While Verizon  and many other wireless network operators plan to roll out their “5G” services between 2018 and 2020, that will be in ADVANCE OF THE ITU-R IMT 2020 “5G” standards. We believe these “5G” roll-outs are extremely negative for the REAL market for standardized “5G,” which won’t begin till 2021 at the earliest.
Note 1. According to Light Reading, a Verizon executive said that the operator’s home-brewed fixed 5G service will get up in running in 2018 but that he doesn’t expect true mobile 5G to arrive until 2020.
John Stratton, executive vice president and president of operations for Verizon Communications Inc. (NYSE: VZ), talking at the Deutsche Bank 25th Annual Media & Telecom Conference in Florida, said that Verizon will deliver fixed 5G in 2018. It is working on customer trials in 11 US cities now. (See Verizon Fixed 5G Tests to Top 3Gbit/s? and Verizon to Start Fixed 5G Customer Trials in April.)
Stratton promised a “meaningful commercial deployment of 5G” in 2018 from Verizon. He was cagey about what exact services the fixed system will provide, but it seems clear that a wireless alternative to cable/DSL services is high on Verizon’s priority list.
“The way we’re thinking about 5G… the ability to leverage the full scale of our business is an important factor,” Stratton added.
The customer trials, Stratton says, will allow Verizon to better understand the signal propagation characteristics of the fixed 5G system and “the load per node.” Verizon has previously said that it has been testing at ranges of up to 1,500 feet in diverse environments for its fixed option.
|Draft REVISION of ITU-R WP5 document IMT-2020/2:|
|Submission, evaluation process and consensus building for IMT-2020|
This document describes the process and activities identified for the development of the IMT‑2020 terrestrial components radio interface Recommendations.
1. Time schedule
The time schedule described below applies to the first invitation for candidate RITs (Radio Interface Technologies) or SRITs (Set of Radio Interface Technologies). Subsequent time schedules will be decided according to the submissions of proposals.
Submission of proposals may begin at 28th meeting of Working Party 5D (WP 5D) (currently planned to be 3-11 October 2017) and contribution to the meeting needs to be submitted by 1600 hours UTC, 7 calendar days prior to the start of the meeting. The final deadline for submissions is 1600 hours UTC, 7 calendar days prior to the start of the 32nd meeting of WP 5D in July 2019. The evaluation of the proposed RITs and SRITs by the independent evaluation groups and the consensus-building process will be performed throughout this time period and thereafter. The detailed schedule can be found in Figure 1.
Resolution ITU-R 65 on the “Principles for the process for future development of IMT for 2020 and beyond” outlines the essential criteria and principles that will be used in the process of developing the Recommendations and Reports for IMT-2020, including Recommendation(s) for the radio interface specification.
Recommendation ITU-R M.2083, IMT Vision – “Framework and overall objectives of the future development of IMT for 2020 and beyond” identifies three usage scenarios for IMT-2020 and envisions a broad variety of capabilities, tightly coupled with intended usage scenarios and applications for IMT-2020, resulting in a great diversity/variety of requirements. Recommendation ITU-R M.2083 also identifies the capabilities of IMT-2020, recognising that they will have different relevance and applicability for the different use cases and scenarios addressed by IMT‑2020, some of which are currently not foreseen. In addition, IMT-2020 can be applied in a variety of scenarios, and therefore different test environments are to be considered for evaluation purposes.
A test environment is defined as the combination of usage scenario and geographic environment as described in the draft new Report ITU-R M.[IMT-2020.EVALUATION]
2.2 Detailed procedure
The detailed procedure is illustrated in Figure 2 and is described below. Some activities are external to ITU-R and others are internal.
IMT-2020 terrestrial component radio interface development process
Step 1 – Circular Letter to invite proposals for radio interface technologies and evaluations
The Radiocommunication Bureau, through Circular Letter 5/LCCE/59, invites the submission of candidate RITs or SRITs addressing the terrestrial component of IMT-2020. Addenda to the Circular Letter provide further details on the invitation for submission of proposals (including technical performance requirements, evaluation criteria and template for submission of candidate technologies).
This Circular Letter and its Addenda also invite subsequent submission of evaluation reports on these candidate RITs or SRITs by registered independent evaluation groups in addition to the initial evaluation report endorsed by the proponent.
Step 2 – Development of candidate RITs or SRITs
In this step, which is typically external to ITU-R, candidate terrestrial component RITs or SRITs are developed to satisfy a version of the minimum technical performance requirements and evaluation criteria of IMT-2020 currently in force (as defined in Resolution ITU-R 65, resolves 6 g)) that will be described in the Draft New Report ITU-R M.[IMT‑2020.SUBMISSION].
The required number of test environments for an RIT or SRIT to be fulfilled is as follows:
An RIT needs to fulfil the minimum requirements for at least three test environments; two test environments under eMBB and one test environment under mMTC or URLLC.
An SRIT consists of a number of component RITs complementing each other, with each component RIT fulfilling the minimum requirements of at least two test environments and together as an SRIT fulfilling the minimum requirements of at least four test environments comprising the three usage scenarios.
Step 3 – Submission/reception of the RIT and SRIT proposals and acknowledgement of receipt
The proponents of RITs or SRITs may be Member States, Sector Members, and Associates of ITU‑R Study Group 5, or other organizations in accordance with Resolution ITU-R 9-5.
The submission of each candidate RIT or SRIT must include completed templates (these templates will be provided in draft new Report ITU-R M.[IMT-2020.SUBMISSION], together with any additional inputs which the proponent may consider relevant to the evaluation. Each proposal must indicate the version of the minimum technical performance requirements and evaluation criteria of the IMT-2020 currently in force that it is intended for and make reference to the associated requirements.
The entity that proposes a candidate RIT or SRIT to the ITU-R (the proponent) shall include with it either an initial self-evaluation or the proponents’ endorsement of an initial evaluation submitted by another entity. The submission will not be considered complete without an initial self-evaluation or the proponents’ endorsement of an initial evaluation submitted by another entity.
Proponents and IPR holders should indicate their compliance with the ITU policy on intellectual property rights, as specified in the Common Patent Policy for ITU‑T/ITU-R/ISO/IEC available at: http://www.itu.int/ITU-T/dbase/patent/patent-policy.html (See Note 2 in Section A2.6 of Resolution ITU-R 1-7).
The Radiocommunication Bureau (BR) receives the submission of technical information on the candidate RITs and SRITs and acknowledges its receipt
Submissions should be addressed to the Counsellor for ITU-R Study Group 5, Mr. Sergio Buonomo (email@example.com). These submissions will be prepared as inputs to ITU-R Working Party
Working Party 5D (WP 5D) and will also be made available on the ITU web page for the IMT-2020 submission and evaluation process.
Step 4 – Evaluation of candidate RITs or SRITs by independent evaluation groups (mid 2018-2010)
Candidate RITs or SRITs will be evaluated. The ITU-R membership, standards organisations, and other organizations are invited to proceed with the evaluation. Organizations wishing to become independent evaluation groups are requested to register with ITU-R preferably before the end of 2017. The independent evaluation groups are kindly requested to submit evaluation reports to the ITU-R. The evaluation reports will be considered in the development of the ITU-R Recommendation describing the radio interface specifications.
