old piece of user interface design, and that the Japanese mobile miracle might not be quite as miraculous when you’re one of the consumers trapped on the inside of it.
Pretty phones
GERMANY
FROM OUR CORRESPONDENT
NIGERIA It’s not often you hear of a regulator warning an operator to raise prices, but that is what we have in Nigeria. Normally, as regulators seek to ensure competition and consumer benefits, operators will be asked to reduce the fees they charge each other for terminating calls and texts – therefore reducing the price they charge consumers. Here in Nigeria, however, the regulator is concerned that MTN is charging too little, using its pricing power to hustle lesser operators out of the market. The Nigerian Communications Commission said that calls between MTN customers cost a third of the price of calls to other networks and amounted to “a calling club” for MTN users. With 44% market share, that meant that MTN could wield undue market power, the regulator said. Accordingly, it asked it to adjust its pricing so that on-net and off-net calling cost its users the same.
MTN wasn’t having that. “At no time have we dropped prices to below the market, we’ve always followed the market,” MTN Nigeria chief executive Brett Goschen said in an interview. Nigeria, Africa’s most populous nation with more than 160 million people, had about 113 million mobile phone subscribers at the end of 2012, according to the NCC. MTN is the market leader with 47 million lines. Nigeria’s Globacom had 24 million users, Bharti Airtel had 23 million
customers and Etisalat 14 million. It’s a puzzling response from the regulator. Cheap or even free on-net calls are not unheard of in many markets. Additionally, 44% is a decent number for one operator to have, but still leaves a lot for the other operators to aim at. Many people suspect something other than protecting consumer interest is at play here. Your correspondent couldn’t possibly comment.
TMNQUARTERLY 11
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operator profile
Zain Structure 14 TMNQUARTERLY
Zain: Few operators span such diverse territory, stretching from North West Africa to Sudan, and from Kuwait into Saudi Arabia and Iraq. Zain’s story, one of growth, dispersal, and renewed technical innovation, is worth telling.
A company founded thirty years ago in one of the Middle East’s smaller countries now operates across the breadth of the Middle East, and stretches indirectly to the northwest and east of Africa. In that time it has breathed in, to ingest operations in up to 15 African countries, and breathed out again, exhaling many of those countries to Bharti Airtel in a $10.7 billion deal. Now, Zain sits with operations in eight countries (plus a 15% holding in Moroccan operator “inwi”) serving 44.1 million customers in markets that range from the developed and mainly urban populations of Kuwait, Saudi Arabia and Bahrain to the developing world of South Sudan, and post-war Iraq. Just recently, it appointed its first non-Kuwaiti
CEO, with the arrival of US national Scott Gegenheimer. With LTE launches, and the introduction of advanced Customer Experience Management processes, and commitments to pilot service environments like Joyn, Zain likes to see itself as one of the most innovative operators in the region. However, like many operators, Zain is seeing its revenues topple over from a peak. In 2012 revenues were just over $4.5 billion, marking a 4% drop from the previous year. Q1 2013 is down 10% on 2012, although the company said that without currency translation, a one time expense in Iraq and the fact there was one fewer day in the quarter it would have seen net income rise 9%.
Anatomy of a MOBILE OPERATOR: ZAIN
merged mtc atheer and iraqna and rebranded to zain
ZAIN IS MARKET LEADER
IN KUWAIT, IRAQ, REPUBLIC OF SUDAN, SOUTH SUDAN AND JORDAN acquired fastlink in jordan
acquired celtel in 13 african nations
awarded 2nd gsm license in bahrain
2005
2002
commenced operations in ghana
2005
2004 awarded management agreement in lebanon
2008
2006 acquired the remaining 61% of mobitel in sudan acquired 65% of v-mobile in nigeria
2007 won bid for 3rd gsm license in ksa rebranded to zain along with 4 operations acquired 15 year nationwide license in iraq
Zain KSA raised $1.6 billion in rights issue and group increased stake in the operation to 37%
SOLD mobile operations in 15 african countries (excluding sudan and morocco) to bharti airtel for $10.7 billion
commenced operations in ksa
acquired madacom in madagascar
awarded gsm license in iraq
leading mobile operator in kuwait
rebranded from celtel to zain all african operations
i ncreased stake in zain iraq to 76%
2010
2009 invested in 31% of moroccan operatoR inwi in a joint venture with al ajial
2012
2011 seperated operations between sudan and south sudan
acquired 75% of westel ghana acquired iraqna in iraq
In April, Zain, signed a three-year, $700 million revolving credit facility from banks to meet its short to medium term funding needs. “The new facility stretches out the maturity profile of the company’s indebtedness and significantly lowers its average funding cost,” Scott Gegenheimer, the company’s chief executive, said. In March, Hisham Akbar resigned from his position as group chief operating officer and deputy chief executive. Zain’s biggest company by revenue is currently Iraq, which contributes 31% of all revenues. Iraq contributes the highest share of revenues to the Group, with a 40% contribution. The Republic of Sudan generates 15% of revenues, although it has 28% of all customers. Kuwait, the company’s home turf, now generates 27% of all revenues, despite numbering just 5% of group customers.
