Data traffic growth forecasts - AD Little's new report has a lot better methodology than most

This post originally appeared on June 5 on my LinkedIn feed, which is now my main platform for both short posts and longer-form articles. It can be found here, along with the comment stream. Please follow / connect to me on LinkedIn, to receive regular updates (about 1-3 / week)

When I saw that Arthur D. Little had published a report on “The evolution of data growth in Europe”, on behalf of ETNO Association & GSMA, I rolled my eyes.
 
Both organisations have previously published terrible studies by consultants, riddled with flawed assumptions and dodgy multiplier "fiddle factors". I’ve loudly criticised Axon and Coleago reports related to the (un)#fairshare and #6GHz #spectrum debates respectively.
 
So I started the ADL report with trepidation, not helped by a strange typo / editing error in the first paragraph.
 
But actually, the report is pretty good, and I broadly agree with both methodology and conclusions, albeit with one major caveat.
 
It estimates usage of home and mobile broadband on the basis of hours-per-day of active use of heavy applications such as video streaming, gaming and possible metaverse-type experiences.
 
I’ve used GB-per-hour myself, to model passenger data-traffic demand on trains. It makes more sense than the usual Gbps, as most applications are “bursty”. It also fits the typical heuristics of human behaviour. How many seconds a day do you spend on social media?
 
The central prediction of 20% growth in fixed traffic and 25% for mobile usage seems reasonable. I could argue for 25/20 rather than 20/25, but it's fine as a rough estimate.

Importantly these rates for the next few years are well within the bounds of both fixed broadband (moving to #FTTP) and mobile (on #5G) without incremental investments in extra capacity, beyond the main "generational" shift & CAPEX. And that is driven by government policy and competition, not traffic load and congestion. The report convincingly shows that nobody really needs/values more than 100Mbps for current apps, so #gigabit networks have plenty of headroom.

My main criticism is there is no analysis of mobile device traffic carried over fixed networks and #WiFi. Smartphones used at home for video, gaming or social media will be c80% on Wi-Fi, and indoor usage is c80% of the total.

The report also talks about AI pre-emptively downloading content for “infinite scrolling”, but doesn't suggest it could be smart enough to do so mostly over cheap / low-energy fixed connections. (IMO, by 2030, governments may *mandate* cellular offload via neutral-host or Wi-Fi for indoor use).

I agree with the report's assertions that VR is in an indoor/fixed application, that most #IoT traffic is a rounding-error and that #Web3 is probably irrelevant. The #metaverse scenarios seem mostly plausible.
 
One area I think ADL underestimates is fixed broadband for video streaming. While Netflix and YouTube are “active” viewing, historically, many people just leave broadcast TV switched on, even if nobody is in the room except the cat.

If TV really goes online-only, then that becomes a genuine “waste” of capacity, unless you can advertise to pets.

Overall - really quite good analysis, which (ironically, given the sponsors) fatally undermines the #InternetTrafficTax rhetoric.

 

A rant about 5G myths - chasing unicorns​

Exasperated rant & myth-busting time.

I actually got asked by a non-tech journalist recently "will 5G change our lives?"

Quick answer: No. Emphatically No.

#5G is Just Another G. It's not a unicorn

Yes, 5G is an important upgrade. But it's also *massively* overhyped by the mobile industry, by technology vendors, by some in government, and by many business and technology journalists.

- There is no "race to 5G". That's meaningless geopolitical waffle. Network operators are commercial organisations and will deploy networks when they see a viable market, or get cajoled into it by the terms & timing of spectrum licenses.

- Current 5G is like 4G, but faster & with extra capacity. Useful, but not world-changing.

- Future 5G will mean better industrial systems and certain other cool (but niche) use-cases.

- Most 5G networks will be very patchy, without ubiquitous coverage, except for very rudimentary performance. That means 5G-only applications will be rare - developers will have to assume 4G fallback (& WiFi) are common, and that dead-spots still exist.

- Lots of things get called 5G, but actually aren't 5G. It's become a sort of meaningless buzzword for "cool new wireless stuff", often by people who couldn't describe the difference between 5G, 4G or a pigeon carrying a message.

- Anyone who talks about 5G being essential for autonomous cars or remote surgery is clueless. 5G might get used in connected vehicles (self-driving or otherwise) if it's available and cheap, but it won't be essential - not least as it won't work everywhere (see above).

- Yes, there will be a bit more fixed wireless FWA broadband with 5G. But no, it's not replacing fibre or cable for normal users, especially in competitive urban markets. It'll help take FWA from 5% to 10-12% of global home broadband lines.

- The fact the 5G core is "a cloud-native service based architecture" doesn't make it world-changing. It's like raving about a software-defined heating element for your toaster. Fantastic for internal flexibility. But we expect that of anything new, really. It doesn't magically turn a mobile network into a "platform". Nor does it mean it's not Just Another G.

- No, enterprises are not going to "buy a network slice". The amount of #SliceWash I'm hearing is astonishing. It's a way to create some rudimentary virtualised sub-networks in 5G, but it's not a magic configurator for 100s or 1000s of fine-grained, dynamically-adjusted different permutations all coexisting in harmony. The delusional vision is very far removed from the mundane reality.

- The more interesting stuff in 5G happens in Phase 2/3, when 3GPP Release 16 & then Release 17 are complete, commercialised & common. R16 has just been finalised. From 2023-4 onward we should expect some more massmarket cool stuff, especially for industrial use. Assuming the economy recovers by then, that is.

- Ultra-reliable low-latency communications (URLLC) sounds great, but it's unclear there's a business case except at very localised levels, mostly for private networks. Actually, UR and LL are two separate things anyway. MNOs aren't going to be able sell reliability unless they also take legal *liability* if things go wrong. If the robot's network goes down and it injures a worker, is the telco CEO going to take the rap in court?