The evaluation guidelines, including criteria and test models, will be provided in draft new Report ITU‑R M.[IMT-2020.SUBMISSION] as announced in Circular Letter 5/LCCE/59 and its Addenda.
In this step the candidate RITs or SRITs will be assessed based on draft new Report ITU-R M.[IMT-2020.SUBMISSION]. If necessary, additional evaluation methodologies may be developed by each independent evaluation group to complement the evaluation guidelines in draft new Report ITU-R M.[IMT-2020.SUBMISSION]. Any such additional methodology should be shared between independent evaluation groups and sent to the BR for information to facilitate consideration of the evaluation results by ITU-R.
Coordination between independent evaluation groups is strongly encouraged to facilitate comparison and consistency of results, to assist ITU-R in developing an understanding of differences in evaluation results achieved by the independent evaluation groups and to form some preliminary consensus on the evaluation results. Consensus building is encouraged, such as grouping and/or syntheses by proponents in order to better meet the requirements of IMT-2020.
Each independent evaluation group will report its conclusions to the ITU-R. Evaluation reports should be addressed to the Counsellor for ITU-R Study Group 5, Mr. Sergio Buonomo (firstname.lastname@example.org).
The evaluation reports will be prepared as inputs to WP 5D and will also be made available on the ITU web page for the IMT-2020 submission and evaluation process.
The technical performance requirements and evaluation criteria for IMT-2020 are subject to reviews which may introduce changes to the technical performance requirements and evaluation criteria for IMT-2020. Proponents may request evaluation against any of the existing versions of the technical performance requirements and evaluation criteria that are currently in force for IMT-2020.
Step 5 – Review and coordination of outside evaluation activities
WP 5D will act as the focal point for coordination between the various independent evaluation groups. In this step, WP 5D monitors the progress of the evaluation activities, and provides appropriate responses to problems or requests for guidance to facilitate consensus building.
Step 6 – Review to assess compliance with minimum requirements
In this step WP 5D makes an assessment of the proposal as to whether it meets a version of the minimum technical performance requirements and evaluation criteria of the IMT-2020 in draft new Report ITU-R M.[IMT-2020.SUBMISSION].
In this step, the evaluated proposal for an RIT/SRIT is assessed as a qualifying RIT/SRIT, if an RIT/SRIT fulfils the minimum requirements for the five test environments comprising the three usage scenarios.
Such a qualified RIT/SRIT will go forward for further consideration in Step 7.
According to the decision of the proponents, earlier steps may be revisited to complement, revise, clarify and include possible consensus-building for candidate RITs or SRITs including those that initially do not fulfil the minimum requirements of IMT-2020 that will be described in the draft new Report ITU-R M.[IMT-2020.SUBMISSION].
WP 5D will prepare a document on the activities of this step and assemble the reviewed proposals and relevant documentation. WP 5D will keep the proponents informed of the status of the assessment.
Such documentation and feedback resulting from this step can facilitate consensus building that might take place external to the ITU-R in support of Step 7.
Step 7 – Consideration of evaluation results, consensus building and decision
In this step WP 5D will consider the evaluation results of those RITs or SRITs that have satisfied the review process in Step 6.
Consensus building is performed during Steps 4, 5, 6 and 7 with the objective of achieving global harmonization and having the potential for wide industry support for the radio interfaces that are developed for IMT-2020. This may include grouping of RITs or modifications to RITs to create SRITs that better meet the objectives of IMT-2020.
An RIT or SRIT will be accepted for inclusion in the standardization phase described in Step 8 if, as the result of deliberation by ITU-R, it is determined that the RIT or SRIT meets the requirements of Resolution ITU-R 65, resolves 6 e) and f) for the five test environments comprising the three usage scenarios.
Step 8 – Development of radio interface Recommendation(s)- mid 2018 till Dec 2020
In this step a (set of) IMT-2020 terrestrial component radio interface Recommendation(s) is developed within the ITU-R on the basis of the results of Step 7, sufficiently detailed to enable worldwide compatibility of operation and equipment, including roaming.
This work may proceed in cooperation with relevant organizations external to ITU in order to complement the work within ITU‑R, using the principles set out in Resolution ITU-R 9-5.
Step 9 – Implementation of Recommendation(s)
In this step, activities external to ITU-R include the development of supplementary standards (if appropriate), equipment design and development, testing, field trials, type approval (if appropriate), development of relevant commercial aspects such as roaming agreements, manufacture and deployment of IMT-2020 infrastructure leading to commercial service.
 The term RIT stands for Radio Interface Technology.
 The term SRIT stands for Set of RITs.
 The draft new Report ITU-R M.[IMT-2020.EVAL] is under development and will be finalized in June 2017.
 The draft new Report ITU-R M.[IMT-2020.SUBMISSION] is under development and will be finalized in June 2017.
 Provides the confirmation to the sender that the submission was received by the BR and that the submission will be forwarded to WP 5D for subsequent consideration.
 Independent evaluation group registration forms are available at:
 As defined in Step 2, each component RIT of the SRIT needs to still fulfil the minimum requirements of at least two test environments.
 As defined in Step 2, each component RIT of the SRIT needs to still fulfil the minimum requirements of at least two test environments.
As several IDC telecommunications analysts were attending Mobile World Congress this week, there were very few communications/networking sessions or data points at this year’s IDC Directions conference, February 28, 2017 in Santa Clara, CA. In this event summary, we touch on an IDC forecast for IoT, it’s relationship to “5G,” and cellular communications opportunities for the Connected Car. We also provide Author’s Notes on the current status and future directions of various standards, e.g. 5G/IMT 2020, V2X, and V2V.
1. Frank Gens Keynote on Digital Transformation (DX) and the New Economy:
In 2017–2020, we’ll see the emergence of digital transformation at a macroeconomic scale — the dawn of the “DX economy.” In this new economy, enterprises in every industry will compete based on their ability to hit and exceed a new set of demanding performance benchmarks enabled by cloud, mobility, cognitive/AI, the Internet of Things, immersive interface, and other technologies — and the digital transformations enabled by these technologies. In the DX economy, every growing enterprise — no matter its age or industry — will become a “digital native” in the way its executives and employees think and operate. And tech industry leaders will need to align with this new customer reality — bringing the right technologies, ecosystems, and customer insight to the fight for IT market share.
Key Points on IoT:
- IoT is highly verticalized (i.e, many different industry vertical market segments) and is tapped into DX use cases.
- IDC predicts $1.3T in IoT spending by 2020. At 22%, manufacturing will be the largest IoT vertical industry segment.
- Every industry has an IoT strategy or initiative to be implemented in the near future.
- By 2019, 43% of IoT data will be processed at the edge of the cloud.
- IDC forecast for “connected things” = IoT endpoints: 15B by 2016, 30B by 2020, 80B by 2025
2. Carrie MacGillivray on 5G: Five Reasons IoT Drives the Collision of Mobility and IoT:
Reasons Why IoT will need 5G:
- Speed and/or Reliability? Many IoT applications will require low latency, high throughput and/or ultra reliable operation (always available).
- Universe of Connections, Standardized for all. Challenge: in IoT today there are multiple “standards” (industry specifications) at the network, device, and security levels. “Mobile has standardized for the most part, but they are still bifurcated.”