This reflects the fact that Kuwait has by far the highest monthly ARPU, at $42. ARPU in Saudi Arabia is $18, while in Iraq the figure is $11. The lowest monthly ARPU is in Sudan, where the average is $6. All of this puts Zain in the mid level of regional competitors in terms of market capitalisation, similar to companies such as Ooredoo and Maroc Telecom. (MTN is by far the biggest at $33 billion, with Etisalat the next largest at $22 billion.) So what of the network? Well, Group capex has remained roughly stable, with a significant spike in late 2012 as the company launched LTE in Kuwait and Saudi Arabia. Through 2011 the company was investing around $240 million per quarter, with a spike of $337 million in that last segment of 2012. Zain Kuwait launched LTE in the fourth quarter of 2012, and now has 1,765 sites covering the entire population, making
it one of very few operators in the world to have full, national, LTE coverage. The investment (in comparative terms) was considerable, with the operator nearly doubling the equivalent quarter’s investment from 2012, spending $74 million, compared to $43 million in the fourth quarter of 2011. The first quarter of 2013, however, has seen a considerable cutback, with capex of just $6 million for the whole three months. The second market in which Zain has LTE is Bahrain, where the company introduced a “One Network” policy that covered 3GPP 3.5G, WiMAx and now LTE. Again the entire population of this small nation has been covered through 335 network sites. The $100 million network was launched in conjunction with the (controversial) running of the Bahrain Grand Prix, where McLaren cars were decked in the Zain livery.
TMNQUARTERLY 15
Anatomy of a MOBILE OPERATOR: ZAIN
BAHRAIN: The operation is currently
preparing to launch an initial public offering to list the company shares on the Bahrain Bourse, which is planned to take place during Q4-2013. Zain Bahrain recently launched LTE, a significant milestone for the operation, with the network covering the entire population through 335 network sites. The operation managed to increase its customer base by 30% compared with Q1-2012, reaching to 686,000 customers compared to 528,000 last year. The operation currently has a total number of 335 network sites, covering the entire population.
JORDAN: 3.5 million customers
with an ARPU of $12 make up this longstanding holding. In 2012 the operator added 738,000 customers, increasing market share by a point to 37%. Data revenues account for 19% of the total, up 40% from the previous year. The company is profitable, too, adding $122 million to the bottom line in 2012.
IRAQ: Zain Iraq Capex reached $131
million in Q1-2013 up from USD 23 million in Q1-2012, mainly due to modernisation of the network (single-ran) and 3G network expansions in the northern part of Iraq, including Kurdistan, areas that are attracting lots of foreign direct investment. The operation is ready to offer 3G data services once the authorities issue spectrum license. The operation had a total of 3,751 sites, with population coverage of 98%.
13.7
MILLION CUSTOMERS IN IRAQ
16 TMNQUARTERLY
KUWAIT: Flagship operation that was
the first to introduce both GSM and LTE to the country. The operator is seeing a slight decrease in revenues as consumers shift from high priced packages into lower priced packages which reduced voice revenues. Zain also cited the impact of OTT applications (Whatsapp, Viber, etc.) on revenues. Data revenues (excluding SMS & VAS) represented 27% of all revenues for Q1 2013. The operation covered the entire population with a total of 1,827 network sites.
Saudi Arabia: Zain KSA became
the country’s third mobile operator when Zain Group, won the bid for the company’s license in March 2007. But the telco has since struggled to grow profits due to the hefty costs associated with the roll out of its mobile telephone infrastructure and intense competition from the likes of Etihad Etisalat, or Mobily, and Saudi Telecom. Zain KSA said its 2012 net losses were $467 million, a 9% decrease from the year before. Zain Group lifted its holding in Zain KSA to 37%, less than a year after it was reported as trying to dispose of its 25% stake. 5,108 network sites: LTE first launched in 2011.
Republic of Sudan:
In February 2006, Zain acquired the remaining 61% stake of Mobitel, Republic of Sudan’s first mobile operator, in a deal valued at USD 1.3 billion, resulting in 100% ownership. In local currency (SDG) terms, the operation reported very healthy growth with a 25% increase in its revenues in Q1 2013. The Sudanese pound, which fell by 53% against the USD (Q1, 2012 to Q1, 2013) severely impacted Zain Sudan’s and ultimately Zain Group’s results. The operation currently has a total number of 2,179 sites, with 88% population coverage and 35% geographical coverage.
SOUTH Sudan:
In June 2011, The Republic of Sudan and South Sudan successfully completed the separation process. Accordingly, Zain Group commenced separating the two entities by having different financial statements and organisational structures. The operation witnessed the highest percentage increase in its customer base among the Group by 44% from the previous year. Despite challenging economic conditions, Zain South Sudan managed to increase its market share from 36% to 40% in Q12013. As of Q1-2013, the operation has a total of 239 network sites.
List of key personnel: CEO: Scott Gegenheimer CTO: Hisham Allam Director, Network Division, Zain Kuwait: Fahad Al-Ali, Chief OperationS Officer, Zain Kuwait: Hani El Kukhun
6,200 EMPLOYEES
42.7
MILLION ACTIVE CUSTOMERS
Anatomy of a MOBILE OPERATOR: ZAIN
108
$902
222
4G
$4.58
44.6
12.5
348.7
MILLION PEOPLE UNDER LICENSE
MILLION IN NET INCOME LICENSE
The World of Zain BILLION IN REVENUES
MILLION + DAILY TOTAL SMS
MOROCCO Ownership: 15.5%
TB OF DAILY DATA USAGE
MILLION CUSTOMERS IN REPUBLIC OF SUDAN
LEBANON
LONG TERM EVOLUTION (LTE) NETWORK IN BAHRAIN, SAUDI ARABIA AND KUWAIT
MILLION + TOTAL DAILY CALLS
Ownership: Management Contract Customers: 1.9 m Prepaid: 86%
IRAQ
Ownership: 76% Revenues: $1,733 m Customers: 13.7 m Prepaid: 99% Market Share: 50%
KUWAIT JORDAN
Ownership: 96.52% Revenues: $509 m Customers: 3.5 m Prepaid: 86% Market Share: 38%
REPUBLIC OF SUDAN
Ownership: 100% Revenues: $864 m Customers: 12.5 m Prepaid: 99% Market Share: 52%
SOUTH SUDAN
Ownership: 100% Revenues: $1,187 m Customers: 2.3 m Prepaid: 70% Market Share: 42%
BAHRAIN
Ownership: 56.25% Revenues: $202 m Customers: 616,000 Prepaid: 68%
SAUDI ARABIA
Ownership: 37.05% Revenues: $1,708 m Customers: 7.5 m Prepaid: 94% Market Share: 15%
Ownership: 100% Revenues: $51 m Customers: 667,000 Prepaid: 99% Market Share: 37%
ZAIN’S WORLD CATERS TO OVER 42.7 MILLION CUSTOMERS IN 8 COUNTRIES* The numbers show active customers year end 2012. * exclusive of Morocco, in which Zain has a 15.5% ownership in the mobile op erator “INWI”
The numbers show active customers year end 2012. * exclusive of Morocco, in which Zain has a 15.5% ownership in the mobile operators
TMNQUARTERLY 17
Small Cell Deployment challenges
Majority INDOOR Of current 46 small cell operator launches
consumer
8
consumer and enterprise 5
public
enterprise
6
1
rural
11.5m
access
FEMTOCELLS
55%
“say public
TODAY:
!