- Getting high-performance 5G working indoors will be very hard, need dedicated systems, and will take lots of time, money and trained engineers. It'll be a decade or longer before it's very common in public buildings - especially if it has to support mmWave and URLLC. Most things like AR/VR will just use Wi-Fi. Enterprises may deploy 5G in factories or airport hangars or mines - but will engineer it very carefully, examine the ROI - and possibly work with a specialist provider rather than a telco.

- #mmWave 5G is even more overhyped than most aspects. Yes, there's tons of spectrum and in certain circumstances it'll have huge speed and capacity. But it's go short range and needs line-of-sight. Outdoor-to-indoor coverage will be near zero. Having your back to a cell-site won't help. It will struggle to go through double-glazed windows, the shell of a car or train, and maybe even your bag or pocket. Extenders & repeaters will help, but it's going to be exceptionally patchy (and need tons of fibre everywhere for backhaul).

- 5G + #edgecomputing is a not going to be a big deal. If low-latency connections were that important, we'd have had localised *fixed* edge computing a decade ago, as most important enterprise sites connect with fibre. There's almost no FEC, so MEC seems implausible except for niches. And even there, not much will happen until there's edge federation & interconnect in place. Also, most smartphone-type devices will connect to someone else's WiFi between 50-80% of the time, and may have a VPN which means the network "egress" is a long way from the obvious geographically-proximal edge.

- Yes, enterprise is more important in 5G. But only for certain uses. A lot can be done with 4G. "Verticals" is a meaningless term; think about applications.

- No, it won't displace Wi-Fi. Obviously. I've been through this multiple times.

- No, all laptops won't have 5G. (As with 3G and 4G. Same arguments).

- No, 5G won't singlehandedly contribute $trillions to GDP. It's a less-important innovation area than many other things, such as AI, biotech, cloud, solar and probably quantum computing and nuclear fusion. So unless you think all of those will generate 10's or 100's of $trillions, you've got the zeros wrong.

- No, 5G won't fry your brain, or kill birds, or give you a virus. Conspiracy theorists are as bad as the hypesters. 5G is neither Devil nor Deity. It's just an important, but ultimately rather boring, upgrade.

There's probably a ton more 5G fallacies I've forgotten, and I might edit this with a few extra ones if they occur to me. Feel free to post comments here, although the majority of debate is on my LinkedIn version of this post (here). This is also the inaugural post for a new LinkedIn newsletter, Most of my stuff is not quite this snarky, but it depends on my mood. I'm @disruptivedean on Twitter so follow me there too.

If you like my work, and either need a (more sober) business advisory session or workshop, let me know. I'm also a frequent speaker, panellist and moderator for real and virtual events.

Just remember: #5GJAG. Just Another G.

Which will be more important for 4G/5G coverage expansion: Neutral Host, or RAN-Sharing?

There are increasing demands for better mobile coverage in areas that are technically complex, or which struggle economically with traditional MNO deployment models. 5G's use of new and higher frequencies will exacerbate the problems.

Even with a shift to pure private networks for some enterprises, there will still be a need for the public mobile networks to have better coverage for their subscribers in places such as:

• In-building locations, including both private offices and public venues
• Metro in-fill sites, needed to densify cellular networks in busy cities - but where cell-siting and connectivity challenges can be immense
• Rural areas, where mobile users are sparse and sometime lower-ARPU
• Along road and rail routes, especially where new connected vehicle uses are expected
• Anywhere with few people, but more IoT devices
• Business sites where multi-operator connectivity is needed (eg construction sites)

There are various approaches emerging to solve these issues:

• More flexible / cheaper RAN deployment options for individual MNOs to extend their own networks
• RAN sharing (including national roaming)
• Neutral host networks (NHNs)
• Various hybrid schemes with government involvement

The middle pair -  NHNs and RAN-sharing - are perhaps the two most interesting, as they fit with a lot of other developments around local and dynamic spectrum licensingto , OpenRAN and NFV, and a move to multi-MNO collaboration.

Yet which will win out, and in what contexts?
 
RAN sharing involves 2+ existing mobile operators combining network assets to save costs, perhaps through a joint venture. There are various types with differing levels of sophistication, from sharing physical towers & power, through to shared backhaul, core networks, baseband units & even spectrum. (MORAN, MOCN, etc) 

Neutral hosts are 3rd parties which build a RAN (and may have spectrum of their own) and which then sign up national MNOs or new niche/private cellular providers as tenants. Again, there are various technical and commercial models emerging. 

In theory, NHNs are more flexible, and push the capex to the new host operator. 

But what are the practicalities? Many questions arise: 

• Coverage locations & backhaul availability. What works best in rural, metro, indoor or industrial locations?
• Does an NHN need a core network? Standalone? Also VoLTE?
• Does this all apply to 4G, 5G, or both? 
• Where do OpenRAN or modern DAS & small-cells fit best? If these overlap with NFV and netwrk-slicing, can each "tenant" MNO bring its own software, if they want?
• How does security work for all parties? This is a huge and diverse minefield, relating to everything from RF interference and license conditions, to the physical integrity of network elements, down to lawful intercept and data-collection requirements.
• What are the contractual & regulatory hurdles? 
• What about other stakeholders like venue owners, property companies, towerco's and local authorities? 
• Who puts all of this together? What's the value chain, and which systems integrators and other partners will be involved?
• Will a neutral-host also offer neutral-edge computing capabilities?

There are no easy answers to all of this - the answer will generally be "it depends", both on use-case and national market.
 

I'll cover all these topics & more in next week's 2nd Neutral Host workshop in London on November 21st. Full details and registration page here: [link]

Is there a potential market for 5G or other connectivity insurance policies?

[Reposted & slightly extended from my LinkedIn post here - see that page for some really good discussion in the comments]

This is a completely speculative post, on an area I’ll happily admit I know little about. It might be complete nonsense, or it could be a billion-dollar idea. Or it could be trivial & exist already with a different name. 

So: What happens if you blend radio spectrum policy & licenses, and 5G or WiFi networks, with the insurance industry? 

Is there a potential market for insuring radio networks against failures (interference, coverage gaps, latency etc), especially in enterprise environments? 