Author’s Note: There was no mention of the 5G standards bodies, which at this time are led by ITU-R WP5D IMT 2020 project (AKA “5G” standard). ITU-R IMT 2020 initial recommendations are scheduled to be completed by November 2020 and to be published the following month. Nonetheless, over a dozen mobile network operators are conducting “5G” trials this year and next, based on their own proprietary “5G” specs.
3. Edge Computing Gets More Interesting- But what is edge computing? According to Carrie: “The Edge is the farthest point from the enterprise Data Center or cloud, where processing, compute and/or storage occurs.”
4. Need for Complementary On-Ramps – WLANs (e.g. WiFi, Zigbee), short range (e.g. Blue Tooth)/near field (NFC), LPWA (Low Power Wide Area networks), cellular backhaul, satellite communications.
5. 5G Drives Next Gen Tech- as innovation accelerates and gains market traction, connectivity becomes an enabler of IoT and mobility. Some next gen technologies to be enabled by 5G include: Voice-as-an-Application, AR/VR, Artificial Intelligence, and Machine Learning.
Examples of 5G-IoT Applications:
- Remote monitoring of oil rigs, generators, other industrial equipment where a quick response (low latency) is required. One benefit could be predictive maintenance.
- Remote surgery with ultra short lag time between surgeon’s movements and (robotic) action on patient.
- Remote control of machinery, e.g. machines that cut down/fall large trees which could be dangerous to a human being.
- Surveillance & security – Emergency response times and human safety.
- 5G will create the intersection point for IoT and mobility.
- Video, remote “control”, human-interactive applications are the use cases to lead adoption.
- 5G will provide the backbone for many edge use cases for mobile and IoT 5G is the Mobile Internet (for things and people).
- IoT forecast to be released next week: By 2025, there will be 82.2B connected IoT endpoints of which ~17B (or ~20%) will use 5G for connectivity.
3. Brian Haven and Heather Ashton on “the Connected Car”:
5G: Two Value Propositions for the Connected Car:
a] Enhanced Mobile Broadband (EMB):
- Evolution of today’s 4G network
- Higher throughput speeds than LTE
- Standardization process underway (in ITU-R IMT 2020), commercial rollout in 2020 (Author’s Note: December 2020 is when the first IMT 2020 set of ITU-R recommendations will be published so any 2020 rollout will be in advance of the ITU-R “5G” standards.)
b] Next-Gen Capabilities:
- Important enabler for V2X+ (Vehicle to Everything is not part of IMT 2020 “5G”)
- Low latency, high density, speed and bandwidth
- Will rollout later than EMB, in the 2021-2022 timeframe
The Role of the Operator and Network:
- 5G will be involved to varying degrees (not specified how?)
- Degree of operator involvement will be based on subjective service/technology
- Focused on meaningful insertion in value chain (what is meaningful?)
+ Author’s Note on V2X Standardization History:
WLAN-based V2X communication is based on a set of standards drafted by the American Society for Testing and Materials (ASTM). The ASTM E 2213 series of standards looks at wireless communication for high-speed information exchange between vehicles themselves as well as road infrastructure. The first standard of this series was published 2002. Here the acronym Wireless Access in Vehicular Environments (WAVE) was first used for V2X communication. V2X encompases V2V (vehicle to vehicle) and V2I(vehicle to Infrastructure interaction).
From 2004 onwards the IEEE started to work on wireless access for vehicles under the umbrella of their standards family IEEE 802.11 for Wireless Local Area Networks (WLAN). Their initial standard for wireless communication for vehicles is known as IEEE 802.11p and is based on the work done by the ASTM. Later on in 2012 IEEE 802.11p was incorporated in IEEE 802.11.
In September 2016, 3GPP completed an initial Cellular V2X standard. In February, 2017, 3GPP announced a first set of LTE-V2X Physical layer standards (in 3GPP Release 14) that use a radio technology based on a LTE sidelink,which specifically addresses communications at vehicular speeds. This standard is NOT based on IMT 2020/5G!
Here’s a recent 5GAA presentation by Dino Flore on 5G – V2X: The automotive use-case for 5G
Author’s Note: IoT/MMC and “5G”
IoT (often referred to as Machine to Machine Communications or MMC) is an important use case for the “5G” IMT 2020 set of recommendations. Please refer to “Usage Scenarios of IMT 2020” in this ITU-R report on IMT 2020 Background.
In a recent IHS-Markit survey, IoT was rated by 79% of network operator respondents as the top use case for 5G, up from 55% in last year’s study.
A February 6, 2017 U.S. contribution to the ITU-R WP5D meeting proposed a new ITU-R report titled:
The Use of the Terrestrial Component of International Mobile Telecommunication (IMT) for Narrowband and Broadband Machine-Type Communications
It remains to be seen if that report will be approved and if it impacts the IMT 2020 “5G” standardization work in ITU-R WP 5D. A few excerpts of the contribution follow:
Machine-type communications (MTC) are penetrating into our daily life and promising to deliver a more convenient, intelligent and hyper-connectivity world. MTC is expanding with a rapid speed and has tremendous market potential. There are many kinds of services and applications of MTC with diversified requirements targeting different market segments, such as asset tracking, smart home, video surveillance, etc. posing distinct challenges in terms of coverage, power consumption, cost, data rate and etc.
MTC/IoT is a subject of high interest for the information and communication technology industry, as well as end users, regulators and other sectors that can benefit from this new communication technology or pattern. International Mobile Telecommunication (IMT) networks are expected to play a critical role as network infrastructures to support MTC applications and IoT.
Relevant ITU-R Recommendations and Reports:
- Recommendation ITU-R M.2012 – Detailed specifications of the terrestrial radio interfaces of International Mobile Telecommunications Advanced (IMT-Advanced)
- Recommendation ITU-R M.2083 – IMT Vision – Framework and overall objectives of the future development of IMT for 2020 and beyond
Technical and Operational Aspects of IMT-based Radio Networks and Systems to Support Narrowband and Broadband Machine-Type Communication:
In recent 3GPP releases standardization enhancements for Machine-Type Communication (MTC) have also been introduced, including support for congestion control, improved device battery lifetime, ultra-low complexity devices, massive number of devices and improved indoor coverage.
Recent releases of the 3GPP standards have introduced enhancements for Machine Type Communications (MTC), e.g. 3GPP Release 13: LTE Physical Layer Enhancements for MTC (eMTC) (LTE), Narrow band Internet of Things (NB-IoT), etc have evolved into LTE category M1 (AKA LTE M).
Source: ITU-R, Geneva, 23 February 2017
Membership of ITU including key industry players, industry forums, national and regional standards development organizations, regulators, network operators, equipment manufacturers as well as academia and research institutions together with Member States, gathered in Geneva today, as the working group responsible for IMT systems, and completed a cycle of studies on the key performance requirements of 5G technologies for IMT-2020.
Draft New Report ITU-R M.[IMT-2020.TECH PERF REQ] is expected to be finally approved by ITU-R Study Group 5 at its next meeting in November 2017.
“IMT-2020 will be the global cornerstone for all activities related to broadband communications and the Internet of Things for the future – enriching lives in ways yet to be imagined,” said ITU Secretary-General, Houlin Zhao.
“The IMT-2020 standard is set to be the global communication network for the coming decades and is on track to be in place by 2020. The next step is to agree on what will be the detailed specifications for IMT-2020, a standard that will underpin the next generations of mobile broadband and IoT connectivity,” said François Rancy, Director of ITU’s Radiocommunication Bureau.