26
small cells most important
Tomorrow: 2016:
8x
92m
Installed base of small cells is set to grow from 11 million units in February 2013 to 92 million units in 2016 - an 8x increase - with a total market value of over US$22 billion (InformatTM)
InformaTM operator survey
PERCENT
98
56%
of all base stations globally (InformaTM)
mobile operators
say small cells essential for future networks
40,000
AT&T to roll out public access small cells
by 2015
Indoor coverage forms key part of AT&T’s early small cell trials.
Indoor use cases gain momentum: Free data traffic in Goody's and Flocafe restaurants in Greece (supported by Vodafone Greece free 3G hotspot)
18 TMNQUARTERLY
ig
n
n
nning – des
www.ibwave.com
WIFI
IP DAS
PASSIVE DAS
78%
Going indoors
59%
SMALL CELLS
r at i o n – o p t
40%
FIBER DAS
i
gu
im
BIGGEST GROWTH IN THE NEXT 3 YRS
fi
22%
n
19%
co
tio a s
p loym e n t –
n – o p e r at
de
io
–
Lifecycle of the deployment of a small cell
-
a Pl
Deploying a small cell solution in in-building hotspots can potentially remove up to 32% of the network traffic carried by macrocells. (Analysys Mason) BT carried 6.7GB of data per second through its Wi-Fi network during the London 2012 Olympic Games. AT&T reported 78GB of cellular traffic during the 2013 Super Bowl half-time show.
Small cells vs. DAS deployments DAS 1 Planning
2013 survey of attendees, iBwave user group.
SMALL CELLS*
2 DESIGN
6 months 6 months
3 days 3 days
3 Construction
3 months
4 days
1 month
1 hour
IMPLEMENTATION 4 Integration 5 OPERATION
10 years
Optimum rollout times only. Operators are finding that real world logistical issues are extending deployment times. (Source: iBwave)
*
Operational cost and backhaul are the top two reported deployment issues for operators. (Analysys Mason. 2013)
Site acquisition and access can be the biggest delaying factors in deployment.
The cost benefit of small cells will not be achieved if deployment is not simplified and deployment costs reduced.
What is a small cell? In my view, any RF network component that is not nailed to a tower! Iain Gillott, President of iGR
TMNQUARTERLY 19
Feature: MAPPING THE SMALL CELLS NETWORK
Keith Dyer explains the thinking behind our small cell graphic, and runs an eye over recent small cell market developments.
M Sm ap Ne a pi tw ll ng or Cel th k ls e
A
22 TMNQUARTERLY
ssessing the progress of the small cells market is a hard thing to do, and your view on whether progress is speeding or stalling perhaps depends where you are standing. The latest market numbers from the Small Cell Forum indicate that there are still fewer than 50 live, commercial deployments of small cell-based services across the world. That number includes residential offers, enterprise and public access outdoor. With most of those services being launched by major operators in developed markets - the likes of Vodafone, AT&T, Verizon, and the Japanese and South Korean operators - there is still scope for a major push of small cells into markets across the world. The Small Cell Forum itself acknowledges this, and has recently released the first of its Small Cell Release guides - a sort of “how to� deployment guide for a residential femtocell service that collects the best practice and considerations of deployments to date. Further guides on enterprise services and on public access small cell deployments are set to follow. So you could view progress to date as impressive, given that it is four short years since Vodafone launched the first commercial residential service. Or you could view small cells as a technology with growing acceptance (98% of operators polled by InformaTM say that small cells will be crucial in the future), but whose adoption has stalled as standards work around co-ordination and interference mitigation catches up with the vision. One thing that has certainly matured has been the ecosystem of vendors and technology providers addressing the
small cells opportunity. Although there are now 70 vendor members of the Small Cell Forum, the market has also seen consolidation, notably with Cisco as the accretive party as it added the acquisition of Ubiquisys to its previous buy of Intucell. Cisco, which will play everywhere in the network apart from in the macro network (a sort of soup to nuts but hold the main course approach) is one company that is betting large on the fact that operators will be investing not just in small cells in the access layer, but in the core and edge network intelligence required to manage and integrate the small cell layer within operators’ existing core systems. Perhaps the most significant news in outdoor small cells has been the public commitments from the major US, South Korean and Japanese operators to deploying large amounts, in the several tens of thousands initially, of public access small cells, both indoor and outdoor. This overcomes one of the public reservations that many operators had - that of deploying small cells within a macro layer, but not perhaps the biggest barrier, that of multi-vendor interoperability. The other big step in this market has been the notable drive for products that enable WiFi and cellular technologies to be mounted together, from the likes of Ruckus Wireless and Alcatel-Lucent amongst others. In the enterprise market it is SpiderCloud with its E-RAN architecture, built on radio nodes managed by an on site controller node that acts as a core element at the edge of the network, that has taken the lead in terms of messaging around enterprise deployments, targeting the perceived difficulty of managing the
FEATURE: MAPPING THE SMALL CELLS NETWORK