Or insurance against interfering with others' networks in shared spectrum like CBRS? (Sort of like radio liability insurance)

At the moment there is huge wariness by conventional operators or vendors in offering full SLAs, especially in mission-critical environments. Understandably, on the other hand very few users or developers will want to risk their mission critical (or possibly safety-critical) applications on networks that could fail. They're certainly not likely to pay much extra for a "slice" or QoS guarantee that has no penalties for failure.

Few existing incumbent spectrum-holders will be willing to share their bands, without governments forcing them to, either. Could a C-Band satellite operate be satisfied that their links would be interference-free, if mobile networks were allowed partial access to the band?

Insurance could offset some of these risks - although it would likely need more data and better measurement in order to calculate premiums.

Regulators typically focus on worst-case scenarios, rather than probabalistic ones. Insurance could put a price on problems, and enable more efficient use of spectrum resources. 

The insurance industry is good at modelling risks, and costs of various types of failure or problem. As well as familiar forms of insurance that pay for a replacement car or house if damage is incurred, some pay out based on specific measurable parameters, such as wind-speeds of a certain strength in a given place. This is called "parametric insurance" -
well-explained here by Swiss Re ("The key criteria for an insurable trigger is that it is fortuitous and it can be modelled”) or in this article.

This could be a huge & beneficial area, if my gut feeling is correct. It's not easy - and various of the LinkedIn comments highlight complexities and problems. But it seems to me that there could be something here, at least in situations where network coverage/performance can be both modelled and measured. There are various other intersections & use-cases I can think of too. 

Comments welcome! 

(Also: a hat-tip to Richard Womersley of LSTelcom, who I discussed this with briefly about 18 months ago).

Private cellular networks - why Ofcom's UK spectrum proposals are so innovative

On December 18th 2018, Ofcom announced two consultations about new 5G-oriented spectrum releases (link), and potential new models for spectrum-sharing, rural mobile coverage and related innovation (link). 

I've already commented briefly on Twitter (link) and LinkedIn (link), but it's worth going a bit deeper in a full post on this - particularly on the aspects relating to private networks and spectrum-sharing.

NOTE: this is a long post. Get a coffee now. Or listen to my audio commentary (Part 1 on the background to private mobile networks is here and Part 2 on the Ofcom proposals is here)

My view is that 2019 is a key breakout year for new mobile network ownership and business models - whether that's fully-private enterprise networks, various types of neutral-host, or a revitalised version of MVNO-type wholesale perhaps enriched by network-slicing. 

This trend touches everything from IoT to 5G verticals, to enterprise voice/comms & UCaaS. I'll be covering it in depth. I also discussed it when I presented to Ofcom's technology team in November (see slides halfway down this page), and it's good to see my thinking seems to align fairly closely with theirs.


This was the future, long ago

Localised or private cellular networks - sometimes called Micro-MNOs - are not a new concept.

Twelve years ago, in 2006, the UK telecoms regulator Ofcom made an unusual decision - to auction off a couple of small slices* of 2G mobile spectrum, for use on a low-power, localised basis for a number of innovative service providers or private companies' use. (Link). A few launches occurred, and the Dutch regulator later did something similar, but it didn't really herald a sudden flourishing of private mobile networks. 

*(The slices were known as the DECT Guard Bands, which separated GSM mobile bands from those used for older cordless phones, widely used in homes and businesses)

Numerous practical glitches were blamed, including the costs / complexities involved in deploying small-cells, the need for roaming or MVNO deals for wide-area coverage, and the fact that the spectrum was mostly suitable for voice calls, at a time when the world was moving to mobile data and smartphones. 

Unfortunately, there was also no real international momentum or consensus on the concept, despite Ofcom's hope to set a trend - although it did catalyse a good UK-based cottage industry of small-cell and niche core-network vendors.


Going mainstream: private / virtualised networks for enterprise & verticals

At the start of 2019, the world looks very different. There is a broad consensus that new models of mobile network are needed - whether that is fully-owned private cellular, more-sophisticated MVNOs with their own core networks, or future visions of 5G with privately-run "network slices". 

There's a focus on neutral-host networks for in-building coverage, proponents of wholesale national "open" networks, and a growing number of large non-telecoms enterprises wanting more control and ownership.

It is unrealistic to expect the main national MNOs to be able to pay for, deploy, customise, integrate and operate networks for every industry vertical, indoor location or remote area. They have constraints on capital, personnel, management resource, specialised knowledge and appetite for risk. Other types of network operator or service provider are needed as well.

In a nutshell, there is a wide recognition that "telecoms is too important to just leave up to the telcos".

I've been talking about this for several years now - the rise of unlicensed cellular technologies such as MulteFire or Huawei's eLTE, the growing focus on locally-licensed or shared spectrum for IoT or industry use, and the specific demands of rural, indoor or industrial network coverage and business models.

(As well as non-MNO deployed and owned 4G/5G networks, we will also see a broad range of other ways to deliver private capabilities, including various evolutions of MVNO, mobile SD-WAN and future network-slicing and private cores. But this particular consultation is more about the radio-centric innovations).


Where is the action?

But while there has been a lot of discussion in the UK (including my own presentations to Ofcom, the Spectrum Policy Forum and others), the main sources of action on private (licensed) cellular have been elsewhere. 

In particular, the US push on its CBRS 3-tier model of network sharing - expected to yield the first local service launches in 2019 - and German and Dutch approaches to local-licensed spectrum for industry, have been notable. Unlicensed cellular adoption is (fairly quietly) emerging in Japan and China as well.

Plenty of other trials and regulatory maneouvring has occurred elsewhere too, with encouragaing signs by bodies like ITU, BEREC and assorted national authorities that private/local sharing is becoming important. 

In the UK, various bodies including Ofcom, National Infrastructure Commission, DCMS (the ministry in charge), TechUK/Spectrum Policy Forum (link) and others have referenced the potential for shared/private spectrum - and even invited me to talk about it - but until now, not much concrete has happened.


What use-cases are important here?