We can anticipate that there will now be a number of early technical trials, market trials and deployments of 5G technologies based on the foreseen developments slated for IMT-2020. These systems may not provide the full set of capabilities envisaged for IMT-2020, but the results of these early activities will flow forward into, and assist the development of, the final complete detailed specifications for IMT-2020.
ITU claims that IMT is the on-going enabler of new trends in communication devices – from the connected car and intelligent transport systems to augmented reality, holography, and wearable devices, and a key enabler to meet social needs in the areas of mobile education, connected health and emergency telecommunications.
E-applications are transforming the way we do business and govern our countries, and smart cities are pointing the way to cleaner, safer, more comfortable lives in our increasingly urbanized world.
A complete ITU-R roadmap, detailing all the next steps leading up to IMT 2020, is available here
To be truly classified as 5G (according to the above referenced IMT 2020 Performance Requirements report), “5G” cellular networks are expected to meet the following minimum requirements:
Downlink peak data rate of 20 Gbit/sec
Uplink peak data rate of 10 Gbit/sec
Downlink peak spectral efficiency of 30 bit/s/Hz
Uplink peak spectral efficiency of 15 bit/s/Hz
Downlink user experienced data rate of 100 Mbit/sec
Uplink user experienced data rate of 50 Mbit/sec
Reference – Press Release:
Reference – Presentation on IMT 2020:
Usage Scenarios- page 4
Two Verizon executives offered more insights this week into the telecom’s plans to introduce fixed-broadband 5G service in 2018, as well as its strategies for virtualization. According to Sanyogita Shamsunder, Verizon’s Director of Network Infrastructure Planning, the 5G trials are about more than just testing fixed 5G in real world situations – they’re more about data gathering. That data, she said, will not only allow Verizon to determine what works and what doesn’t in fixed wireless, but it will also apply to mobile use cases as well.
“This is really the first proving ground on how millimeter wave with beamforming and all that works in various environments,” she said. “Like with anything else 5G is a technology that will serve multiple use cases, like IoT and broadband. And if you think about it, fixed wireless is enhanced broadband. Whether it’s mobile or fixed, a lot of our customers today use a phone sitting down in their home in their offices. So, it’ll slide right into a broader use case of mobility.”
“With software defined networking and NFV we can channel the resources of the network,” Shamsunder said. “We are on the path to virtualization with a lot of our core network, and even today with our 4G network. That provides a lot of flexibility for us. We have several parts of our network which are already virtualized and then as we go to 5G, virtualized network is the only way we want to be deploying 5G, including parts of the radio network. We’re talking about things like (virtualized RAN) and (extensible RAN) and we’re working with 3GPP and all the standards bodies to have the flexibility to build a software-based RAN as well as core.”
“We have several parts of our network which are already virtualized and then as we go to 5G, virtualized network is the only way we want to be deploying 5G,” Ms. Shamsunder added.
Read more at:
Verizon’s fixed 5G plans include offering fixed wireless broadband service outside the company’s traditional local service footprint, said Matt Ellis, Verizon chief financial officer and executive vice president today. Ellis made his comments in a question and answer session at an investor conference, where he outlined the Verizon 5G roadmap.
Verizon 5G Roadmap
Verizon currently has 5G fixed wireless technology testing underway in “eleven geographies” and “different environments” including urban and suburban settings, Ellis said.
The company expects to have results from those tests in “a few months” and to be “in a position to launch [service] in 2018,” according to Ellis. That launch would use spectrum in the 28 GHz band, which Verizon gained use of through its purchase of XO Communications.
That purchase could give Verizon an edge, as the FCC has yet to establish a date for a planned auction of high-frequency spectrum suitable for 5G.
Verizon anticipates layering mobile service onto the fixed 5G infrastructure around 2020, Ellis said. Densification, which takes the form of small cell deployments, “adds significant capacity and pre-provisions the network for 5G,” Ellis said. He also noted that Verizon was instrumental in organizing industry groups that helped accelerate the standards process for 5G.
This year’s Verizon capex budget will be spent on boosting 4G coverage, density and capacity and on fiber, with “a bit of spending” on 5G, the CFO noted.
Verizon’s CFO Matt Ellis
Read more at:
As 2016 ended as another year of consolidation within the semiconductor industry, GSA Global examined what’s ahead for 2017 and what are the driving factors at the February 22, 2017 GSA Meetup in San Jose, CA. Most forecasts predict 2017 to be a growth year for the semiconductor industry and those were explained at the Meet Up. Five presentations from market research, private equity and systems integrator firms addressed the status and market drivers for the chip industry.
At the February 22, 2017 GSA Meetup in San Jose, CA, several market research firm presentations referenced the Internet of Things (IoT) as a key market driver for the semiconductor industry. Many new IoT forecast were made and several significant survey results were revealed.
One of the most important was that 92% of potential IoT users are concerned about cyber-security, according to Vijay Joshi of KPMG. That includes security functions like authentication, encryption, threat mitigation, anti-malware protection, etc.
There’s been a rapid increase in “ransomware,” where a hacker demands a ransom after penetrating a connected car, factory with connected devices, or a wearable connected device. One solution would be to embed security functions noted above in hardware or firmware in the IoT connected device along with default credentials. [Author opines that there don’t appear to be any widely accepted standards for the actual security mechanisms to be used-see note below.] In addition to hardware based security functions, an “unpatched OS” (Linux, Android) was recommended, but not defined by the KPMG speaker.
Public and private sector IoT adapters must know what is going on around them so that they can identify when an attack has taken place or when an attack is imminent. Hence, real time monitoring and analytics are mandatory. That is best achieved by including comprehensive cyber-security within an IoT framework.
Author’s Note: We completely agree, but don’t see solid IoT security happening yet. The LPWA (Low Power Wide Area) networks and wireless LAN standards organizations/spec writing bodies are not incorporating network security into their standards/specifications which primarily deal with only the network access (MAC and PHY).
Golnar Pooya of Accenture noted that IoT has become an increasingly complex landscape. She made several interesting IoT forecasts:
- 40% of all data transmitted/received will come from connected sensors by 2020
- 50B connected devices expected by 2020
- 4.2B people will access 4G-LTE networks by 2020
- 80% of Fortune 100 could offer public APIs
- 31 Exabytes of Mobile data traffic per month by 2020
- IoT will produce an “outcome based economy,” where the “proper outcome (?)” will come from new connected ecosystems, an IoT platform enabled marketplace (see Platform Wars below, and a shared risk environment.
IoT Vision and Value:
IoT vision will have (Internet or Gateway connected) devices talk to each other and also to cloud based compute and storage servers.
Value of IoT is to draw insights and drive action from the raw data. Lots of data transmitted has limited value unless analyzed to generate insights that drive decisions and/or actions.
IoT Platform Wars:
There are currently over 300 IoT Platforms, with different functionality and implementations. The resulting “platform wars” are causing confusion which is reducing the rate of IoT adoption. Mr Pooya predicted that only 10% of the IoT Platforms would succeed in the market. Software and analytics will be the key differentiating factors.