deployment of large amounts of femtocells within a building or campus. The most important aspect in enterprise services, however, is not necessarily about RF optimisation (although of course it is important) but about the opportunity for service integration and revenue enhancement that it gives mobile operators. There are also a small but growing number of use cases for small cells in targeted applications such as on boats and in rural areas, using satellite for backhaul, or as private networks for emergency first responders at major incident scenes. Some of these applications rely on increased intelligence within the small cell to carry out data optimisation and processing, for instance to reduce backhaul payloads. The concept of the Smart Cell is one that Ubiquisys has been pushing in tandem with Intel. It will be interesting to see how that positioning transfers over to Ubiquisys’ Cisco home. Finally, in the residential space we have seen some major numbers from AT&T with its Cisco-ip.access product, and Vodafone, but little mass movement elsewhere so far. Although there are pushing 30 residential femtocell services out there, on many occasions the operator is using the cell as a customer retention tool of last resort, posted off to a customer that is about to churn and is of sufficient value to retain. There has been little recent commercial innovation in small cell deployment, with Vodafone Greece notable for its partnership with two local fast food restaurant chains: users get free data, served through the femtocell, whilst they are in the restaurant. It’s a twist, of course, on the more usual WiFi model. However, one area of mass innovation has been in backhaul. Our map shows the growth of companies that are targeting specific small cell backhaul solutions across a variety of spectrum bands and technologies. The landscape may be about to get even more blurred with innovations
around NLOS backhaul from the likes of FastBack and Tarana, not to mention that Ericsson at Mobile World Congress was trumpeting the benefits of NLOS backhaul in 26 and 42GHz bands, rather than the more usual sub-6GHz bands. Note also that the chart we assembled doesn’t even include fibre backhaul, which will be the widest deployed technology of all for small cell backhaul, according to some analysts. Nor does it touch on the use of TD-LTE for backhaul, something Vodafone has in live deployment in Madrid, and is no doubt planning for the UK, where it recently gained more TD-LTE spectrum. Backhaul is important because it is in the public access small cell space that we are likely to see the greatest value in terms of access points. Cost-efficient backhaul solutions that enable the end to end service assurance across multiple domains will become crucial to enabling that vision. As a tip for backhaul, expect to see the emergence of the backhaul wholesale service provider, backed up from a technology standpoint by virtualised or very small form factor Network Interface Devices from the likes of RAD and Accedian, that can provide network and service assurance to allow operators to monitor SLAs for their own services, and those they offer major customers. In chipset development we can see the competition for dominance of the small cell market. Qualcomm alone has been making a huge marketing push in this area, defining the capacity challenge in terms of the requirement for an eye-catching
and Mindspeed, both companies who built their strategies in this area on acquisitions, who are leading the market, in terms of volume and technical development. In February 2013 Infonetics split the market between the two companies, awarding Mindspeed 63% of the 3GPP (non-CDMA) market, with all the other chip providers splitting the rest of the market. However, it’s likely to be a different story in LTE. ABI Research followed Infonetics in ranking Mindspeed and Broadcom one and two in 3G cells, but put Freescale, with over 50% share, and Texas Instruments in the number one and two spots for LTE. The situation is complicated by the fact that for LTE metrocells, “Huawei, Ericsson, Samsung and to some extent, Nokia Siemens Networks, all are using ASICs in their designs, particularly in their picocell and microcell products,” according to Nick Marshall, Principal Analyst at ABI. Finally, look for a greater role in the market for the types of companies that can provide wrap-around services around the actual technology elements themselves. I’m thinking of core integration, but also of test and verification, of security enablement, and of planning and deployment tools that can automate the actual process of getting small cells and backhaul onto the streets. It’s going to be critical in a market driven in value terms by the public access small cell market, that several sites can be installed in a day by a 1-2 person team working from a single vehicle. Several tools and packages are emerging to support this.
One area of mass innovation has been in backhaul. Our map shows the growth of companies that are targeting specific small cell backhaul solutions across a variety of spectrum bands and technologies. 1000x increase, and pushing out a range of advanced on-chip capabilities such as SON capabilities. Yet it is still Broadcom
TMNQ’s editor, Keith Dyer keith@the-mobile-network.com
KD
TMNQUARTERLY 23
Small cell ecosystem...
maturity requires end to end partner vision, capability and verification
Commitments are rolling: AT&T 40,00 outdoor small cells by 2014 Vodafone and Sprint also committed
Maritime Aviation
Enterprise deployments: 14 Includes SME and large enterprise
OPERATORS
Rural
46 commercial deployments, 60 commitments. Mainly large operators. Small Cell Forum Release One designed as “how to� guide to speed further deployments.
Specialist
TIER 1
FIRST RESPONDERS
Residential deployments: 26 AT&T 1 million+ Sprint 1 million+
20
Segmentation of vendors in tHE small-cell ecosYStem
Launches by year
16 10
11
7 1
1
2007 2008 2009 2010 2011 2012 2013
24 TMNQUARTERLY
End-to-end system providers Components and software Small-cell access points Network elements Other enableRs 0
5
10
15
20
25
Growing number of applications for small cells attracting increased number of vertical partners, requiring integration and management.
Application Partners
Outdoor deployments: 5
SOLUTION AND INTEGRATION PARTNERS
Mature ecosystem requires end to end management of componentised supply chain GE LAR DIUM E M AL L SM
GATEWAYS
E
5+ gateway vendors
LA ME RG D SM I A
UM L L
4G
15 core component vendors
3G ACCES SP
OI N T TIO OP
20+ AP vendors, 50+ products ENTERPRISE
2G
LARGE M ED I U M SMALL
ACCESS POINTS
HOME
NS
SMALL BUSINESS
Public
MANAGEMENT SYSTEMS
MACRO CO-ORDINATION
SON capability
n Verificatio
component based systems and services for small cell partners
TMNQUARTERLY 25
FEATURE: NETWORK SHARING - TIME TO SHARE
Time to share
Although most network sharing commitments go nowhere, new technical advances mean the industry could be ready for the next wave of sharing, if operators can sort out the commercial and political issues.