From my perspective, the main focus in actual deployment of private LTE has been for industrial IoT and especially the ability for large enterprises to run their own networks for factories, robots, mining facilities, (air)ports or process plants. Some of these also want human communications as well, such as replacing TETRA mobile radio / walkie-talkie units with more sophisticated cellular smartphone-type devices, or links to UCaaS systems.

These are all seen as future 5G opportunities by vendors too. They are also often problematic for many MNOs to cover directly - few are really good at dealing the specialised demands of industrial equipment and installations, and the liability, systems-integration and customisation work required.

Together with big companies like GE and Bosch and BMW, there has been some lobbying action as well. CBRS has had a broader appeal, with numerous other categories showing interest too, from sports stadium owners, to cable operators looking for out-of-home coverage for quadplay, or fixed-wireless extensions.

But I'd say that rural coverage, and more generic in-building use-cases, have had less emphasis by regulators or proponents of Micro-MNO spectrum licensing. That's partly because rural uses are often hard to generate business cases and have fragmentary stakeholders by definition, while in-building represents an awkward mix of rights, responsibilities and willingness-to-pay.  

Yet it is these areas - especially rural - that Ofcom is heavily focused on, partly in response to some UK Government policy priorities, notably around rural broadband coverage.


What has been announced?

There are two separate announcements / consultations:

• An immediate, specific proposal for 700MHz and 3.6-3.8GHz auctions to have additional coverage conditions added to "normal" national mobile licenses, especially for rural areas. This includes provisions for cheaper license fees for operators that agree to build new infrastructure in under-served rural areas, and cover extra homes in "not-spots" today.
• A more general consultation on innovation, which focuses on various interesting sharing models for three bands: the 1800MHz DECT guard bands (as discussed above), the 3.8-4.2GHz range and also 10MHz around 2.3GHz.

The first proposal is essentially just a variation of "normal 3.5GHz-band national 5G licenses", similar to the earlier 3.4-3.6GHz tranche which has already been released in the UK. Some were hoping that this would have some sort of sharing option, for instance for neutral-host networks in rural or industrial sectors, but that has been sidelined. 

Unlike Germany, which has just 3 MNOs and a powerful industrial lobby wanting private spectrum, the UK has to squeeze 4 MNOs' 5G needs into this band, with a big chunk already belonging to 3/UK Broadband. So, it has stuck with fairly normal national licenses. Instead, there's some tweaks to incentivise MNOs to build out better rural coverage. This helps address some of the UK government's and voters' loudly voiced complaints, but doesn't really affect this post's core theme of private/novel network types.

It is the second consultation that is the most radical - and the one which could potentially reshape the mobile industry in the UK. There are two central elements to its proposals:

• Local-licensed spectrum in three "shared" bands, with Ofcom managing authorisations itself, with a fixed pricing structure that is just based on cost of administration, rather than raising large sums for the Treasury. There are proposals for low-power and mid-power deployments, suitable respectively for individual buildings or sparsely-populated rural areas.
• Secondary re-use of existing national licensed bands. In essence, this means that any existing mobile band could be subject to 3rd-party localised, short-term licensing in areas where there is no existing coverage. This is likely to be hugely controversial, but makes inherent sense - essentially it's a form of "use it or lose it" rule for MNOs. 

Local licensing in shared bands
 
The local licensing idea has numerous potential applications, from industrial sites to neutral-hosts to fixed-wireless access in rural districts. It updates the 1.8GHz 2006 low-power wireless licenses to the new approach, and adds in the new bands in 2.3GHz and 3.8-4.2GHz. 

While I'm sure that some objections will be raised - for example, perhaps around the low-cost aspects of these new licenses - I struggle to find many grounds for substantive disagreement. It is, essentially, a decent pitch for a halfway-house between national licenses and complete WiFi-style unlicensed access. Like CBRS in the US (which is much more complex in many ways) it could drive a lot of innovative network deployments, but at smaller scale, as CBRS is aimed at county-sized areas rather than local areas as small as 50m diameter. 

There are numerous innovations here - and considerable pragmatism too, and plenty of homework that's been done already. The medium-power band, and the rural restrictions for outdoor use, are both definitely interesting angles - and well-designed to ensure that this doesn't allow full national/mobile competition "on the cheap" by aggressive new entrants. The "what if?" consultation sections on "possible unintended consequences" and ways to mitigate  them are especially smart - frankly all governmental policy documents should do something similar.

Ofcom also discusses options for database-driven dynamic spectrum approaches (similar to CBRS, white spaces and others) but thinks that would take too long to develop. It essentially wants a quasi-static authorisation mechanism, but with short enough terms - 3 years - that it can transition to some DSA-type option when it's robust and flexible enough. 

(As an aside, I wonder if the ultimate version is some sort of decentralised blockchain-ish decentralised-database platform for dynamic spectrum, which in theory sounds good, but has not been tried in practice yet. And no, it shouldn't be based on SpectrumCoin cryptocurrency tokens).


Secondary licensing of existing bands

This is the really controversial one.

It basically tells the MNOs that their existing - or future - national licenses don't allow them to "bank" spectrum in places where it's not going to be actively used. If there's no coverage now, or credible mid-term plans for build-out in the future, then (as long as it won't create interference) then other parties can apply to use it instead, as long as Ofcom agrees that there's no risk of interference. 

Unlike the shared-band approach (except for 1800MHz), this means that devices will be available immediately, as they would operate in the same bands that already exist. It would also potentially apply for the new 5G bands, especially 3.4-3.8GHz. 

There's a proposed outline mechanism from Ofcom to verify that suggested parallel licenses should be able to go ahead, and again a fairly low-cost pricing mechanism.

Clearly, this is just a broad outline, and there are a lot of details to consider before this could become a reality. But the general principle is almost "use it or lose it", although more accurately it's "use it, or don't complain if someone else uses it until you're ready".

There are a few possible options that have been suggested in the past for this type of thing - leasing or sub-licencing of spectrum by MNOs, or some form of spectrum trading, for instance. In some countries / places this has worked OK, for example for mines in the Australian Outback running private cellular, that have been able to do a deal with one of the national MNOs. But it's complex to administer, and often the MNOs don't really have incentives or mechanisms to do this at scale. They're not interested in doing site-surveys, or drawing up unique contracts for £1000 a year for a couple of farmhouses or a wind-turbine on a hilltop. Plus, there are complexities about liability with leasing (it's still the original licensee's name on the license).

While there will be costs for Ofcom to manage this process, it thinks they should be reasonable - it's pricing the licenses at £950 for a 3 year period. 

All this is pretty radical. And I expect MNOs and industry bodies to raise blue-murder about this in the consultation. Firstly, they will complain about possible interference, which is valid enough, but can be ruled out in some locations. They'll talk about the internal costs of the acceptance process. And above all, they may talk about "cherry-picking" and perceived competitive distortions.

The most interesting aspect for me is how this changes the calculus for building networks indoors, in offices, factories or public buildings. This could limit the practice of MNOs sometimes insisting that enterprises pay for their own indoor systems, for delivery of the MNOs' network coverage and capacity. It could incentivise operators to focus on indoor coverage, if they want to offer managed services for IoT, for example.

There's a lot of other implications, opportunities and challenges I don't have time to address in this post, but will pick up on, over the next weeks and months. There are technical, regulatory, commercial, practical and political dimensions.

I'm really curious to read the responses to this consultation, and see what comes out of the next round of statements from Ofcom. I'm probably going to submit something myself, as I can see a bunch of questions and complexities. Let me know if you'd like me to brainstorm any of this with you.
 

Spectrum is not enough

One thing is definitely critical for both proposals. The availability of local-licensed spectrum is not enough for innovators and enterprises to build networks. There are many other "moving parts" as well - affordable radio infrastructure such as small-cells, inexpensive (likely cloud-based) core and transport networks, numbering resources, SIMs, billing/operations software, voice and messaging integration, and so on. The consultations cover numbering concerns and MNC (mobile network codes), at least up to a point.

In some cases, roaming deals with national networks will be needed - and may be hard to negotiate, unless regulatory pressure is applied. As I've been discussing recently (including in this report for STL - link) this ties in with a wider requirement for revisiting wholesale mobile business models and regulation.


Conclusions

This is all very exciting, and underscores a central forecast of mine, that mobile network business / ownership models will change a lot in the next few years. We'll see new network owners, wholesalers and tenants - even as normal MNOs consolidate and merge with fixed-lie players.

I'd like to think I've played a small part in this myself. I've advised clients, presented and run many workshops on the topic, including my own public events in May and November 2017 (link), and numerous speeches to regulators, industry groups and policymakers. Industry, rural and in-building users need both more coverage and sometimes more control / ownership of cellular networks in licensed bands. 

There will need to be customisation, systems integration and a wide variety of "special cases" for future cellular. The MNOs are not always willing or able to deliver that, so alternatives are needed. (Most will admit, privately at least, that they cannot cover all verticals and all use-cases for 4G/5G). WiFi works fine for many applications, but in some cases private cellular is more suitable.

We're seeing a variety of new network-sharing and private-spectrum models emerge around the world, and a general view that they are (in some fashion) needed. What's unclear is what is the best approach (or approaches). CBRS, German industrial networks, Dutch localised licenses, or something else. I'd say that Ofcom's various ideas are very powerful - and in the case of the secondary re-use proposal, highly disruptive.

Edit & footnote: rather than "secondary re-use", perhaps a better name for this proposal is "Cellular White-Space", given that it is, in essence, the mobile-spectrum equivalent of the TVWS model.

If you'd like to discuss this with me - or engage me for a presentation or input on strategy or regulatory submissions - please reach out and connect. I'm available via information AT disruptive-analysis DOT com

Also, please subscribe to this blog, follow me on Twitter and LinkedIn - and (new for 2019!) look out for new audio/podcast and YouTube content. 

There are two audio segments that relate to this blog post:
Part 1 covers the general background to private cellular (here)
Part 2 covers the specific Ofcom proposals (here)
 

Emerging risks to telcos from "Cuckoo Platforms"

Summary

• Telcos want to be platform players at varying points in their network architecture and service offerings. 
• But successful platforms generally need "anchor tenants" to gain scale.
• The problem comes when anchor-tenants are themselves other 3rd-party platforms.
• There is a risk of platforms-on-platforms acting as "cuckoos", pushing the native owner's eggs out of the nest.
• Telcos face a risk from major cloud platforms overwhelming their MEC edge-compute platforms.
• ... and a risk from major AI-based commerce platforms overwhelming their messaging, voice and IoT platforms.
• Other future platforms also face similar challenges.
• To succeed as platform providers, telecom operators need to have their own anchor-type services, and to have a well-designed approach to combating the risk of parasitic cuckoo platforms.

Background: the Internet overcame its broadband host

The cuckoo bird is infamous for laying its eggs in other birds' nests. The young cuckoos grow much faster than the rightful occupants, forcing the other chicks out - if they haven't already physically knocked the other eggs overboard. (See "brood parasitism", here).

Analogies exist quite widely in technology - a faster-growing "tenant" sometimes pushes out the offspring of the host. Arguably Microsoft's original Windows OS was an early "cuckoo platform" on top of IBM's PC, removing much of IBM's opportunity for selling additional software. 

In many ways, Internet access itself has outgrown its own host: telco-provided connectivity. Originally, fixed broadband (and the first iterations of 3G mobile broadband) were supposed to support a wide variety of telco-supplied services. Various "service delivery platforms" were conceived, including IMS, yet apart from ordinary operator telephony/VoIP and some IPTV, very little emerged as saleable services.

Instead, Internet access - which started using dial-up modems and normal phone lines before ADSL and cable and 3G/4G were deployed - has been the interloping bird which has thrived in the broadband nest instead of telcos' own services. It's interesting to go back and look at the 2000-era projections for walled-garden, non-Internet services.