Example of Ecosystem Strategic Partnerships: Intel & Accenture ESP:
• Bring end-to-end solutions to market
• One stop shop / one partner to manage
Author’s Note: The details of this partnership were not described. However, we found this link which provides a thumbnail sketch of the strategic partnership: https://www.accenture.com/us-en/service-accenture-intel
Recommendations [Author ?s]:
- Suppress the Platform Suppression [How to narrow down the number of platforms when there is no reference model for the functionality an IoT platform should contain?]
- Pick the Right Teammates/Partners [How to evaluate partners?]
- Support Standards Bodies [Which one’s- official or private alliances/forums?]
- Prioritize Use Cases and Outcomes [Methods and procedures to do this?]
Consider the connected car/vehicle as a huge potential IoT market. According to Jim Hines of Gartner, 80% of all new vehicle models in mature markets will have built-in data connectivity by 2020. Several different types of car connectivity were hypothesized, including: wireless and wireline Ethernet connections within the car, Vehicle to Home, Vehicle to Vehicle (V2X), Vehicle to Smart City/Smart Factory, Intermodal (not defined).
The connected vehicle will be characterized by:
- Human-Machine Interface
- Digital Security
- Data Analytics
- In-Vehicle Ethernet
- OTA (over-the-air) Updating
- Vehicle Information Hub Location-Based Services
- Embedded OS (no specific OS suggested)
Hines said that “automotive applications are leading semiconductor market growth.” [Perhaps that’s why Qualcomm is acquiring NXP- a leader in automotive semiconductors]
His recommendations were as follows:
Focus on the key technologies for enabling connected car functions: – Sensing technologies – Human-machine interface – High-performance processing – Wireless communications
Align your product and service offerings with connected car leaders
View automobiles as mobile sensors and connected devices that will enable new digital business models
Dan Hutchinson of VLSI Research said that IoT will drive a data supply chain explosion. It’s one of the strong engines of the next “virtuous cycle” for the IC industry, which will propel the demand for semiconductors. The other drivers, according to a chart attributed to Gary Dickerson of Applied Materials are: visual computing, artificial intelligence and cloud computing/storage). The “smart factory,” presumably chock full of IoT devices, is projected to generate 1M Gbytes of data per day (timeframe not provided).
The cyclicality of the semiconductor industry has moderated for semiconductors, but not for semiconductor production equipment, according to Hutchinson. [Yet semiconductor/chip growth has declined sharply from 2000-2005 period as per a chart shown.]
Summary & Conclusions:
- Moore’s Law has created $13 Trillion of market value for semiconductors
- Without semiconductors: – All those Unicorns would be hornless – No Google – No Facebook – No Amazon – No Netflix – Just to name a few …
- Things are looking up for 2017 & 2018
- However … Let’s NOT party like it’s 1999
IoT Conclusions [Author’s Opinion]:
IoT certainly offers tremendous potential and power to create an entire new ecosystem and supply chain. However, the problems identified 10 years ago for Machine to Machine (M2M) communications and IoT have still not been resolved. At least the security problem was discussed at length by the KPMG presenter and noted by the Accenture speaker. That’s a good start, but follow up by IoT industry participants and official standards bodies is urgently needed.
GSA is comprised of 375 members that represent nearly 75% of the $350B industry and boasts the broadest group of executive membership from the entire semiconductor ecosystem.
GSA is the only organization that brings together the entire semiconductor ecosystem in order to represent industry-wide interests and thoughts.
GSA provides a neutral environment for executives within the semiconductor industry to meet and collaborate on ways to improve efficiencies and address industry wide topics and concerns.
GSA identifies and discusses emerging trends & opportunities, and how our membership can best participate and impact change.
GSA encourages and supports entrepreneurship through various Leadership Councils, Technical Interest Groups and Resources.
GSA promotes the visibility of our members and their contributions to our industry. Testimonials: http://www.gsaglobal.org/gsa-membership/testimonials/
Two New GSA Interest Groups:
- VLSI design trends
- Materials, Manufacturing, Packaging and Test
GSA will be providing an opportunity for our members to join us in two individual interest groups to address the technical and business challenges unique to their specific ecosystem.
Opportunity to discuss technology, materials, scale, equipment and manufacturing, as well as common issues and concerns.
Plan is to meet twice a year
AT&T has completed a lab test of streaming broadband fixed-wireless signals of its DIRECTV Now (Internet TV streaming service) over 39 GHz millimeter wave airwaves using Nokia’s AirScale technology. The test, which Nokia termed a global first, showed how high-frequency spectrum can support over-the-top service delivery. The trial was conducted at the AT&T Labs facility in Middletown, N.J.
“With this trial, we’re doing something that no other operator has done – regionally or globally,” Tom Keathley, SVP of wireless network architecture and design at AT&T, said in a statement. “We expect 39 GHz to be an important 5G band in the United States, and we look forward to continuing our collaboration with Nokia to further advance 5G technology in this band.”
AT&T has stated plans to trial 5G services using the 28 GHz and 39 GHz bands, with the former offering better propagation characteristics, while the latter has more available resources. The carrier is set to pick up control of 39 GHz spectrum through its recently announced purchase of FiberTower.
AT&T earlier this year announced plans with Ericsson and Qualcomm to conduct interoperability testing and over-the-air trials based on what they expect to be 5G technical specifications and using millimeter wave spectrum bands. The companies said the tests will tap spectrum in the 28 GHz and 39 GHz bands in an effort to bolster their expectations for the 5G “New Radio” specifications being worked on by the Third Generation Partnership Project as part of the expected LTE Release 15 standard.
Both bands are also included in the Federal Communications Commission’s Spectrum Frontiers proceedings, which has the federal government looking to open up nearly 11 gigahertz of spectrum above the 24 GHz band in support of mobile telecom services. The 28 GHz band has been receiving more attention from operators, with Verizon Communications, Sprint, T-Mobile US, C Spire and U.S. Cellular all announcing use of the band for 5G network trials.
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T-Mobile has been closing the gap on Verizon’s lead in our surveys over the past three years. The latest results show T-Mobile has now moved into the top spot in overall customer satisfaction, loyalty, and preferences among planned switchers.
Verizon still leads in satisfaction with coverage, reliability, speed of network and streaming video quality. But T-Mobile continues to challenge the status quo by pressuring the competition with non-traditional offerings while remaining sensitive to price.
The survey of 4,125 primarily North American respondents from 451 Research’s Leading Indicator panel looks at key wireless industry trends – including data plans and usage, as well as the impact of T-Mobile’s One unlimited data plan.
T-Mobile Leads Highly Competitive Wireless Market:
T-Mobile (38% Very Satisfied) now leads the wireless industry in customer satisfaction, up 3 points since the previous survey in September 2016. Verizon (37%; unchanged) is a close second, but remains at its all-time low in satisfaction.
|Sprint (28%; up 2 points) has moved into a tie with AT&T (28%; up 1 point) for third place. We note this is the first time Sprint has ranked third in over three years.
Customer Loyalty: Wireless subscriber churn remains in check despite aggressive promotions around devices and data plans among the four major carriers.
In the latest survey, less than one-in-ten (9%) respondents plan to change wireless carriers in the next 90 days – down 1 point since September, but unchanged from a year ago.
T-Mobile (8%) has a slim edge over the competition, registering the industry’s lowest churn rate. Verizon (9%) and AT&T (9%) customers are nearly as loyal.
|Customer retention is more of a concern for Sprint (13%). Though the current results are an improvement since the previous survey, it is 4 points worse compared to a year ago.