N
ot so long ago, a consultant like A T Kearney could see little scope for mobile operators to continue to seek differentiation through the quality of their radio access networks. With core revenues under threat, and profitability dropping, the solution for more effective cost-performance in the radio network appeared to be network sharing. A T Kearney’s 2009 report, “1 + 1 =1 Network Sharing”, proposed that operators would be able to source 59% savings in total access layer costs as a result of sharing planning, optimisation and operational costs, as well as site rental and power.
26 TMNQUARTERLY
“The choice is clear,” the report concluded. “With the ever increasing margin pressure in the telecommunications business, MNOs sense the need for change. Network sharing will provide a competitive edge for operators that understand the advantages of moving forward together.” And since then? Well, not much. Back then, AT Kearney had it that 15% of all operators were involved in some form of network sharing. Now, the analysts are barely tracking the numbers. Interestingly the other cost saving approach for operating a network - outsourcing or moving to a managed services model
- has proved far more popular, even though AT Kearney was of the strong opinion back in 2009 that outsourcing resulted in few cost-operational improvements. So what happened? One thing that happened was that the network became important again. In 2009, the drive for mobile data was certainly well established - we are two years into the iPhone age by 2009 - but was not at the levels we now see in 2013. Operators began to realise that although they didn’t want to be merely pipes, there is considerable value in investing in the network as a market differentiator. Thomas Neubauer, of
FEATURE: NETWORK SHARING - TIME TO SHARE
So what are the technical enablers for deepened
Even where network sharing appears to be mandatory, such as in Russia where Yota is supposed to be operating as a wholesale provider of LTE network connectivity to the other operators, Neubauer is sceptical. “Russia? I don’t see that. Even though there are regulatory aspects, they are all going to build their own stuff. I’d be surprised if that [network sharing] happens.” However, there are those who believe that many operators, especially in Europe, will be forced into further network sharing. Although operators differentiate on network as LTE rollouts progress, seeking first and early mover advantage, the benefits will level off again, and network sharing comes into play once more. This is especially true of low-margin or unprofitable rural areas where the market just could not support three or four different operator rollouts. In France, for example, there is already some network sharing in rural areas between operators.
network sharing, if the commercial and cultural
aspects work themselves out?
Aircom, a company that helps operators plan and deploy shared networks, points out that there has been more talk than action in network sharing. “We’ve seen lots of talk since 2005 about network sharing deals and they hardly ever come true.” He admits that the UK has proved something of an exception, with O2 and Vodafone deepening their Cornerstone venture, and MBNL still providing services to both EE and 3 UK. These changes mean that there are now effectively two, rather than five, organisations planning and building the mobile networks in the UK. EE achieved a 30-40% denser grid than either of its previous two standalone networks had deployed. Cornerstone will harness a 10% site reduction for its two partners, with a 20,000 cell site grid, compared to two roughly equal grids of 18k sites each for O2 and Vodafone. However, Neubauer doesn’t see this being replicated. “Other places are not seeing it at that level,” he maintains.
So what are the technical enablers for deepened network sharing, if the commercial and cultural aspects work themselves out? Aircom’s Neubauer points to technologies such as smart, active antennas, that can “allow individual manipulation for two different frequency bands run by two operators”. He adds that SON technologies also help, as a shared network involves a lot of planning and optimisation work, and aspects such as Automatic Neighbour Relations can be very useful in establishing new network configurations. In the UK, Metricell provided its NetView product to discover and encapsulate the Orange and T-Mobile networks, creating a site list generation and ranking and identifying coverage holes/roaming locations by area, so that a shared transmission re-plan, consolidation plan, and plan for de-installation emerged. One company that has outlined a recent technical approach to network sharing is
TMNQUARTERLY 27
FEATURE: NETWORK SHARING - TIME TO SHARE
NEC which is authoring contributions for 3GPP work that is currently defining new scenarios in which multiple operators share network resources, with the goal of providing a way to enable efficient sharing of pooled radio resources and to allocate resources more dynamically than is currently supported. The work takes advantage of recent advances in virtualisation of radio resources in the pooled, Cloud RAN. A paper from NEC titled “RAN sharing” outlines an eNodeB product line that includes a Network Virtualisation Substrate feature that manages the sharing of spectrum and processing of resources, by virtualisation of the physical radio resources. Each virtual slice is entitled to use a certain share of the physical resources. This enables sharing of resources to be determined by policy but is not without deep complexity. In LTE the MAC scheduler is designed to make efficient use of radio spectrum. Virtualisation places additional constraints on the MAC scheduler, according to NEC, and the challenge is to be able to provide effective virtualisation of resources without compromising overall system performance. NEC says it overcomes possible limitations by operating its slice scheduler in conjunction with the MAC scheduler, dynamically adjusting the bearer priorities in the MAC scheduler to maintain the required resource allocation for each operator. This gives all operators access to the whole system bandwidth, NEC claims. So there are technologies appearing, and work in the standardisation groups, aimed at enabling active spectrum sharing. However good the technology, the critical barriers to network sharing are not technical but operational and political. Not until operators see the strategic rationale, will the benefits of such technologies be unleashed.