The need for an anchor tenant

The problem is that everyone wants to be a platform player. And when you're building and scaling a new potential platform, it's really hard to turn down a large and influential "anchor tenant", even if you worry it might ultimately turn out to be a Trojan Horse (apologies for the mixed metaphor). You need the scale, the validation, and the draw for other developers and partners.

This is why the most successful platforms are always the one which have one of their own products as the key user. It reduces the cannibalisation risk. Office is the anchor tenant on Windows. iTunes, iMessage and the camera app are anchors on iOS. Amazon.com is the anchor tenant for AWS.

Unfortunately, the telecoms industry looks like it will have to learn a(nother) tough lesson or two about "cuckoo platforms".


MEC is a tempting nest

The more I look at Multi-Access Edge Computing (MEC), the more I see the risks of a questionable platform strategy. Some people I met at the Small Cells event, in the US a couple of weeks ago, genuinely believe it can allow telcos to become some sort of distributed competitor to Amazon AWS. They see MEC as a general-purpose edge cloud for mainstream app and IoT developers, especially those needing low-latency applications. 

I think this is delusional - firstly because no developer will want to deal with 800 worldwide operators with individual edge-cloud services and pricing, secondly because this issue of latency is overstated & oversimplified (see my recent post, link), and thirdly because a lot of edge-computing tasks will actually be designed to reduce the use of the network and reliance/spend on network operators.

But also, this "MEC as quasi-Amazon" strategy will fail mostly because the edge/distributed version Amazon will be Amazon. The recent announcement by Nokia that it will be implementing AWS Greengrass in its MEC servers is a perfect example (link). I suspect that other MEC operators and vendors will end up acting as "nests" for Azure, IBM Bluemix and various other public cloud providers.

Apologies for the awful pun, but these "cloud-cuckoos" will use the ready-made servers at the telco edge to house their young distributed-computing services, especially for IoT - if the wholesale price is right. They will also build their own sites in other "deeper" network locations (link). 

In other words, telcos' MEC deployments are going to help the cloud providers become even larger. They may get a certain revenue stream from their tenancy, but this will likely be at the cost of further entrenching the major players overall. The prices paid by an Amazon-scale provider for MEC hosting are likely to be far lower than the prices that individual "retail" developers might pay.

(The real opportunity for MEC, in my view, lies in hosting the internal network-centric applications of the operators themselves, probably linked to NFV. Think distributed EPCs, security gateways, CDN nodes and so on. Basically, stuff that lives in the network already, but is more flexible/responsive if located at the edge rather than a big data centre).


End-running Messaging-as-a-Platform (MaaP)

Another example of platform-on-platform cannibalisation is around the concept of "messaging as a platform", MaaP. Notwithstanding WeChat's amazing success in China, my sense is that it's being vastly over-hyped as a potential channel for marketing and customer interaction. 

I just don't see the majority of people in other markets forgoing the web or optimised native apps, and using WhatsApp or iMessage or SnapChat or SMS as the centrepiece of their future purchases or "engagement" (ugh) with companies and A2P functions. But where they do decide to use messaging apps for B2C reasons, the chatbots they interact with will not be MaaP-dedicated or MaaP-exclusive. 

These chatbots will themselves be general "conversational platforms" that work across multiple channels, not just messaging, with voice as well as text, and with a huge AI-based back-end infrastructure and ongoing research/deployment effort. They'll work in messaging apps, browsers, smart speakers, wearables, car and general APIs for embedding in apps and all sorts of other contexts.

Top of the list of conversational platforms are likely to be Google Assistant, Amazon Alexa, Apple Siri, Microsoft Cortana and Facebook M, plus probably other emergent ones from the Internet realm.


MaaP is "just another channel" for broad conversational/commerce platforms

In other words, some messaging apps might theoretically become "platforms", but the anchor tenants will be "wholesale" conversational platforms, not individual brands or developers. In some cases they will again be in-house assistants (iMessage + Siri, or Google Allo + Assistant for instance). In other cases, they may be 3rd-party bot ecosystems - we already see Amazon Alexa integrated into numerous other devices.

Now consider what telcos are doing around MaaP. As well as extending their existing SMS business towards A2P (application-to-person), they have also allowed third-parties like Twilio to absorb much of the added value as cPaaS providers. And when it comes to RCS* which has an explicit MaaP strategy, they have welcomed Google as a key enabler on Android, despite its obvious desire to use it mainly as a free iMessage rival. (*obviously, I'm not a believer in RCS succeeding for many other reasons as well, but let's leave that for this argument).

What the GSMA seems to have also missed is that Google isn't really interested in RCS MaaP per-se - it simply wants as many channels as possible for its Assistant, and its DialogFlow developer toolkit. To be fair, Google announced Assistant, and acquired API.AI (DialogFlow's original source) after it acquired Jibe. It's moved from mobile-first, to AI-first, since September 2015.

The Google conversational interface is not going to be exclusive to RCS, or especially optimised for it. (I asked the DialogFlow keynote speaker about this at last week's AI World conference in Boston, and it was pretty clear that it wasn't exactly top-of-mind. Or even bottom-of-mind). Google's conversational platform will be native in Android, in other messaging apps like Allo, Chrome, Google Home and presumably 1000 other outlets.

From an RCS MaaP perspective, it's a huge cuckoo that will be more important than the Jibe platform. There is no telco "anchor tenant" for RCS-MaaP as far as I can tell - I haven't even seen large deployment of MNOs' own customer-care apps using it. If I was an airline's or a retailer's customer experience manager, and I was looking beyond my own Android & iOS apps for message-based interactions, I wouldn't be looking at creating an RCS chatbot. I'd be creating an Assistant chatbot, plus one for Alexa and maybe Siri.


Can you cuckoo-proof a platform?

Apple, incidentally, has a different strategy. It tends to view its own services as integrated parts of a holistic experience. It tries to make its various platforms cuckoo-proof, especially where it doesn't have an anchor tenant app. This is a major reason for the AppStore policies being so restrictive - it doesn't want apps to be mini-platforms in their own right, especially around transactions. Currently, Google and Amazon are fighting their own mutual anti-cuckoo war over YouTube on Fire TV, and sales of Google Home on Amazon.com (link). Amazon and Apple are also mutually wary.

It's worth noting that telcos are sometimes pretty good at cuckoo-deterrence too. In theory, wholesale mobile networks could have a been a platform for all manner of disruptive interlopers, but in reality, MVNO deals have been carefully chosen to avoid commoditisation. A similar reticence exists around eSIM and remote SIM provisioning - probably wisely, given the various platform-on-platform concepts for network arbitrage that have been suggested.


Conclusions

In my view, both MEC and (irrespective of its many other failings) RCS are susceptible to cuckoo platforms. I also wonder if various telco-run IoT initiatives, and potentially network-slicing will become a platform for other platforms in future too.

One of the key factors here is a "the rush to platformisation". Platforms only succeed when they evolve out of already-successful products, which can become inhouse anchor tenants. Amazon's marketplace platform grew on the back of its own book and other retail sales. AWS success grew on the back of Amazon using its own APIs and cloud-computing.

MEC needs to succeed on the basis of telcos' own use of their edge-computing resources - which don't currently exist in a meaningful way, partly because NFV has been slower than expected. MaaP needs telcos' own messaging services and use-cases to be successful before it should look at external developers. With RCS, that's not going to happen.

Network-slicing needs to have telcos' own slices in place, before pitching to car manufacturers (or Internet players, again). IoT is the same too. Otherwise, expect even more telco eggs to be pushed out of the nest, as they help to foster other birds' offspring.

Both sides are wrong in the Net Neutrality debate

I've been watching the ongoing shouting-match about Net Neutrality (in the US & Europe) with increasing exasperation. Recently there was a "day of action" by pro-neutrality activists, which raised the temperature yet further.

The problem? Pretty much everyone, on both sides (and on both sides of the Atlantic), is dead wrong a good % of the time. They're not necessarily wrong on the same things, but overall the signal-to-noise ratio on NN is very poor.

There are countless logical fallacies perpetrated by lobbyists and commentators of all stripes: strawman arguments, false dichotomies, tu-quoque, appeals to authority and all the rest. (This is a great list of fallacies, by the way. Everyone should read it). 

Everyone's analogies are useless too - networks aren't pipes, or dumb. Packets don't behave like fluids. Or cars on a road. There are no "senders". It's not like physical distribution or logistics. Even the word "neutrality" is dubious as a metaphor. The worst of all is "level playing field". Anyone using it is being duplicitous, ignorant, or probably both. (See this link).

I receive lots of exhortations from both sides - I get well-considered, but too-narrow network-science commentary & Twitter debates from friend & colleague Martin Geddes. I read detailed and learned regulatory snark and insider stories from John Strand. I see telco/vendor CEOs speaking (OK, grandstanding) at policy conferences. I get reports of egregious telco- and state-based blocking of certain Internet services from Access Now, EFF and elsewhere. I see VCs and investors lining up on both sides, depending on whether they have web interests, or network vendor/processing positions. I watch comments from the FCC, Ofcom, EU Commission, BEREC, TRAI and others - as well as politicians. And I read an absolute ton of skewed & partial soundbites from lobbyists on Twitter or assorted articles/papers.

And I see the same, tired - often fallacious or irrelevant - arguments trotted out again and again. Let me go through some of the common ones:

• Some network purists insist routers & IP itself are (at core) non-neutral, because there are always vagaries & choices in how the internals, such as buffers, are configured. They try to use this to invalidate the whole NN concept, or claim that the Internet is broken/obsolete and needs to be replaced. Other Internet purists insist that the original "end-to-end" principle was to get as close as possible to "equal treatment" for packets, and either don't recognise the maths - or suggest that the qualitative description should be treated as a goal, even if the precise mechanisms involve some fudges. Everyone is wrong.
• In the US, the current mechanism for NN was to incorporate it under the FCC's Title II rules. That was a clunky workaround, after an earlier NN ruling was challenged by Verizon in 2011. In many ways, the original version was a much cleaner way to do it, as it risked less regulatory creep. Everyone is wrong.
• Many people talk about prioritisation of certain traffic (eg movies) and how that could either (a) allow innovative business models, or (b) disenfranchise startups unable to match web giants' payments. Yet the technology doesn't work properly (and won't), it's almost impossible to price/market/sell/manage in practice, and there is no demand. Conspicuously, there have been no lobbyists demanding the right to pay for priority. There is no market for it, and it won't work. It's irrelevant. Everyone is wrong.
• Some people assert that NN will reduce "investment" in networks, as it will preclude innovation. Others assert that NN increases overall investment (on networks plus servers/apps/devices). When I tried to quantify the possible revenues from 25 suggested non-neutral business models (link), I concluded the incremental revenue would barely cover the extra costs of implementation, if that. There are many reasons for investments in networks (eg 4G then 5G deployment cycles), while we also see CapEx being replaced by OpEx or software licences for managed or virtual networks. Drawing meaningful correlations is hard enough, let alone causation from an individual issue out of dozens. Everyone is wrong.
• Most of the debate seems to centre on content - notably video streaming. This ties in with operators wanting to bundle TV and related programming, or Netflix and YouTube seen as dominating Internet traffic and therefore being pivot-points for neutrality. Yet in most markets, IPTV is not delivered via the public Internet anyway, and is considered OK to prioritise as it's a basic service. On the opposite side, upgrades to high-speed consumer broadband is partly driven by the desire for streaming video - revenues would fall if it was blocked, while efforts to charge extra fees to Netflix and co would likely backfire - they'd insist on opposite fees to be carried, like TV channels. Meanwhile, most of the value in the Internet doesn't come from content, but from applications, communications, cloud services and data transmission. However, they are all much techier, so get mostly overlooked by lobbyists and politicians entranced by Hollywood, Netflix or the TV channels. Everyone is wrong.
• Lots of irrelevant comments on all sides about CDNs or paid-peering being examples of prioritisation (or of craven content companies paying for special favours). Fascinating area, but irrelevant to discussion about access-network ISPs. Everyone is wrong.
• Lots of discussion about zero-rating or "sponsored data" paid for by 3rd-parties and whether they are right/wrong/distortions. Lots of debate whether they have to be offered to all music / video streaming services, whether they should just be promotional or can be permanent. And so on. Neither relate to treatment of data transmission by the network - and differential treatment of pricing is, like CDNs, interesting but irrelevant to NN. And sponsored data models don't work technically or commercially, with a handful of minor exceptions. Ignore silly analogies to 1-800 phone numbers - they are totally flawed comparisons (see my 2014 rant here). Upshot: zero-rating isn't an NN issue, and sponsored data (with prioritisation or not) doesn't work (for at least 10 reasons). Everyone is wrong.
• Almost everyone in the US and Europe regulatory scene now agrees that outright blocking of certain services (eg VoIP) or trying to force specific application/web providers to pay an "access" toll fee is both undesirable or unworkable. It would just drive use of VPNs (which ISPs would block at their peril), or amusingly could mean that Telco1.com could legally block the website of Telco2.com, which would make make future marketing campaigns a lot of fun. In other words, it's not going to happen, except maybe for special cases such as childrens' use, or on planes. It's undesirable, regulatorily unacceptable, easy to spot and impossible anyway. Forget about it. Everyone is wrong.
• Lots of discussion about paid-for premium QoS on broadband, and whether or not it should apply to IoT, 5G, NFV/SDN, network-slicing, general developer-facing APIs and therefore allow different classes of service to be created, and winners/losers to be based on economic firepower. Leaving aside enterprise-grade MPLS and VPN services (where this is both permissible and possible), there's a lot of nonsense talked here. For consumer fixed broadband, many of the quality issues relate to in-home wiring and WiFi interference, for which ISP-provided QoS is irrelevant. For mobile, the radio environment is inherently unpredictable (concrete walls, sudden crowds of people, interference etc). Better packet scheduling can tilt the odds a bit, but forget about hard SLAs or even predictability. Coverage is far more a limiting factor. Dealing with 800 ISPs around the world with different systems/pricing is impossible. The whole area is a non-starter: bigger web companies know how much of a minefield this is, and smaller ones don't care. Everyone is wrong.

In summary - nearly anyone weighing in on Net Neutrality, on either side, is talking nonsense a good % of the time. (And yes, probably me too - I'm sure people will pick holes in a couple of things here).

So what's the answer?

• First, tone down the rhetoric on both sides. The whole thing is a cacaphony of nonsense, mostly from lobbyists representing two opposing cheeks of the same arse. Acknowledge the hyperbole. Get some reputable fact-checkers involved, and maybe sponsored by government and/or crowdsourcing.
• Second, recognise that many of the threatened non-neutral models are either impossible or obviously unprofitable. Arguing about them is sophistry and a waste of everyone's time. There are more important things at stake.
• Thirdly, design and create proper field-trials to try to prove/disprove assertions about innovation, cost structures etc. Select a state, a city or a class of users, or speciallly-licensed ISPs to run prototypes and actually get some proper data. Don't try to change anything on a national or international basis overnight, no matter how many theoretical "studies" have been done. Create a space for operators and developers to try out creating "specialised services", see if they work, and see what happens to everything else. Then develop policy based on evidence - and yes, you'll have to wait a few years. You should have done it sooner instead of arguing. I suspect it'll prove my point 2 above, anyway
• Fourth, consider "inevitabilities" (see this link for discussion). VPNs will get more common. NFV and edge-computing will get more common. Multiple connections will get more common. New networks (eg private cellular, LPWAN) will get more common. Multi-hop connections with WiFi and ZigBee & meshes will get more common. Devices & applications will fragment, cloudify, become "serverless", being componentised with micro-services, and be harder to decode and classify in the network. AI will get more common, to "game" the network policies, as well as help manage the infrastructure. All this changes the landscape for NN over the next couple of years, so we'll end up debating it all again. Think about these things (and others) now.
• Six, try some rules on branding Internet / other access. Maybe allow specialised services, but force them to be sold separately from Internet access, and called something else (Ain'ternet? I Can't Believe it's Not Internet?)
• Seven, get ISP executives (and maybe web/content companies' execs too) to make a public promise about acting in consumers' interests on Internet matters, as I suggested a few years ago - an IPocratic Oath. (link)
• Eight, train and empower the judiciary to be able to understand, collect data and adjudicate quickly on Internet-related issues. It may be that competition law could be applied, or injunctions granted, even in the absence of hard NN laws. Let's get 24x7 overnight Internet courts able to take an initial view on permissibility of traffic management - not wait 2 years and appeals during which time an app-developer slowly dies.
• Nine, let's get more accountability on traffic-management and network configurations, so that neutrality/competition law can be applied at a later date anyway. We already have rules on data-retention for customer calls & access to networks. Let's have all internal network configuration & operational data in ISPs' networks securely captured, encrypted, held in escrow and available to prosecutors if needed, under warrant. A blockchain use-case, perhaps? We're going to need that data anyway, to guarantee that customer data hasn't been tampered with by the network. 
• Ten, ask software (and content and IoT device and cloud) developers what they actually want from the networks. Most seem to be absent from the debate - the forgotten stakeholders. Understand how important "permissionless innovation" actually is. Query whether they care about network QoS, or understand how it links to overall QoS which covers everything from servers to displays to device chipsets to user-interfaces. Find out how they deal with network glitches, dodgy coverage - and whether "fallback" strategies mean that the primary network is getting more or less important. Do they want better networks, are they prepared to pay for them - or would they just rather have better visibility and predictability of when problems are likely to occur?

Apologies for the length of this piece. I'll happily pay someone 0.0000001c for it to load faster, as long as the transaction cost is less than 5% of that.

Get in touch with me at information AT disruptive-analysis dot com if you'd like to discuss it more, or have a sane discussion about Neutrality and what it really means for broadband, policy, 5G, network slicing, IoT and all the rest.