Why Subscribers Switch or Stay: Cost remains the key reason for switching among Sprint (36%), AT&T (41%), and Verizon (57%) customers. On the other hand, just 16% of T-Mobile subscribers plan on switching because of cost.
What’s the most important reason why you’re likely to change wireless service providers?
Mobile network performance remains the biggest reason why T-Mobile customers want to switch (31% Poor Reception/Coverage), but their low overall churn rate suggests that T-Mobile customers consider the trade-off with lower price worthwhile.
The trade-off is the opposite for Verizon customers. Verizon’s relatively low churn is an indication that their subscribers are willing to pay a higher price for network performance, with just 6% citing Poor Reception/Coverage.
According to Rich Karpinski, 451 Research Principal Analyst – Mobile Operator Strategies, “T-Mobile passing Verizon in the all-important Very Satisfied metric is a significant milestone. Ultimately, it reveals two things: happy customers at T-Mobile and questioning customers at Verizon. As we saw in Verizon’s latest earnings results, our VoCUL Leading Indicator survey results track closely to reality.
“Verizon retail postpaid churn – while still low – has been inching higher. Competition has also cut into Verizon’s Average Revenue Per Account (ARPA) for its shared data plans, which has declined more than 10% in Q4 2016 vs. Q4 2015. That said, Verizon has done a lot right lately to try to stem the tide but it has yet to find a magic bullet. Meanwhile, T-Mobile keeps its Uncarrier momentum chugging along, Sprint continues applying pricing pressure and AT&T takes its flyer at video and content.”
Future Service Provider Preferences: T-Mobile (14%) is the most preferred wireless service provider among planned switchers in the latest survey. Verizon (11%) and AT&T (11%) rank second.
For AT&T, this is the best result in the past two years, while for Verizon this is the provider’s worst mark over the same time frame. Sprint has been unable to move the needle in its favor, as just 6% of switchers say they would most prefer to sign up with Sprint.
Wireless Data Plans:
Unlimited data plans have roared back into the wireless conversation, a trend that has largely resulted from the rollout of new T-Mobile and Sprint wireless plans, along with AT&T’s DirecTV bundled unlimited offering.
But as the following chart shows, actual use of unlimited data plans (30%) are relatively flat over the past year:
The lack of a jump for unlimited data plans is somewhat surprising, despite recent marketing efforts promoting unlimited offerings.
“Unlimited plans will make their mark, but it may take some time. Device financing and upgrade plans – as well as a variety of limited time promos and grandfathered offers – mean that T-Mobile and Sprint customers won’t all jump to unlimited at once. Plus T-Mobile only moved to exclusively offering its T-Mobile One unlimited plan in January,” notes Karpinski.
“The relatively higher cost compared to tiered or shared data plans could also slow the move to unlimited plans. And though unlimited customers get more for their buck, they also pay more out-of-pocket. In the long run, the value and price certainty of current unlimited offers will attract a large share of mobile users.”
A Closer Look at T-Mobile’s One Unlimited Data Plan:
This latest survey shows 15% of T-Mobile subscribers have signed up for the One unlimited plan, and another 20% are considering signing up in the next 90 days. Importantly, more than a quarter of T-Mobile One subscribers (27%) say they switched from a different wireless provider to sign up.
Note that the survey was conducted before T-Mobile announced its updated One plan which now includes taxes and fees as part of its advertised price.
Previous Wireless reports highlighted how T-Mobile’s BingeOn offering acted as catalyst for higher customer satisfaction. Being able to stream unlimited video without using monthly data allowance was a strong incentive, as customer satisfaction among BingeOn users was higher than all other T-Mobile subscribers.
Is the T-Mobile One plan having a similar impact? Yes, T-Mobile One customers rated their service higher than all T-Mobile customers nearly across the board – with the biggest margin being in Value (50% T-Mobile One vs. 43% all T-Mobile customers).
Data Plan Satisfaction: Turning to customer satisfaction with specific aspects of their data plans, we see the narrowest disparity among the major providers for Quality of Streaming Video. Verizon (36% Very Satisfied) has an edge over the competition, but T-Mobile (34%) and Sprint (34%) customer satisfaction is only 2 points lower, even though both cap most streaming video at standard definition quality (i.e., 480p).
How satisfied are you with each of the following aspects of your current data plan?
AT&T customers (31%) are relatively less satisfied with their video quality, but it’s not far behind the other three providers. This may however change as AT&T will now limit video traffic to 480p quality across most plans through its ‘Stream Saver’ feature.
In terms of other aspects, Verizon wins big in Coverage (54% Very Satisfied) and Reliability (51%), but when it comes to Speed of Network, Verizon (38%) holds a small lead over the next closest competitor T-Mobile (35%).
The satisfaction ratings for Cost and Value clearly show that despite limits on video streaming and network performance, T-Mobile and Sprint customers feel they’re getting a greater bang for their buck. Cost and perceptions of value remain a challenge for AT&T and Verizon.
Data Plan Changes – Next 90 Days: Just one-in-ten (11%) respondents say they’ll change their type of data plan over the next 90 days. Tiered (14%) and shared (12%) plan customers remain more likely to say they’ll make a change than unlimited users (7%).
At the provider level, Verizon customers (13%) are most likely to change their type of plan, while Sprint and T-Mobile customers are least likely (7%).
Importantly, more than half of respondents changing their data plan (55%) also plan on switching wireless service providers. And among customers sticking with their current wireless carrier, 88% say they’re unlikely to change their data plan.
How likely are you to change the type of data plan you have over the next 90 days?
Among all respondents changing data plans, two-in-five (42%) want an unlimited plan. This is largely driven by those who are also switching wireless providers, as nearly half (47%) of this group say they want an unlimited data option.
Subscribers staying with their current carrier are equally likely to choose either an unlimited (33%) or shared (34%) option when they change their data plan.
Which type of data plan will you most likely switch to?
Data Usage – Shared vs. Tiered Customers:
Among shared plan users, the average data bucket now consists of 11 GB per month – an increase of more than 2 GB since June 2016. Some of this increase can be attributed to AT&T and Verizon now offering higher amounts of data across their shared plans.
The average data allowance for a tiered plan is nearly 6 GB per month, which has stayed relatively stable since June 2016.
How do shared and tiered plan users manage their data use to prevent overages? It’s a combination of using Wi-Fi hotspots (43%), avoiding streaming music or video apps (41%) and limiting use of their phone while not connected to Wi-Fi (36%).
Which of the following measures – if any – do you take to manage data usage on your smartphone? (Check All That Apply)
Concerns about Data Overages: The survey asked how concerned respondents were about exceeding their monthly data plan allowance, and found Verizon subscribers (35%) most concerned – despite the availability of ‘Safety Mode’ on the new Verizon Plan, which allows users to browse at 2G speeds after running out of data.
Just 10% of Verizon customers say they’ve enabled Safety Mode on their plan, but this may be due to customers being required to opt into this feature.
“Price certainty, above any other concern, drives customer wireless decisions. Our survey data backs that up. Customers don’t want to pay more than expected for their wireless service. Verizon’s Safety Mode approach offers price certainty – as does the throttling approach that many carriers offered the past few years,” says Karpinski.