Some core definitions of network sharing (GSMA) Site sharing. Site sharing, involving co-location of sites, is perhaps the easiest and most commonly implemented form of sharing. Operators share the same physical compound but install separate site masts, antennas, cabinets and backhaul. Mast (tower) sharing. Mast, or tower, sharing is a step up from operators simply co-locating their sites and involves sharing the same mast, antenna frame or rooftop. RAN sharing. RAN sharing is the most comprehensive form of access network sharing. It involves the sharing of all access network equipment, including the antenna, mast and backhaul equipment. Each of the RAN access networks is incorporated into a single network, which is then split into separate networks at the point of connection to the core. MNOs continue to keep separate logical networks and spectrum and the degree of operational coordination is less than for other types of active sharing. Core Network sharing: Usually meant to mean sharing of national fibre or fixed line rings, rather than of the core network elements. Backhaul sharing: Sharing of the transmission from base station sites back to the core network.
Network sharing:
Sound financially, but what about strategically?
By Didier Levy, Director of Arthur D. Little’s TIME Practice The potential savings associated with network sharing range from 10% to 30% on network capex and opex – depending on the type of sharing, the starting position of operators and the potential costs related to decommissioning of sites, JV setup, and backhaul upgrades etc. We therefore expect more network sharing deals to be announced in 2013. However, these financial benefits must be weighed against the potential strategic consequences. For example, network sharing is inherently inconsistent with network differentiation. The extreme case could see operators teaming up and forming just two nationwide LTE networks. This would give all players extensive coverage and
large capacity, but remove the quality of the network as a point of differentiation. Such deals can also enable smaller players to get access to scale benefits that would otherwise be reserved for leading players. For instance, if a number three and four share their networks the two smaller players could in the long term enjoy similar network economics as the two leaders. Network sharing can generate strong benefits in the current operating environment, but the combinations have to be thought out with care by all the different players involved to optimise implications in terms of market structure. Extract from Arthur D. Little & Exane BNP Paribas’s joint report ‘4G - Going faster, but where? Full report available at www.adl.com.
TMNQUARTERLY 29
Feature: User EXPERIENCE - A TEST OF DISRUPTION
User Experience
A test of disruption A new breed of device-based apps threaten to provide a crowd-sourced view of mobile networks, cutting the mobile operators out of an area they used to control.
T
hese days, you’re not a new company or a start-up worth the name unless you can be called a disruptor. Disruption is such a sought after commodity in the start-up world that one major tech start-up conference even calls itself Disrupt. Mobile operators are used to being the disrupted, targets for smaller, more agile, businesses as well as for the giants of the internet world. They’ve faced disruption to their core revenues – as apps developers and service providers find ways to offer users different voice and messaging experiences. Their plans to operate as key content partners and providers, with music stores, video portals and applications shops have fallen a cropper in the face of these new disruptive forces. Incumbent players have faced disruption from new market entrants operating with skeleton staffs, a bought or hired network, a bunch of SIMs and an internet-heavy marketing model. So in amongst all this disruption there’s been one thing operators have always been fairly sure of, that they have control of their own network, and of how that network is assessed and tested. Those who say that the network as differentiator is gone have not been watching. In country after country, particularly as LTE is rolled out, operators are still using the quality and coverage of their network to position themselves as market leaders. The promise of the fastest, widest, or “best quality” network is a commonplace. How that speed and quality has been tested, verified and assured has been in the hands of the operators. 30 TMNQUARTERLY
Feature: User EXPERIENCE - A TEST OF DISRUPTION
Yes, national regulators have published coverage maps and typical consumer experiences, but in many cases this has been done using the information provided by the operators themselves. It wasn’t until 2012, for instance, that France’s ARCEP, driven by disputes over the nature of Free’s entry to the market, commissioned an “independent” audit of the job operators were making of network coverage. Network operators hired teams to go out in cars and vans, and latterly on foot in large venues, to perform the famous drive tests. These tests logged network information, signal, call quality and so on, for a certain spot at a certain point in time. Operators could use this information to build up a more detailed picture of real world coverage and network performance than their theoretical network maps could offer. The information was provided to regulators and to the public in a masked way as verification of network quality. So could operators be disrupted in even this, the testing and monitoring of their own networks, and then, importantly, the distribution of that information to the public and other authorities? In recent times there has been a clutch of companies coming along that have threatened to do just that. RootMetrics, based in Seattle, has had a visible market profile with what it terms its hybrid crowd sourcing approach. RootMetrics offers users an app that when active logs stats such as data session throughput on the
uplink and downlink, as well as signal strength. RootMetrics also hires a dedicated number of people who act as permanent testers on the network - walking around urban areas and in indoor locations to provide a more controlled picture of a network, to smooth out the random variations a solely crowd sourcing approach might throw up. The driver for users to download the app is to understand their own usage better, and also to have something concrete with which to rate how one network stacks up against another. It’s not just about giving the customer something with which to beat operators up with, however. RootMetrics also takes the information it gathers, aggregates and anonymises it and presents it to operators for bench-marking purposes, and so that operators can gain insight into their own network performance. In this way, operators can actually gain insight not just into how customers are perceiving their own network, but that of their competitors. Initially, CEO Bill Moore says, this was met with “scepticism” by many operators, but as they have become increasingly motivated to improve the nework and reduce customer churn, those same operators are now “embracing” RootMetric’s insights, he adds. “We do get challenged, and you could call it a lovehate relationship, but we are exposing information that previously has never been exposed before,” Moore reasons.
TMNQUARTERLY 31
Feature: User EXPERIENCE - A TEST OF DISRUPTION
A UK start up, OpenSignal, takes a similar approach, though it is perhaps less developed in its product cycle and marketing. The company, based in the UK, produces detailed network coverage maps, ranking operators available within a given location, and plans to plot every cell location, WiFi access point, and cell phone signal strength reading that it can, using a crowd-sourced Android application. It also provides a global benchmark of that coverage, so a user in London can compare the quality he receives with that of a user in the USA, for example. Similar approaches also exist from providers whose main aim is to provide usage information, such as another on-device based company called Mobidia. Mobidia provides users with insight into which apps have used most data by volume, where the users have used most data (WiFi access point or cell location). Again, it also aggregates that data and provides it to operators themselves to carry out their own audit of usage. It’s not a test of network quality, so much, as of usage and performance.
OpenSignal creates coverage maps based on user data, allowing users to test speeds and see operator rankings.
32 TMNQUARTERLY
Feature: User EXPERIENCE - A TEST OF DISRUPTION
Another company, Metricell, takes a slightly different approach. In 2011 it introduced its TraceSaver app to a limited number of testers, capturing many of the same metrics as the RootMetrics tool. In this instance, Metricell then took the step of only providing the app, now called MyCoverage Checker, on a white label basis direct to mobile operators, who have been the company’s core customers for its network mapping and planning software. The operators then have control over distribution of the app, and have been using it in many cases to support SLAs with large enterprise and corporate customers. Tom Staniland, Sales Director of Metricell, points out that it is not just about capturing data, but about what can be done with the data. Metricell’s tools allow it to draw on its strong background in analysing and processing network level data, combined with a geospatial datawarehouse that it has built up of a network, to build up a more detailed picture of the network. So the traditional players do not so much fear this new, crowd-sourced, disruption, as seek to exploit it themselves, to add richness to their own datasets. Graham Kunz, of Empirix, points out that of course, one thing such apps cannot do is tell and operator or a user why they may be experiencing poor signal or slow throughputs. Although crowdsourced quality monitors can be useful,
they are only a part of the picture. There are also limitations with the apps themselves, as they need to be running in the background to be logging data, something that can have an impact on device and battery performance (although OpenSignal’s CEO Brendan Gill says that many of these issues have been resolved). Devices can also generate more traffic on the uplink, if a device is continually logging stats. “An app can tell you if there is an issue but not necessarily where in the network that issue is. For mobile operators, as they become more of a pipe for off-net content offers, it’s more and and more important for them that if there is a problem with a service, an operator can determine if there is a problem with the pipe or with the service host, quite often the latter. Our probes can generate transactions that we process to provide network, service and customer related metrics not just as a report, but with end to end correlation of the control and user plane in the mobile space. That’s subscriber information as well as characterising the actual content,” Kunz says.
That aside, is there a hunger amongst users for these sorts of apps? One measure is of course the number of downloads that the crowd-sourced providers have generated. OpenSignal says it has 500k active installations of its app submitting data. RootMetrics, for one, is a little coy about revealing its download numbers, but CEO Bill Moore told TMN its downloads are in “the six figures”. To finish, here’s an interesting anecdote that came out of EE’s recent results. One of the top drivers of traffic on its network, on a per-app basis, was SpeedTest. In other words, one of the first thing people were doing after getting LTE was getting hold of an app to test and verify their own experience. Those disruptors, it seems, are at it again.
Metricell’s Netfix software creates detailed views of network performance.
TMNQUARTERLY 33
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MARKET FOCUS: BRAZIL
Brazil GETS READY
Network quality app OpenSignal derives a high number of downloads from Brazil “probably because of the historical issues with network quality” according to CEO Brendan McGill.
From here to 4G Brazil’s operators have not had it easy, but a confluence of major events has focussed thinking in this massive country, with a glittering prize of a million high value roamers lying in wait.
I
t was only in June of 2012 that Brazilian telecoms regulator Anatel suspended three of Brazil’s four major operators from signing new subscribers. The step was taken because it was felt service for existing users was so poor that the operators - TIM Brasil, Claro and Oi - should be forced to improve their infrastructure before being allowed to sign up new customers. The operators got 30 days’ notice to do something about their quality, and the ban, which only applied on a state by state basis, was lifted after 11 days. The damage to the operators’ reputation was more long-lasting, however. In August, The Economist ran an article titled, “The next big blackout? A swamped mobile-phone network could choke Latin America’s biggest economy”. Something had to be done. As part of their deal to lift the sales embargo, the operators threw money at the problem, bringing forward investment money planned for the future, to the tune of $2 billion. Oi committed to invest approximately BRL 5.5 billion in 2G, 3G and 4G (access and core) networks until 2014. TIM had an investment plan of BRL 9.5 billion between 2012 and 2014, with Vivo committing BRL 7.2 billion for the years 2012–2014. This, however, is only a twelfth of the total amount that Anatel reckoned is required over the next decade to bring the sector up to speed. Overall, over 75 million smartphones are forecasted in the country in 2016, with demand for mobile broadband expected to increase 19-fold between 2011 and 2016. But the twin unmissable deadlines of the football World Cup, in 2014, and the Olympics in 2016, further increased the need for action, and the operators finally got sight of new spectrum to increase capacities with the auction of spectrum in a variety of bands from 800MHz to 2.6GHz. The auction of 4G spectrum raised BRL 2.93 billion, and the national batches were acquired by the four dominant players Claro, Oi, TIM and Vivo.
A GSMA/Telecoms Intelligence report on Brazil’s market stated:
“The World Cup is expected to bring over 1 million roaming connections, generating 300% of the normal data traffic for a period of 8 weeks. Analysts estimate that during the London 2012 games, 60GB of data crossed the network in the Olympic Park every second, and this figure is likely to grow significantly in four years’ time. Providing extra capacity in such a limited time window will be a key challenge for operators.” TMNQUARTERLY 35
MARKET FOCUS: BRAZIL
Anatel stipulated that 4G spectrum holders must deploy commercial networks in the six FIFA Confederations Cup host cities, by 30 April; the twelve FIFA World Cup host cities (six of which will already have hosted the Confederations Cup), by 31 December; and then progressively in all municipalities with over 100,000 inhabitants by 31 December 2016. Vivo launched its LTE service on 30 April – under the banner ‘4G+’. Claro claimed to have successfully launched LTE in all of the host cities in mid-April, beating the deadline, having started launch in December 2012. ZDNet reported that the monthly cost of 4G services to end consumers varies from R$34.90 ($17.35) for a 600MB data plan to R$98 ($48.76) for a 5GB option. The amounts are exclusive of the voice plan, which is charged separately. Handsets compatible with the 4G technology include the Motorola RAZR HD, Samsung Galaxy S III LTE, which can cost as much as R$1,900 ($945.39) and R$1,400 ($696.65), respectively. Average individual monthly income within the socalled “emerging middle class” in Brazil is R$1,019 ($507.12). Brazil is expected to receive between 600,000 and 1 million roaming connections during the 2014 World Cup, which is expected to generate 300% of the normal data traffic for a period of eight weeks. Demand estimates by The Center for Research and Development (CPqD) for Brazil during the World Cup suggest a traffic density of 200 bps/m² or 17 Mbps per cell area. Their study suggests that, even considering that changing system parameters might improve network performance, it is very unlikely that HSPA or LTE cells, with a 2 x 5MHz bandwidth, will be able to meet this demand. As such, more base stations will be required in the short term to increase network capacity.
Getting ready for the away teams US interconnect and roaming services provider Syniverse has been working with the Brazilian authorities and operators to get ready for the influx of visitors for the FIFA World Cup. Pablo Mlikota, Senior Vice President, Global Business Services and Solution said that as far back as 2011 Syniverse came up with four to five strategies to make sure the operators were ready for the games. It looked at the 2010 World Cup, at who attended, where they came from. Syniverse found that in 2010 400,000 people from 32 countries arrived. The number one country that provided roamers was UK, with the next largest groups coming from The Netherlands, Italy, Argentina and Brazil. The plan was for the operators to secure the right roaming footprint and deals for visitors from the key likely visiting countries. Mlikota says, “What we’re aware of is the thing that is most likely to be affected is the Brazilian brand. We’re looking at a million people coming in, and a massive amount of those people will, by then, likely have LTE as a default technology. Europe is in different bands at 2600MHz than in Brazil, where the allocations are in 850 and 1800, and spectrum allocation is different by player and region. So by the time the World Cup cup takes place we must see handset providers have multi freqencies by default.” After defining the likely service footprint, Syniverse looked at capacity and network planning. Access will need to be a combination of WiFi and extra base stations close to stadiums, with a flexible backbone to absorb a gigantic amount of traffic.
250
the nu mber o f differe nt ante nna siting p olicie Brazil (G s in SMA) 36 TMNQUARTERLY
It’s not just about capacity, though. Supporting 1 million inbound roamers is a great commercial opportunity, but only if you can capture the users to your network, and keep them there. “Operators are going to be fighting for that roamer,” Mlikota said. “The nature of roaming activity means you have to be on top of users every time and all the time. One person who couldn’t register to the home network will mean a bad experience for him and money you’re not making. Operators will need to quickly figure out if they have an issue or not and react to that information, which will require a real time approach to processing information. At this point the key players in Brazil have got tools that look at inbound traffic and in every 15 minutes know the status of the network, failed registrations, if there’s a node down, or one specific country not registering roamers.”
Number of users: 260 million users in May 2012, up 67% since 2009 Pricing decline: the effective price per minute has fallen from around $0.15 - $0.25 in 2008 to a spread of $0.05- £0.10 in 2012. In the same time period, ARPU has dropped from an average of $17 to just over $10
tors:
Opera
%) ivo (29 ) TIM V % tel 4 x (2 e Claro 6%) N ) TIM (2 % & .5 m 8 o Oi (1 elec Algar T (1.6%) (0.3%) l te Sercom
4th
largest mar in the w ket orld
MARKET FOCUS: BRAZIL
Spectrum allocation will bring GDP boost
The twelve host cities for the Fifa World Cup and the dominant operator by market share in each city.
Rio de Janeiro
Across Latin America, the case for spectrum harmonisation is growing. Many countries have made significant strides by utilising the 700MHz band, known as the Digital Dividend, to enable the growth of mobile broadband. Thanks to its far-reaching and low frequencies, 700MHz has the ideal properties for improving mobile coverage in the country’s vast, rural population. In Brazil, where data traffic per user is expected to increase by an average of 83 per cent every year until 2020, the 700MHz band is currently allocated to broadcasting services. According to a GSMA/TAS study, accessing the Digital Dividend would provide an additional direct and indirect contribution of US$5.3 billion to the Brazilian GDP. Last April, the issue of spectrum harmonisation was high on the agenda at a public consultation organised by the Brazilian government and Anatel, the Brazilian regulator. In accordance with the Public Consultation 12/2013, issued in February 2013, Anatel is proposing that the country adopt the APT band plan within the 700MHz spectrum band. If the decision to re-farm the 700MHz spectrum band is indeed passed, the spectrum auction would be scheduled for 2014. This move by Brazil would enable the creation of critical economies of scale behind the allocation of the Digital Dividend across Latin America, bringing down equipment prices and allowing greater consumer access to mobile broadband. Bolivia, Chile, Colombia, Ecuador, Peru and Uruguay have been allocating more harmonised spectrum in the 700MHz and other IMT bands. Acting in a coordinated way will benefit the region as whole in its drive to stimulate economic growth and bridge the digital divide. Sebastian Cabello, Director, GSMA Latin America.
TMNQUARTERLY 37
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heatmap of a heterogeneous network in Chicago, produced by Keima Wireless. The network elements are co-channel to ensure high spectral utilisation, with three types to ensure high spectral efficiency: 250 mW enterprise femto devices to provide capacity within buildings; 1 W to 5 W pico devices to provide outdoor capacity; and existing macros. For more, visit: www.keima.co.uk
Keima Wireless maps Chicago
This is an LTE signal strength (RSRP)
TMNQUARTERLY 39