“Unlimited is simply a better approach to price certainty. Unlimited users – unless they are extremely heavy users – don’t have to look for Wi-Fi or avoid streaming. T-Mobile’s latest move folds taxes and fees into its pricing, enabling an even greater degree of price certainty. The price on the tag is the price on the bill. That appeals to consumers.”
Putting this in context, AT&T also offers overage protection on its new plans, but it’s automatically enabled. Sprint and T-Mobile no longer charge overages by default for all plans. This could explain why AT&T (27%), Sprint (22%) and T-Mobile (16%) subscribers are less concerned compared to Verizon.
T-Mobile is the new industry leader in customer satisfaction, loyalty and preferences among switchers. This is not surprising, with our surveys over the past three years showing consistent momentum for T-Mobile as it rolled out its Uncarrier strategy of disruptive services while being sensitive to price.
Verizon’s advantage remains the strength of its network – coverage, reliability, streaming video quality, and speed of network – all categories in which Verizon still rates the best. While Verizon has added more GB to its plans in the second half of 2016, it still does not offer an unlimited data plan option. In its place Verizon now offers Safety Mode to avoid overages, and PopData, which allows subscribers to buy 30-60 minute increments of unlimited data use.
Karpinski concludes, “Trendlines being trendlines, it wasn’t difficult to foresee this day coming. T-Mobile’s Uncarrier strategy has been winning subscribers, at the rate of 8 million net-adds per year for the past three years. It is simply gaining more customers, and keeping them happier with its creative and aggressive approach.
“That said, there are some wildcards that we’ll be watching closely. New products like AT&T’s DirecTV Now OTT service could turn the market’s attention from growing subscribers to boosting revenue. The bigger wildcard is potential M&A activity such as a T-Mobile/Sprint combo or a Verizon/cableco merger, which could dramatically alter the market’s balance of power. The FCC is expected to significantly loosen regulatory reins, which could also encourage a major reshuffling of the players. If that happens, the US mobile services market will see yet another wave of disruption and change in 2017.”
Summary of Key Findings
SoftBank could be interested in relinquishing control of Sprint and retaining a minority stake if that’s what it takes to merge the US carrier with T-Mobile US, Reuters reports, adding that the parties might enter talks after the spectrum auction ends. Deutsche Telekom has said it wants to keep its stake in T-Mobile.
SoftBank has not yet approached Deutsche Telekom to discuss any deal because the U.S. Federal Communications Commission (FCC) has imposed strict anti-collusion rules that ban discussions between rivals during an ongoing auction of airwaves.
After the auction ends in April, the two parties are expected to begin negotiations, the sources told Reuters this week.
Two and a half years ago, SoftBank abandoned talks to acquire T-Mobile for Sprint amid opposition from U.S. antitrust regulators. That deal would have put SoftBank in control of the merged company, with Deutsche Telekom becoming a minority shareholder.
T-Mobile was worth around $30 billion at the time, but its market value has since risen to more than $50 billion as it overtook Sprint as the No. 3 wireless carrier by subscribers. Sprint’s market value is around $36 billion, roughly the same as in 2014.
Deutsche Telekom Chief Executive Tim Hoettges has said in recent months that the German company is no longer willing to part with T-Mobile, prompting SoftBank to explore a new strategy towards a potential combination, the people said. Deutsche Telekom owns about 65 percent of T-Mobile.
SoftBank, which owns about 83% of Sprint, has been frustrated with its inability to grow significantly on its own in the U.S market, which is dominated by Verizon Communications Inc and AT&T, the two largest U.S. carriers.
While SoftBank is still open to discussing other options, it is now willing to surrender control of Sprint and retain a minority stake in a merger with T-Mobile, the sources said. They asked not to be identified because the deliberations are confidential.
The Reuters report sent shares of T-Mobile surging as much as 7.9% before they eased back to close up 5.5% at $63.92. Shares of Sprint ended 3.3 percent higher at $9.30.
Investors have said a merger between T-Mobile and Sprint, ranked third and fourth respectively, would still face antitrust challenges, but made strategic sense as the industry moves to fifth-generation wireless technology.
Carriers will need to spend billions of dollars to upgrade to 5G networks that promise to be 10 times to 100 times faster than current speeds.
“We may buy, we may sell. Maybe a simple merger, we may be dealing with T-Mobile, we may be dealing with totally different people, different company,” SoftBank Chief Executive Masayoshi Son told analysts on the company’s latest quarterly earnings call earlier this month.
With the advent of 5G, Deutsche Telekom may receive offers for T-Mobile from other U.S. companies, such as DISH Network Corp and Comcast Corp. Sprint could also be an acquisition target for other companies, the sources said.
Dish declined to comment and Comcast did not immediately respond to a request for comment.
Under CEO John Legere, T-Mobile has rolled out unlimited data plans and international roaming packages. Combined with aggressive marketing, this has boosted T-Mobile customer base at the expense of its rivals.
T-Mobile said it had 71.5 million total customers while Sprint had 59.5 million at the end of 2016.
T-Mobile is now almost as big as Deutsche Telekom’s German business. “We are not in the mood of selling the business,” Hoettges told investors last November.
While Sprint’s customer base has also grown under CEO Marcelo Claure and financials have improved, the growth was primarily driven by heavy price discounts. Despite new investment, the company’s network is still viewed by many consumers as weaker than its rivals.
Reuters could not determine how much of a premium SoftBank may want Deutsche Telekom to pay for control of Sprint.
Barclays analysts wrote in a note in December that a merger of T-Mobile and Sprint could result in $25 billion to $30 billion in synergies but said, “it is not imminently clear to us that the various regulatory agencies would reverse course having already blessed the outcome of a four-player market.”
The FCC and the U.S. Department of Justice sent strong messages in 2014 that they did not want Verizon, AT&T, Sprint and T-Mobile to merge among themselves.
Since then, AT&T acquired satellite television provider DirecTV and signed an agreement to buy media giant Time Warner Inc, though that deal is still under regulatory review and has attracted criticism from U.S. President Donald Trump. Verizon has also been exploring other acquisitions.
Antitrust experts said it was difficult to predict how the Trump administration would view a T-Mobile-Sprint merger since key antitrust appointments at the Justice Department have not been made. It is also not clear how such a combination would be viewed by the FCC, whose new chairman Ajit Pai is viewed as more business-friendly than his predecessor.
“I am of the camp that that will not happen even in a Trump administration,” Christopher Marangi, co-chief investment officer at GAMCO Investors Inc, said on the prospects of a T-Mobile-Sprint combination. “That kind of merger means lots of job cuts in the U.S.”
Craig Moffett, an analyst at MoffettNathanson, said price wars between Sprint and T-Mobile have driven down overall wireless prices for consumers.
“Antitrust regulators could well argue that this is precisely the dynamic they would want to preserve,” Moffett added.
Son has said he expects his company to benefit from Trump’s promised deregulation of the U.S. economy. After meeting Trump in early December, Son pledged to invest $50 billion and create 50,000 jobs in the United States.
FBR Comment & Analysis:
Regarding the above Reuters article citing Softbank’s plans to make an offer to Deutsche Telekom for a merger between S and TMUS, in which Softbank will give up control of S for a minority stake in the combined company.
Current FCC anti-collusion rules bar carrier discussions during the broadcast incentive auction. The auction will enter the last stage (the assignment phase) on March 6 and is anticipated to conclude in April, when Softbank could approach Deutsche Telekom. Despite a solid set of data on the record at the FCC and DOJ endorsing a four-player market, and in contrast to 2014, we believe a merger in 2017 would pass regulatory muster due to:
(1) a political and regulatory Administration change,
(2) less spectrum capacity at T-Mobile, and
(3) commitments to increase coverage and competition in rural areas.
■ Déjà vu. In 2014, Softbank failed to convince the Democratic-led FCC commission that a merger would strengthen sustainable competition. Sprint argued that the wireless carrier market would move from a two-player dominant market to a more viable three-player market. Since then, while cutting capital spending, S has made solid strides in improving its network performance, stabilizing its subscriber base, innovating around its spectrum assets, growing EBITDA, and improving liquidity. While the industry remains in a negative Net Present Value (NPV) situation for incremental capital spending, we think that Sprint, with High Performance User Equipment (HPUE), can maintain low capex spending and is on a path toward positive free cash flow, despite a more fierce-than-ever competitive backdrop.
We believe a deal also makes sense to T-Mobile, due to its ability to tap Sprint’s treasure trove of more valuable HPUE-based spectrum, which should help maintain subscriber momentum.
■ Strategic timing makes sense. An M&A announcement is slightly ahead of our expectations—but makes sense. We never believed a DISH/TMUS combination made sense, due to a lack of synergies/ wireless experience and declining spectrum value; many DISH bulls believe its approaching spectrum buildout milestones would force the company to sell or make a carrier acquisition. Softbank is wise to move now, with both CMCSA and CHTR looking to launch their MVNOs later this year and next, respectively. Moving later risks Sprint being left in the cold with major downside risk if a cable company, having learned more about the wireless disruptive opportunity through its own assets and an MVNO model, subsequently moved to acquire T-Mobile.
■ Market is undervaluing synergies. We see substantial upside to the $3B in synergies being priced in by the market today. (Applying a 7x EV/EBITDA multiple on the EV of the combined entity and deducting the combined EBITDA of both companies would yield the $3B in opex synergies.) However, we believe there is major capex synergy upside, which we do not think the market anticipates, as it does not appear to be pricing in major capex saving benefits from high-power spectrum for the combined S/TMUS entity.
■ Positive implications for Shenandoah Telecommunications Company (SHEN), negative for United States Cellular Corp (USM). We believe a combined S/TMUS would provide a stronger partner network for SHEN. However, given TMUS’s growing focus on rural coverage, a merger would lessen the likelihood of TMUS acquiring USM, and its buildout poses significant risk to USM’s high-margin roaming revenues from Sprint. USM acquired 700 MHz spectrum in the Midwest region in recent years, likely as a hedge against declining roaming revenues and to better position itself as a takeout candidate, in our view. This spectrum is compatible with TMUS, which is rapidly rolling out coverage in Chicago on 700 MHz A-Block. However, if an S/TMUS does materialize, the potential for a USM acquisition will greatly diminish.
By Benny Evangelista, San Francisco Chronicle
Pushing beyond mobile phones, AT&T is expanding its cellular network to connect commercial smart devices, from water meters that detect excess toilet flushes to soda dispensers that learn what people prefer to drink.
The company has tested the technology in San Ramon, CA and this week it announced plans to expand its upgraded network throughout the United States by this summer and into Mexico by the end of 2017.
With the Gartner research group projecting as many as 20 billion Internet-connected devices of all types installed around the world by 2020, the potential revenue stakes are high for AT&T and its wireless rivals Verizon, Sprint and T-Mobile, which are locked in price wars to retain mobile-phone customers as the market reaches saturation.
“They see this as a real pathway to growth over the next decade or more,” said Bill Menezes, Gartner principal research analyst for wireless services.
That compares to the mobile wireless business, which is “flattening,” Menezes said. “What you see there is a lot of customers moving from one carrier to another. That’s a business where you’re not going to see a ton of growth.”
AT&T Labs began testing its upgraded network, called LTE-M, in October, with its first commercial pilot project in and around its San Ramon facility. That includes special testing rooms lined with a foam-composite material to isolate radio signals. The company has opened a second test area in Columbus, Ohio.
The low-power, wide-area network uses the same transmission equipment needed for AT&T’s standard LTE wireless phone network. But adding the new capabilities requires only a software upgrade, which will speed the introduction of the technology, said David Allen, director of advanced product development for the company’s Internet of Things division.
“One of the goals is that we can scale this for the Internet of Things,” he said.
One test partner is Capstone Metering, a Plano, Texas, firm that makes smart water meters for public utilities. The upgraded network is designed to connect devices that use small amounts of power, which applies to products like underground water meters with batteries that are supposed to last up to 10 years.
Capstone tested a meter on a San Ramon home this week and immediately reported the signature of a toilet leak — precisely 1.6 to 1.9 gallons of water used every 27 minutes, meaning the toilet kept refilling itself.
“We couldn’t do that two years ago,” said Capstone CEO Scott Williamson. “We have the ability with the technology to tell you when you’re washing your hands. It’s data that you need to know if you’re trying to manage and conserve water.”
AT&T also worked with shipping pallet company RM2, which plans to use the network to track some of its latest products, and with PepsiCo, which has a smart soft drink dispenser called Pepsi Spire.
The dispenser can tell Pepsi what the more popular drinks are in different regions or countries, acting as “its own focus group no matter where it is,” said Darren Koenig, Pepsico’s senior director of digital innovation and Internet of Things.
Verizon operates a downtown San Francisco innovation center that’s working on a similar program, called ThingSpace.
Menezes said AT&T, Verizon and wireless networking companies like Sigfox see potential in connecting a wide universe of inanimate devices that don’t need to transmit a lot of data and,
unlike human customers, “are not going to move from carrier to carrier in order to grab an extra 10 percent in savings.”
Qualcomm (Atheros Division) plans to sample chips using the IEEE 802.11ax specification this year. They will provide faster wireless transmission of data while consuming less power.
The company’s QCA6290 system-on-a-chip device for Wi-Fi access points is expected to be released this June. It can use both the 2.4GHz and the 5GHz bands at the same time for peak speeds up to 1.8Gbps, the company said. It’s designed for uses that include 4K Ultra HD video streaming and videoconferencing and in-car Wi-Fi with multiple video streams.
The IEEE 802.11ax standard isn’t expected to be signed off until late next year, but it’s common for some components using a new standard to ship before that step takes place.
802.11ax is particularly aimed at high-density Wi-Fi deployments, improving not only speed, but the ability of connections to stay active even when interfered with heavily. If you’ve been to a technology convention or trade show lately, you’ll know that the existing co-existence features built into Wi-Fi aren’t really sufficient to particularly dense environments.
The specification includes using multiple antennas to send as many as 12 streams of data at the same time. But it also uses technologies from the cellular world, including traffic scheduling, which gets devices on and off the network efficiently so they don’t have to contend with each other as much.
This can help cut the power consumption of Wi-Fi by as much as two-thirds, Qualcomm says. Even users with current 11ac and older 11n devices should see better performance when they use an 11ax network, according to the company.
IEEE 802.11ax is the next generation of Wi-Fi after 802.11ac, which is already capable of gigabit speeds with the right features and conditions. That technology is still finding its way into consumers’ devices and corporate and service-provider networks. This author has an an AT&T Uverse Residential Gateway which has a built in 802.11ac WiFi AP/Router.
For more information: