IEEE ComSoc Technology Blog

Introduction:

This article reviews the IoT connectivity options (wireless PANs and wireless LANs) discussed and debated at the IoT World conference IoT Technical Architecture track on Wednesday, May 11, 2016.   Surprisingly, no wireline technologies, e.g. Power over Ethernet or Automotive Ethernet for connected cars (e.g. Broadcom offering) were mentioned.  Some wireless WAN issues (e.g. licensed vs unlicensed spectrum) were discussed in a panel session that’s summarized below.

Part III will focus on IoT Wireless WANs, sometimes referred to as LPWANs or LPWA.  See preview at the end of this blog post.

Navigating the IoT Connectivity Landscape, Alex Kengen, International Product Marketing Manager Dialog Semiconductor:

Mr. Kengen identified the following IoT industry verticals: smart car, smart city, smart home and wearables. Presumably, these are the IoT market segments Dialog Semi is pursuing. Notably absent is Industrial IoT, which this author (and many others) think will be the biggest IoT market in terms of revenues.

“Smart home” is characterized by multiple connectivity standards/specs, ease of use (very important), low cost, low power dissipation (=longer battery life), good security, robustness (availability/no downtime), use of IPv6.

There’s a “sea of confusion” when it comes to IoT Connectivity standards, such as WiFi, Bluetooth, Zigbe, Thread, and DECT ULE.  These are illustrated in the 2 slides below:  

Alex noted that DECT ULE was low power, star topology, and a high data rate.  IEEE 802.15.4 Zigbee had the advantage of a mesh topology and long range.

Dialog Semiconductor’s Portfolio of low power wireless SoCs:

• Optimized for low power, small size and low system cost

• Embedded Software stacks

• Highest levels of integration and ease of use

• Complete development environment and development tools and local support

• Unique innovations on Sensor Fusion, Energy Harvesting, Audio

• Supporting a wide range of IoT applications with reference designs

•  DA1458x: Single-chip solution for low cost, small and light devices such as Proximity tags, Beacons, Smart Buttons, Disposables, etc

•  DA1468x:  Single-chip solution for standalone wearables and other rechargeable devices

•  Module Partners include:  Murata, Panasonic, TDK, ALPS, LG-Innotech, Samsung (SEMCO)

•  Portfolio of Reference Designs (SmartBond [TM])

•  DA14583 IoT Sensor Development Kit

Kengen’s Closing Comments (Alan’s comments in parenthesis):

• There is a massive market opportunity for IoT (but will it be realized?)

• To realize the full potential of IoT, innovations are needed to drive it to the next level (no mention of what type of innovations?)

• Dialog Semiconductor focus is on helping the IoT grow, together with the major players (who are they?)

• Dialog Semiconductor cooperates, not competes, with other standards (presumably the one’s noted in above chart)

• Let’s take IoT to the next level!!  (whatever that means???)

Panel: Examining the Array of Connectivity Enablers for IoT

• Matt Lear,Representative ATIS₁  

• Paula Hunter, Executive Director at NFC Forum₂

Note 1.  ATIS (Alliance for Telecommunications Industry Solutions) is a founding partner of oneM2M – a global standards initiative for M2M communications and the Internet of Things.  oneM2M has selected ATIS as the initial Registry Management Authority for the oneM2M Application Identifier (App-ID) registry powered by iconectiv.  The Registry enables delivery of globally unique software application identifiers, based upon oneM2M specifications, and provides application identifier management to support developers and enterprises within industry verticals.

Note 2.  NFC (Near Field Communication) is a standards-based short-range wireless connectivity technology that makes life easier and more convenient for consumers around the world by making it simpler to make transactions, exchange digital content, and connect electronic devices with a touch. NFC is compatible with hundreds of millions of contactless cards and readers already deployed worldwide.  More information at the NFC Forum website.

IoT Issues discussed by the 2 panelists:

• What are the key aspects when considering network connectivity? There will be different evaluation and selection criteria for different connectivity choices.  The criteria to be reviewed should include: Range; Data Rate; Power; and Security.  
• IoT vendors and solution providers should think about user experience (who is the user of a “thing?”).  Interoperability and security are most important for a good user experience.  Privacy may also be an issue.
• Range should include ability of the wireless signal to penetrate walls (WiFi is not at all good for that).
• Low power is critical for battery operated “things” in the field, where the battery must last for a very long time.
• Capability to change bandwidth/bit rates for applications like video surveillance, medical videos, and/or data bursting from equipment or controllers will also be an important criteria for those applications.
• As technology evolves, it will be essential to “future proof” IoT modules, equipment and controllers.
• Compatibility with legacy IT networks might also be an issue (except for totally greenfied IoT deployments)
• Huge BATTLE:  proprietary specs vs standards for modules, connectivity, messaging formats & protocols and apps.
• IoT industry needs standards for devices, connectivity, protocols, and open APIs.
• Wireless WAN issue:  licensed vs unlicensed spectrum.  

– Licensed spectrum is owned by a single network operator (in the U.S. the spectrum is usually auctioned by the FCC).  2G, 3G, and 4G-LTE all use licensed spectrum.

– Unlicensed spectrum is not owned by anyone. Rather, it’s used by any equipment transmitting/receiving in that frequency band.  Because there are many more players, interoperability may be a bigger issue than for licensed spectrum connectivity options.  All WiFi WANs use unlicensed spectrum.  LTE-M is being developed by 3GPP for unlicensed spectrum.

Note: Wireless WANs for IoT will be the subject of IoT World Part III Summary.

Challenges for IoT Conncectivity:

• Interoperability, in light of the current “chaos and confusion” in connectivity options, forums & alliances, proprietary technologies,etc.
• Solid and widely accepted standards are required for: PHY & MAC/Link layer connectivity, auto-discovery, authentication, reliable messaging, and security.  
• Security is critical: If one IoT device on a shared network is compromised, then all networed IoT devices on that network are at risk.
• A shake out is inevitable with only the “robust standards” becoming commercially viable.  All IoT industry participants must work together to enable interoperability and “fair behavior” for all players.
• It will be “at least two years before we know who the dominant players will be.”
• More IoT solutions are needed to be accessible to customers (no examples given).
• Search engines to find IoT solutions and apps will be needed.
• Lack of spectrum as the number of IoT devices is growing exponentially.
• May have to rely on mesh networking to realize required range.
• The Wi-Fi Alliance® has introduced Wi-Fi HaLow™ as the designation for products incorporating IEEE 802.11ah technology. Wi-Fi HaLow operates in frequency bands below one gigahertz, offering longer range, lower power connectivity to Wi-Fi CERTIFIED™ products. Wi-Fi HaLow will enable a variety of new power-efficient use cases in the Smart Home, connected car, and digital healthcare, as well as industrial, retail, agriculture, and Smart City environments.

Session Abstract:

True value creation in IoT comes from monitoring and analyzing a system and then modifying it to create a more effective and efficient desired outcome. This results in then taking an action to match where appropriate intelligence can be added along an IoT chain. Every “SMART” step in IoT is an opportunity to create & capture value.

We share some examples to demonstrate value creation and then explain SMART partitioning. It explains the trade-offs of how and where to add intelligence along the signal path and shares some industry trends for SMART IoT design. These are discussed with respect to some key IoT parameters including cost, power and security.

Stay tuned for Part III on Wireless WAN/LPWAN/LB WAN connectivity options.  

Preview:  This author was aware of the huge number of wireless personal (PAN) and local (LAN) connectivity standards being promoted for IoT and other low power, lower speed applications.   Astonishingly, we were not aware of an even bigger set of IoT wireless WANs, because they’d all be based on a low power, low speed version of LTE.  WRONG!  Many such wireless WAN specs are being generated in forums or alliances, while some are proprietary technology of a single vendor!  The resulting chaos and confustion may lead to IoT market fragmentation due to lack of interoperability between IoT “things” and the wireless networks they connect to.

Till next time, here’s a pic of Alan asking a question at one of the above sessions.  Track Moderator Daryl Schoolar of Ovum is to the right, in back of Alan.

Introduction:

For many years, we’ve heard tremendous hype about the Internet of Things (IoT) with its immense promise and potential, influence and impact, and how it will radically change our world.  Consulting companies like McKinsey, research firms like Gartner Group, and large multinational equipment companies like Cisco, Ericsson and GE, have all predicted from 20 to 50 billion connected devices by 2020 and more beyond.  

According to Gartner, the “endpoints of IoT will grow at a 31.7% CAGR from 2013 through 2020, reaching an installed base of 20.8 billion units.” 

That tremendous “off the charts” hype continued at the largest IoT conference in North America last week (Tuesday, May 10-through-Thursday May 12, 2016) at the Santa Clara Convention Center.  I was told by the registration desk that there were over 10,000 attendees, while observing every square inch of exhibit space was taken.  Also, every nearby parking lot was full during show hours Wednesday and Thursday.  Please see IEEE Member comments below.

IoT Industry verticals like smart home, connected cars, wearables (fitness trackers, medical monitors, etc), industrial IoT, manufacturing/factory floor, smart building/smart cities were all represented on the show floor, conference sessions, and vision theater.  There were also sessions and exhibits on IoT security, IoT cloud, big data/analytics, etc.

Overview of Executive Keynotes on Tuesday, 10 May 2016:

The main theme of Tuesday’s executive keynotes – “Disrupt, Innovate, Monetize” – with new business models, improved productivity and other benefits- greatly added to the hype, while providing little or no substance to resolve the critical issues that have plaqued IoT since the name was coined (replacing M2M Communications).  

Tuesday’s executive keynotes (many were sponsored talks) were from Hitachi, SAP, ADT, Microsoft, Silver Springs Networks, HP Enterprise, Schneider Electric, and JCI.   Several key themes emerged as per Bitnavi’s blog:

Ubiquitous technology: Various software packages, smaller & more power efficient ARM processors, sensors,cameras, wireless LAN & WANs are coming together to enable the IoT to be a reality, if not a fractured market (even within the same industry vertical) due to lack of universally accepted standards.  

More about that in a follow up article where we will convincingly prove that connectivity will NOT be ubiquitous!

New business models: Companies such as Kaiser Permanente (healthcare), Bosch (automotive components), PepsiCo (consumer) and Harley Davidson (motorcycles), among many others, were mentioned as end users of IoT technologies to bring faster, better, more reliable products and services to market. Many of these companies are using technologies such as SAP’s HANA platform to improve manufacturing, lower maintenance costs and improve the overall customer experience.

Smart cities are becoming a reality: Many municipalities from Boston to Chicago and Los Angeles are levering IoT technology to improve the quality of life. For example, the City of San Francisco is using IoT in its quest to become the first U.S. city to have a fully connected “ecosystem of transportation,” where driverless cars and transit, ride sharing services like Uber and Lyft, and even bike-sharing apps will be connected through one platform where residents can easily plan their transportation from Point A to Point B, according to Timothy Papandreou, chief innovation officer for the San Francisco Municipal Transportation Agency.

Collaboration is critical:  While in the world of technology, being first to market seems to be the norm, almost all presenters discussed collaboration as being critical to the success of IoT. Clearly this makes sense as no particular company can possibly provide an end-to-end solution, given the vast array of technologies available within the ecosystem.

SAP Keynote at 2pm May 10, 2016:

Tanja Rueckert, Executive Vice President, Digital Assets and Internet of Things at SAP, discussed 2 main drivers within all industries as being critical to the adoption of IoT.

1.  IoT is enabling disruptive business models. And second,

2.  Companies are now using IoT-enabled technologies to optimize their business processes.

Ms. Rueckert gave examples of non-tech companies such as Under Armour, several shoe manufacturers, and others of using SAP’s software along with thousands of connected devices to collect and analyze millions of data points related to improving operations. Whether its using predictive maintenance to improve maintenance and service costs, or asset intelligence networks to lower their inventory expenses, companies in all industries are now involved in this movement.

You can see a video of her presentation here. 

All of the executive keynote videos are at https://iotworldevent.com/iot-channel/ and https://iotworldevent.com/keynote-presentations/

HP Enterprise announces Universal IoT Platform at 4pm 10 May 2016:

“There is no doubt in anybody’s minds, IoT will be a seismic shift in how we interact with technology. Massive change will sweep through all industries, again, and just as mobile communications and the Internet did before, business models will evolve rapidly, with new services and offerings already rapidly becoming available,” according to Nigel Upton, General Manager of Hewlett Packard Enterprise (HPE) IoT platform and Global Connectivity Platform.

The new functionality in HP Enterprise Universal IoT Platform was said to be a driving force in building the infrastructure that will enable and sustain the growth of IoT.

“The value of the IoT lies in enriching data collected from devices with analytics and exposing it to applications that enable organisations to derive business value,” said Nigel Upton, director and general manager of IoT at Hewlett Packard Enterprise who spoke at 4pm Tuesday.

“The HPE Universal IoT Platform dramatically simplifies integrating diverse devices with different communications protocols, enabling customers to realise tremendous benefits from their IoT data, and is designed to scale to billions of transactions tried and tested in rigorous large scale global telco and enterprise environments in a variety of smart ecosystems.”

The HPE universal IoT platform is aligned with the oneM2M industry standard and is designed to be industry and vendor-agnostic, enabling IoT operators to simultaneously manage heterogeneous sets of sensors, operate vertical applications on machine-to-machine (M2M) devices, as well as process, analyse and monetise collected data in a single secure cloud platform.

The HPE Universal IoT Platform provides increased support for long range, low power connectivity, ensuring that LoRa® and SIGFOX deployments can be supported alongside other connectivity protocols, including cellular, radio, Wi-Fi and Bluetooth. 

“From multiple back office IT systems and diverse connectivity technologies to business processes, the biggest barrier encountered by enterprises deploying IoT across multiple countries is complexity,” said Jim Morrish, chief research officer, Machina Research. “The most important thing a supplier can provide enterprises is simplicity – HPE certainly helps with reducing the complexity, pulling together components of an end-to-end enterprise IoT offering.”

The HPE Universal IoT Platform is available worldwide and can be deployed on premises or in a private cloud environment for a comprehensive as-a-service model. Read more about this HPE product in the company’s press release.  

Note that a similar IoT Management platform was announced by Hitachi.  The Lumada platform of the new Hitachi Insight Group aggregates data from nodes and edge devices and performs analytics. 

Schneider Electric & Silver Spring Networks Keynotes & Panel Session:

1.  Schneider Electric announced ecoStruxure.io, an IoT cloud service linking offerings across its portfolio of switches, breakers and electricity distribution products for buildings, factories and cities. Duke Energy is already showing cost savings by using Schneider’s IoT platform, which includes technology from ARM, Cisco and Intel as well as Microsoft’s Azure for IoT cloud service.

“We’ve identified IoT as the biggest opportunity for us,” said Prith Banerjee, Schneider’s CTO in a Tuesday afternoon keynote speech where he traced the hsitory of Scheider Electric. 

“We have been connecting things for a long time in industrial automation, but the difference now is the speed and scale of rolling out multi-site and multi-tenet apps, the speed of message processing and the different business models,” said Michael MacKenzie, vice president of IoT platform delivery at Schneider, speaking in a panel session on Wednesday. “This space is huge and there are a lot of problems left to solve,” he added.

2.  In a keynote speech on Tuesday,  Mike Bell chief executive of Silver Spring Networks said that the near term ROI for IoT will be in industrial and smart cities deployments. Silver Spring is trying to turn its 23.6 million private smart meter installations into a public IoT net it calls Starfish.  The company added London to a handful of cities already supporting the concept, but it’s still a few weeks before developer’s kits will be available and prices and first users announced.

“I’m a huge believer IoT is here and getting bigger, but we have to start reinforcing and making this real, so please get out there and start building and shipping things,” Bell said.  “We’re at the beginning stages of IoT,” he added. (NOTE THAT WAS EXACTLY WHAT IoT CONFERENCE SPEAKERS WERE SAYING IN 2009 AND 2010 WHEN IT WAS CALLED “M2M COMMUNICATIONS” OR “SMART GRID.”)

Comment & Analysis:

• The same problems that plagued IoT six years ago are still front and center:  security, privacy (of personal info, medical measurements/records, etc), wireless LAN connectivity and – BELIEVE IT OR NOT – wireless WAN connectivity (at least 6 specs besides the current version of LTE are proposed for IoT WAN access!
• BT, HP and a few start ups announced various access networks between IoT and the core network. BT has gotten into the IoT data base business by designing a common API to access data stored in many different formats within its network.  Thought that was impressive and gutsy for a network provider!  John Davies  gave an excellent, but somewhat rushed presentation of BT’s place in IoT ecosystem.
• Also, there was no consensus or even DISCUSSION on how much of the “thing” data, control, and status signals should be sent to (or from) the Internet vs being handled by an access controller.   Of course, there will likely NOT be any controller for heavy industrial equipment in the field or a cargo container moving through the ocean…But what about a home or factory floor?
• Connectivity is just the 1st step and may NOT be IP based (different packet format and addressing).  Many other protocol related issues are still unresolved: message format above the Transport layer, Authentication, Secure messaging, Failover/protection/restoration, OAM&P? etc.   They all seem to be different for the IoT vendors I talked to at the show!
• Finally, what ever happened to Smart Grid?  Has it been folded into “Smart Electricity IoT” for electric power companies?  Or is it part of “Industrial IoT?” Or something else?

IEEE Member Discussion List Comments (any IEEE member can join for free at comsocscv.org):

Nokia cited a wireless spending slowdown and the integration of its new Alcatel-Lucent unit in reporting an unexpected loss in its latest quarter after a profit in the year-earlier period. But higher sales at Alcatel’s fixed-line division offset some of the declines. Revenue at Alcatel’s mobile networks business declined 28%, which Nokia blamed on customers’ delayed buying decisions related to the transition.

Nokia agreed to buy Alcatel-Lucent for about $18 billion last year to seek savings and expand its product range beyond mobile infrastructure as demand from phone carriers wanes. The first-quarter numbers show the short-term costs of such a big transaction are quickly materializing, while the long-term benefits are yet to be proven.

“This was another mixed publication and will be difficult to interpret for investors,” analysts at Oddo Securities said in a note to clients.

Nokia Chief Executive Officer Rajeev Suri is betting on the deal to tap into newer products such as Internet-protocol networks, while boosting Nokia’s software offering and research and development capabilities to fend off rivals Ericsson AB and Huawei Technologies Co.

Suri said forecasting was difficult just four months into its merger with Alcatel Lucent: “We don’t have quite the visibility I would like to have,” he said.

Nordea analyst Sami Sarkamies said the company had given analysts precious little to work with in terms of forecasting when stronger profits might return. “The margin estimates will be revised down clearly for this and next year,” he said.

“Sales were a bit weak, but Nokia showed stronger profitability mostly because of Alcatel-Lucent’s contributions from its fixed-line and IP and applications businesses,” said Mattias Lundberg, an analyst at Swedbank AB in Stockholm.

Revenue was hurt by a 28 percent drop at Alcatel-Lucent’s mobile-networks business, as customers considered how to align their infrastructure to Nokia’s product road map, Ihamuotila said on a conference call.

“It’s understandable that some customers who have been mobile customers on the Alcatel-Lucent side would think of ‘how do I get to the combined road map as quickly as possible’ and that could impact slightly the short-term performance,” he said, adding Nokia isn’t losing market share with those customers.

Sales in North America, Nokia’s biggest region, slumped 17 percent to 1.58 billion euros, while revenue from China slipped 5 percent to 572 million euros. Nokia’s overall network sales declined 12 percent to 3.73 billion euros.

Reducing Jobs

The merger is also aimed at reducing costs. Nokia is said to eliminate about 10,000 to 15,000 positions from the combined staff of 104,000, seeking savings by reducing overlapping products, services and sales positions. Savings from the merger are set to surpass the company’s previous estimate and top 900 million euros in 2018, Nokia said.

Phone carriers are curbing investments after spending billions of dollars in the past years to build speedier fourth-generation networks so smartphones can stream video and audio more quickly. With much of the 4G networks already built in key markets such as the U.S. and China, carriers’ investments are set to slump by 7 percent this year and a further 5 percent in 2017, according to Deutsche Bank AG.

This decade long telecom slump is a far cry from the boom years in the 1990s.  It’s truly mind boggling.

References:

http://www.bloomberg.com/news/articles/2016-05-10/nokia-revenue-misses-estimates-amid-waning-carrier-spending

http://www.reuters.com/article/us-nokia-results-idUSKCN0Y10DQ

Introduction & Overview: by Alan J Weissberger

Zayo was founded in 2007, to “provide customers with enormous, exceptionally high quality bandwidth.”

The company has grown exponentially via acquisitions, taking advantage of transactional demand from hyperscale service providers for bandwidth infrastructure, with its meteoric rise driven by 37 acquisitions in its nine-year history. Zayo has assembled an attractive services mix, with potential for leveraging its dense metro, regional, and long-haul fiber networks.  

Late last year, Zayo acquired Allstream,  which provides bandwidth and telecom services to business and public sector customers across Canada. Allstream also operates colocation space in Toronto, Montreal, and Vancouver. “Within today’s Allstream is a robust collection of fiber networks, which are enormously valuable to both Allstream and Zayo customers,” explained Dan Caruso, chairman and CEO of Zayo.

“We will unleash the full potential of these assets by combining them with Zayo’s network and focus on providing high-quality and low-cost bandwidth to help fuel the growth of Canada’s economy.”

Zayo currently offers the following services/capabilities: hybrid cloud infrastructure as a service (IaaS), dark fiber, data center & colocation, Carrier Class Ethernet (10M to 100Gb/s),  IP services, mobile infrastructure, SONET, and wavelengths (on one or more fibers).

Zayo says they have 7.7M miles of optical fiber installed, 800 data centers connected, with 9,000 miles of fiber buildout underway.  The company claims its dark fiber is secure and scalable with virtually unlimited bandwidth. “You get fiber from us, you light it up with your own electronics and you maintain direct operational control of your network while leveraging our dense metro and long haul fiber network.”  

Industry bandwidth demand continues to increase, but Zayo’s ability to benefit from this growth, against technology shifts in wireline and wireless segments, could be gating factors.  In particular, the transition from hub and spoke enterprise networks to cloud wireline and wireless access could prove to be a challenge for Zayo.  See question 2. below for wireless industry shifts underway.

Analysis: by David Dixon of FBR & Co.

ZAYO has assembled an attractive mix of high-bandwidth services on its dense metro, regional, and long-haul fiber networks. Although industry bandwidth demand continues to increase, ZAYO’s ability to profitably benefit from this growth against technology shifts in the wireline and wireless segments is a concern.

ZAYO is a high-margin revenue growth story with potential technology related headwinds amid an unclear ability to integrate and maintain revenue momentum while extracting sufficient synergies from its largest and most complex acquisition to date. Based on our industry checks with major Canadian customers, there is a significant portion signaling an intention to change carriers.

Last week, management announced lower-than-expected annualized synergies of $60M (versus our expectation of >$100M) for Allstream, which suggests head-count reductions are behind schedule and interconnection savings are longer dated. Based on results to date, we see increased investment risk from ZAYO’s Canadian acquisition, which could warrant a lower implied valuation multiple.

Key Points (David Dixon):

■ Fiscal 3Q16 results recap. ZAYO delivered fiscal 3Q16 consolidated revenue growth of 40.3% YOY, to $478.0M, driven by the inclusion of Zayo Canada, versus consensus of $473.0M and our estimate of $477.0M. 

■ Organic revenue momentum on track, but weaker than expected, including Zayo Canada and Allstream. Including Zayo Canada and Allstream, ZAYO reported 2% pro forma recurring revenue growth and 5% constant currency (6% and 8%, respectively, excluding Zayo Canada and Allstream). Excluding Zayo Canada, gross installs were $5.9M, and net installs were $2.1M, driven by record low churn of 1.0%. Excluding Zayo Canada, management reported solid bookings of $7.0M and reiterated guidance of 3.0M in net installs by the end of 2016.

■ Allstream execution is an increasing concern. Last week, management announced lower-than-expected annualized synergies of $60M (versus our expectation of >$100M) for Allstream, which suggests head-count reductions are behind schedule and interconnection savings are longer dated. While management cited increased cross-border transaction opportunities within the core Zayo sales group, we are increasingly concerned about high-margin revenue contraction at Zayo Canada, from both gross billings and churn perspectives. Based on our industry checks with major Canadian customers, there is a significant portion signaling an intention to change carriers. In our initiation note, we highlighted key challenges that could drive slower revenue growth and higher churn: the (1) transactional, versus customer-based, sales platform; (2) entrepreneurial, versus mature, business culture; (3) lack of experience in voice and security services; (4) the transition to a reseller-based SMB business.

Q &A (David Dixon):

1. What is the impact of an architecture shift on Zayo’s business model? Do telecom and cable companies have sufficient metro fiber in place to deploy distributed compute networks?

We see limited competition from other dark fiber and mobile infrastructure providers but believe the real question is the impact of network technology changes underway on the outlook for demand for Zayo s products and services. In the metro fiber segment, we see a move underway within the telecom and cable segments toward distributed compute bandwidth and storage platforms, potentially on fiber infrastructure already in place. This will likely serve as the foundation for transferring data traffic from Internet content and applications from the core network to mini datacenters at the edge of the network in each metro location. This is similar to the content (not computing) challenge solved by Akamai in the early days of the Internet.

2. Are there wireless technology shifts underway disruptive to Zayo’s business model?   On the mobile infrastructure front, there are multiple trends underway:

(1) more heavy lifting by low-cost super Wi-Fi-like indoor, versus outdoor, LTE deployments on commodity servers;

(2) new cloud-based, shared spectrum bands; and

(3) the use of wireless back-haul and front-haul in lieu of fiber connections to cell sites.

3. Synergy potential is high at Allstream, but what is Zayo’s ability to execute its largest and most complex acquisition to date?

While Zayo expects $60 million in annualized cost synergies, we see key challenges, including:

(1) a horizontal-based, versus vertical-based, sales and profitability platform (Canadian enterprise customers may not transition well to a transactionalbased relationship);

(2) an entrepreneurial, versus mature, business culture;

(3) Zayo’s limited experience in managing a cybersecurity service portfolio, which may increase churn and lower revenue growth;

(4) similarly, management’s lack of experience in managing a mature voice service platform (still a key part of an enterprise customer solution), which may result in increased customer and revenue churn; and

(5) the transition of Allstream SMB business to a pure reseller, which may increase customer churn.

Source:  Leland Kim, AT&T Media Relations Director, Northern California and Northern Nevada

AT&T’s impressive progress in building out fiber optics to commercial office buildings, residences and cell towers are discussed in this blog post, edited by Alan J Weissberger, ComSoc Community content manager.  

For a map of AT&T Fiber Ready Buildouts in the U.S. please refer to:  http://www.corp.att.com/fiberreadybuilding/map.html and click on the state you’re interested in.  You will then see a list of cities in that state where fiber to the building is available.

AT&T has withdrawn a major contract to host its Internet and mobile portals from Yahoo in favor of Synacor, a move that analysts speculate could cost Yahoo about $100 million a year in revenue. Under the 15-year partnership, AT&T’s website defaulted to Yahoo’s content and search services for broadband subscribers, and the companies split ad revenues generated from the site.

The deal had given AT&T broadband customers access to Yahoo’s search engine and other media services on the default AT&T website. AT&T and Yahoo had been splitting the search and display ad revenue from the site.  Only AT&T-Yahoo email (which this author uses but dislikes) will be left in the web partnership.

For Yahoo, the partnership brought in hundreds of millions of dollars in revenue over its life, a significant portion of which went straight to the bottom line. That is because the arrangement required minimal resources from Yahoo, leading to strong profit margins.  Fortune says the AT&T deal brought in $100 Million a year for Yahoo.

http://fortune.com/2016/05/05/yahoo-att-portal-partnership/

http://www.nasdaq.com/article/att-unwinds-15year-web-alliance-with-yahoo…

Read more: http://www.nasdaq.com/article/att-unwinds-15year-web-alliance-with-yahoo-20160504-01647#ixzz47phXvm00

Preface:  AT&T’s IoT initiative was formerly called “Emerging Devices,” headed by AT&T Executive Glenn Lurie.

Overview:

AT&T is looking to diversify its revenue stream by betting on the Internet of Things (IoT), which research company IDC predicts will be a $1.7 trillion market by 2020. The wireless industry sees opportunities for growth in such devices, as well as in connected cars. “We’re just at the beginning,” said Chris Penrose, senior vice president of AT&T’s Internet of Things operations. “It is a top priority of our company to continue to be a leader in the IoT space,” he added.

Internet of Things is a reported fast-growing area (we disagree as it’s ultra hyped) where industrial and consumer firms and software providers are teaming up to offer smarter ways of doing things such as predicting mechanical problems before they arise, controlling machines at home remotely or integrating municipal services. 

AT&T already has a strong position in the automotive industry, where it has 10 major carmakers using a platform it has developed to deliver services such as roadside assistance, weather reports or Internet radio to cars on the road.

“We have the ability not only to connect things … we also have the ability to enable the collection and the analytics of the data behind those as well as do it in a secure manner and do it globally,” Penrose said. 

But he said AT&T did not insist that customers use its own platforms, rather allowing them to use their preferred technology. “We want to be the very best collaboration partner,” he said. “Sometimes we will provide connectivity and that’s OK.” 

At the Hannover Messe, AT&T announced new deals including one with Otis, in which it will connect data from Otis elevators to Microsoft’s Azure cloud, enabling Otis to access real-time equipment performance data.  Penrose said in this case AT&T would add value through the security of its connection. In other cases, it might exploit its more mundane but essential expertise in areas like billing – a core competence of wireless carriers. 

AT&T does not disclose how much revenue it makes from the Internet of Things. Rival Verizon said it made about $690 million in IoT revenue in 2015, up 18 percent year on year, of a total $132 billion in revenue. 

AT&T has about 26 million connected objects and is connecting more than a million more every quarter, Penrose said.

References:

http://www.reuters.com/article/us-at-t-interet-idUSKCN0XO2DF

https://www.business.att.com/enterprise/Portfolio/internet-of-things/

In an April 28th WSJ op-ed “How to Bring The ‘Internet Of Things To Life,” Jerome Rota wrote:

The Federal Communications Commission (FCC) is considering bids for its latest spectrum auction, of licenses to transmit in the 600 megahertz band, now that the March 29 application deadline has passed. Though it might seem arcane, the resale of this enormous swath of airwaves, freed from TV broadcasters by Congress in 2012 and now pitched toward wireless carriers, is hugely important. That’s because the 600 megahertz band could finally bring a techie buzzword, the Internet of Things, to fruition.

This low-frequency bandwidth, in layman’s terms, isn’t great for carrying big loads of data, so it won’t be much help in streaming high-definition Netflix on your iPhone. But it is fantastic at traveling long distances and penetrating buildings—past metal doors and through concrete basements, where your cell coverage now wanes. That’s important for keeping online those sensors and gadgets that we keep hearing will soon pepper our homes and apartments.

From a consumer perspective, the Internet of Things has not yet delivered on its promise. Plenty of cool, connected and smart stuff is available for purchase, but the technology still requires a prohibitive amount of effort to get going. And even then, it often doesn’t work the way it should. The communications protocols, gateways, routers and hubs leave consistent device compatibility somewhere between a technical chore and an impossible dream.Perhaps worse, security remains a major issue, in part because it’s difficult to update software as device manufacturers release patches and bug fixes. Demonstrations uploaded to YouTube show the simplicity of hacking everything from baby monitors to coffee pots. With all the apps, boxes and devices needing updates, you would need a full-time IT specialist to make your home truly smart.

Instead of having to set up and maintain all of these networked devices, a wireless carrier could do it for you. The 600 megahertz band (FCC auction forthcoming) would ensure that a strong and secure signal is always available in any part of your home. Consider how this could change passive home-safety devices such as smoke alarms, air-quality monitors or flood sensors in dishwashers. The consumer could plug them in and forget them for years. They could be programmed to send text notifications if they sense something or need a battery change.

The Internet of Things could be listed as a service on wireless or cable bills. Consumers could purchase whatever smart stuff they want—a smart lightbulb or thermostat, say—and simply activate the devices with their mobile carriers upon installation. Device security or compatibility would be less of an issue, since they would be handled by a major telecom. The infrastructure already exists for this model to function. Making it work is merely a matter of setting up and marketing the service.

The telecom-empowered Internet of Things is already up and running at some modern hospitals, large corporations and municipalities. For example, AT& T has implemented the Internet of Things at Texas Medical Center in Houston, working with wheelchair-maker Perimobil to produce a connected wheelchair. General Electric uses Verizon to provide connectivity for software-enabled industrial machines and devices. Scaling this technology for everyday consumers is a natural next step.

Although wireless carriers aren’t the most beloved firms in the eyes of most Americans, they could make life a lot easier once brought into homeautomation. If the pricing is reasonable, the Internet of Things will finally provide the promised service without all of the maddening management headaches. None of this is available to the buying public today. For such a model to emerge, carriers would have to both snap up the spectrum and push their partners to explore these commercial possibilities. But the broadband-spectrum auction hints at the possibility of metamorphosis.

Mr. Rota is the chief scientist of usability at Greenwave Systems.  From the company’s website:

“Greenwave Systems is a global Internet of Things (IoT) software and services company whose disruptive  Greenwave360™  model enables category-leading brands to quickly and profitably deploy managed services. Greenwave Systems empowers market leading brands to profitably deploy their own Internet of Things managed services and products to foster deeper customer relationships and grow their business.”

Summary by David Dixon (Overview by Alan J Weissberger is below):

Akamai (AKAM) delivered another quarter of robust financial results that largely exceeded Wall Street expectations. The security products continue to sell well while the prior departure of two of its largest customers weighed on media delivery solutions revenues but were mostly expected.

Although it is easy to gloss over the significance of the decline in media delivery solutions, as few customers have the scale to go DIY today, we believe the industry is in the early innings of a fundamental shift in network topology toward distributed computing over the next 12 months, coupled with the proliferation of datacenters and fiber that will greatly increase performance and reduce incremental costs associated with delivering media content directly via end-user cable and telecom networks. This should pave the way for further DIY adoption. Management has purposefully lowered the rate of head-count additions and pulled back on spending, which, we believe, is an attempt to preserve margins as revenue growth remains under pressure. We continue to believe that Akamai is on a downward dominance curve and anticipate greater revenue pressure going forward.

1Q16 Recap:

Consolidated revenues of $567.7M (+7.8% YOY) were ahead of consensus of $564.0M and our estimate of $558.1M. Media delivery solutions revenue declined 4.2% YOY, to $205.9M, below consensus of $208.7M. Performance and security solutions revenue grew 16.1% YOY, to $315.9M, versus consensus of $311.6M. Service and support solutions revenue increased 15.6% YOY, to $45.9M, versus consensus of $46.0M.

Adjusted EBITDA of $234.1M topped consensus’ expectation of $228.4M, driven by growth in the top line. Adjusted EPS were $0.66, versus consensus of $0.63.

Will sales force investments and international expansion pay off?

Akamai continues to accelerate investment in its sales force. Most of the company hiring will be done with a focus on international, where the company believes the revenue opportunity could one day equal North America. We think that the growth seen in international revenue supports the company decision to aggressively expand sales capacity and that the move could ultimately pay off.

Can newer products contribute enough to offset maturing core markets and drive sustained midteens, or better, growth?

Akamai s focus over the past few years has been to increasingly diversify its business beyond media delivery and Web performance. Through acquisitions and investments, the company entered new end markets and doubled its addressable market. Akamai s newer product groups Web security, carrier products, and hybrid cloud optimization are growing well, but overall growth is still determined by performance in Akamai s slowing core markets. These businesses are achieving scale, but the rate of slowing in the core CDN business is occurring faster than expected, and the magnitude and timing of OTT opportunities are unclear.

Will Akamai s business model be pressured over time by the irreversible mix shift of Internet traffic toward two-way content increasingly distributed on cloud-based architectures that provide compute and storage?

While the amount of Internet traffic is growing, there is an increase in DIY CDN business, and the amount of static, Akamaicacheable data on the Web is falling as a percentage of the total amount of data with which customers interact. In 1999, the Web was a read-only medium with very little user-generated content, customization, etc. Today, the flow is much more bidirectional (and therefore uncacheable). We do not see that Akamai has a play here; it may resist this architecture shift, as moving into these growth areas would likely cannibalize the CDN revenue base. More acquisitions to enhance the enterprise security portfolio in the interim are likely as the company continues to diversify away from the commodity CDN business segment. Yet the market has responded to the unification of software accessing three types of storage by moving toward distributed, layered IaaS/PaaS systems (e.g., AWS) using HTTPS APIs (versus FTP), providing compute and storage (versus caching of object storage). Improved performance, reliability, and scale are occurring fast, and we expect many cloud customers that are not scaled up will still require a CDN for performance enhancement.

Conclusions:

We believe Akamai Technologies is in transition as its core media delivery business matures. The company has stepped up its diversification efforts, including (1) broadening the product set, (2) ramping sales hiring, and (3) expanding internationally. The long-term impact of these efforts could be positive, but we see increased pressure on Akamai’s CDN-based business model over time, driven by the irreversible mix shift of Internet traffic toward “two-way” content increasingly distributed on cloud-based architectures that provide compute and storage. We view the risk/reward at current levels as negative: Near-term positive momentum is more than offset by fundamental challenges in the CDN segment.

Remainder of this post is by Alan J Weissberger, IEEE ComSoc Community site content manager.

Overview:

Akamai is the largest provider of content delivery network (CDN) services. A content delivery network or content distribution network (CDN) is a globally distributed network of proxy servers deployed in multiple data centers. The goal of a CDN is to serve content to end-users with high availability and high performance.

Akamai competes with Level 3 Communications (LVLT) and Limelight Networks (LLNW), as well as startups Fastly and CloudFlare. Verizon Communications (VZ), Amazon.com‘s (AMZN) Amazon Web Services,  IBM (IBM) and Comcast (CMCSA)  are also emerging as new rivals in some parts of the CDN market.

Worries that customers such as Apple (AAPL) and Facebook(FB) are shifting some of their data traffic to their own CDNs has pressured Akamai and analysts have lowered Q1 estimates.

Other Voices:

“Revenue guidance is slightly under consensus, due to year-over-year decline in revenue from two major media delivery customers (Apple and Facebook) that are taking more of their volume in-house,” Michael Olson, a Piper Jaffray analyst, said in a research report. “Importantly, the impact from these customers is becoming less material as they go from 11% of revenue in 2015 to around 6% in 2016.”

Colby Synesael, an analyst at Cowen & Co., says Akamai’s guidance might be too conservative.

“While we appreciate management’s decision to err on the side of being overly cautious after its surprising revelation regarding these two customers on its Q3 (2015) call, it highlights management’s lack of visibility with its own top customers,” he said in a report.

“Akamai has been very clear that the first half of 2016 would be marked by slower growth in the media segment, but then it expects (Internet TV) video to begin to accelerate growth. Similar to other large, secular growth opportunities, it is often difficult to project the exact timing of the opportunity, but we believe growth from (Internet TV) will begin to manifest in second half 2016,” said Michael Bowen, an analyst at Pacific Crest Securities, in a report.

References:

10 Best CDN Service Providers: Content Delivery Networks that Work

1Q-2016 Earnings Call Transcript

Summary & Overview:

AT&T delivered in-line 1Q16 financial results, but domestic subscriber metrics were disappointing. While total wireless net adds of 2.3 million were impressive, most of this was driven by growth in Mexico, which has a much lower wireless penetration and profitability than the U.S. market. Excluding Mexican postpaid net adds of 529,000, this implied U.S. domestic postpaid sub growth of 129,000—business segment of 133,000 + consumer mobility of (4,000)—a YOY decline of 70.8%.

We believe this corroborates with T-Mobile’s very strong 1.75 porting ratio against AT&T during the quarter, the highest among T-Mobile’s competitors. With the DIRECTV acquisition now closed, AT&T is shifting towards bundling of two-year contracts (wireless, video, broadband), which has not yet resonated with consumers, in our view. Pressure from T-Mobile should continue: Its rollout of extended LTE on 700 MHz A Block spectrum (covering 194 million PoPs) is running ahead of schedule, with plans to acquire additional A Block spectrum that will cover 48 million PoPs. We expect AT&T to continue its ramped-up fiber network investment strategy (despite our view that this generates negative NPV), due to increased market share erosion risk from cable, which enjoys a lower incremental cost curve.

Meanwhile, T-Mobile USA reported (April 26) materially better 1Q16 financial and  operating results, versus consensus and our estimates. It is likely that T-Mobile captured the bulk of the industry’s net subscriber adds this quarter, in our view. It is seeing increased success in capturing better quality market share at the expense of Sprint and AT&T, due to a similar network and device portfolio and customers balking at AT&T’s (pricier) bundles. The porting ratio was the highest (with AT&T as noted above), at 1.75 this quarter, followed by Sprint at 1.35 and Verizon at 1.34.  T-Mobile is riding high on momentum, yet our vendor checks suggest it has about two years of network capacity left, which bodes well for another kick at the M&A can in 2017, in our view.

Key Points:

■ 1Q16 results recap. Consolidated revenues increased 3.8% YOY to $40.5B, in line with consensus’ estimate but modestly below our estimate of $40.8B. By segment: Business solutions delivered revenues of $17.6B, entertainment and Internet services had revenues of $12.7B, consumer mobility had revenues of $8.3B, and International had revenues of $1.9B. Adjusted EBITDA of $13.3B were in line with Street expectations and a hair below our estimate of $13.4B. EBITDA margins improved by 16 bps YOY, to 32.7%, driven by increased cost reductions. Mobility postpaid net adds were 28,294, and prepaid net adds were 12,171. Postpaid churn was 1.24%.

■ Worsening wireline business deterioration. Legacy voice and data service revenues continue to worsen as customers switch to wireless or VoIP. We believe there is a greater management urgency to shed the consumer wireline business to help fund low-band spectrum purchases. We think management is exploring additional consumer access line sales, given the looming wireless access substitution risk, higher costs, and a negative NPV profile to upgrade copper plant to fiber, in our view.

■ While we believe AT&T will continue to reap the benefits of an under-penetrated Mexican market and cost synergies and cross-selling opportunities with DTV, competition from T-Mobile USA will likely continue to weigh on wireless subscriber acquisitions in the medium term.

Outlook for discounted handset eligibility:

Declining iPhone churn confirmed that the loss of exclusivity and resurgence of T-Mobile US were manageable. Extended upgrade eligibility, upgrade fees, and accelerated upgrade opportunities through AT&T Next have material margin implications, and we expect continued discipline on upgrade eligibility, even in the event of flow share to Verizon and T-Mobile. With the LTE network buildout complete and AT&T diversifying into Mexico to alleviate churn pressures, further changes to upgrade eligibility are likely.

Can AT&T drive earnings growth?

Smartphone activations remain significant. Strategic initiatives with Samsung and Google, coupled with support of the Windows Phone ecosystem by MSFT, NOK, and other OEMs, are key to lower wireless subsidy pressure, but it is early days.

We think AT&T will continue to consider pricing action to augment growth once the LTE network build is complete, but competitive intensity is likely to increase in FY16, so this will prove difficult absent consolidation or until T-Mobile US becomes spectrum challenged, which we think is still one year away and a function of T-Mobile US s commitment to continue network investment.

How will AT&T fare in the changing wireless landscape in 2016 and beyond? Our strategic concerns for AT&T include:

(1) the Apple eSIM impact, should Apple be successful in striking wholesale agreements;

(2) the Google MVNO impact, which could strip the company of the last bastion of connectivity revenue; and

(3) a Wi-Fi first network from Comcast, coupled with a wholesale agreement with a carrier, which would enable a competitor and increase pricing pressure.

Does AT&T have a sustainable spectrum advantage compared with other carriers?

AT&T is behind Verizon in spectrum and out of spectrum in numerous major markets, according to our vendor checks. However, with additional density investment, it is reasonably well positioned to benefit from the combination of coverage layer (700 MHz and 850 MHz) and capacity layer (1,700 MHz and 1,900 MHz and soon-to-be-confirmed 2,300 MHz) spectrum and will focus on LTE and LTE Advanced, as well as refarming 850 MHz/1,900 MHz spectrum for additional coverage and capacity. Yet this nonstandard LTE band will cost more capex and take longer to implement. In the short run, aggressive cell splitting is expected, and metro Wi-Fi and small-cell solutions with economic backhaul solutions are becoming available, allowing for greater surgical reuse of existing spectrum. Sprint s differentiation through Clearwire spectrum in FY16 is only likely to modestly affect AT&T relative to Verizon. Furthermore, with 70% 80% of wireless data traffic on Wi-Fi and only 20% of capacity utilized, this suggests a focus in this area to manage data usage growth.

Conclusions:

We expect the wireless segment to continue to be challenged by a resurgent T-Mobile USA. We are less bullish on near-term improvements in capex intensity, due to cultural challenges associated with the much-needed migration to software-centric networks, coupled with the need to upgrade its fiber plant aggressively to improve its competitive positioning and lay the foundation for efficiency improvement.

Introduction:

Speaking at Thursday’s April 21, 2016 NFV World Congress in San Jose, CA, Geng Lin, Head of global engineering in emerging markets at Google Access (part of Google parent company Alphabet), described his division’s strategy in improving Internet access and affordability in developing countries.  He then cited India RailTel WiFi as a real world “case study” of extending Internet access to millions of new users via a managed WiFi network designed and developed by the Google Access division.

Internet Access in Developing Countries:

There are 3.2B unique Internet users worldwide of which 2B are from developing countries.  Yet 4B people in developing countries remain offline, which is two thirds of that population.  India is the most promising market for Google Access, while other markets include Indonesia, Brazil, and sub-Sahara Africa.

Internet Access for the Emerging Markets/Regions:

Three methods were proposed for Internet Accessibility in developing nations/regions*:

1.  Fiber/Wireline combined with terrestrial wireless for high population density areas.
2.  Aerial wireless (balloons) combined with terrestrial wireless for medium density areas.
3.  Aerial wireless (balloons) combined with satellite/space communications for low density areas.

*Geng’s comment (via email):  “Each of the transmission technologies noted above can be used for both access and backhaul for the respective density areas.”

India Has Great Growth Potential for Internet Access:

India is a key emerging market for Google Access as there’s only 20% Internet penetration in a country of 1.2B people. Mobile users comprise 60% of the Indian population, but many only have cellular voice/text with no Internet access. There are only 200M smart phone users (16% of the total population) in India.  With 100M new Internet users in the last year (2015) and many more wanting connectivity in coming years, there’s huge potential to significantly grow the number of broadband Internet users in India.

RailTel WiFi Project:

Last fall, Google announced in a blog post that it was partnering with state owned India Railways and India’s RailTel (which owns a Pan-India fiber optic network on exclusive Right of Way along railway track) to provide WiFi based Internet access in 400 Indian train stations.  

The WiFi to be deployed is much more than “best effort” transport, Geng said.  It’s a highly reliable, managed WiFi network: “This is a WiFi service that operates as a highly managed service, You could think of it as carrier class,” he added.

Many new Indian Internet users are expected each week when the managed WiFi network is fully deployed.  The service was turned on in January 2016 in Mumbai’s central station as per this WSJ article.  More train stations have been added this month (see Sidebar below). When fully deployed, it will be the world’s largest WiFi network!  

Sidebar- from the referenced WSJ article:

“Everyone who comes here will get high quality, high-definition streaming,” said Gulzar Azad, head of access programs for Google in India. He said 100,000 people pass through Mumbai Central station daily.

At the station, users will be able to get high-speed Internet for the first hour. Then the speed slows to “normal,” Mr. Azad said.  The Wi-Fi service is available on all the station’s platforms, but cuts off as soon as one steps outside the station.

Passengers at Mumbai’s railway station try out Google’s free Wi-Fi service on Jan. 22, 2016. 

Composition of Google’s Managed WiFi Network:

Two critical technologies are used in Google’s managed WiFi network in India (and other countries in the future):

1.  Cloud based Evolved Packet Core (EPC) control plane, which can massively scale to accommodate millions of new users.

2.  Cloud platform based Service Operations for service level modeling, monitoring, and reporting (i.e. OSS type functions).   Google’s cloud-based service operations is also delivering advanced analytics and service level monitoring to improve the customer experience.

The third piece of this managed network is the WiFi Radio Access Network (RAN), which is composed of WiFi Access Points (APs) and wirless LAN controllers.  It’s fully automated with minimum staff required for maintenance. 

Google is leveraging India Railways 45,000 km fiber optic backbone network for WiFi backhaul to Indian ISPs (not disclosed).  There’s evidently fiber optics cable to each train station in India that will have managed WiFi access.

–>Google combines and integrates the Wi-Fi RAN with their cloud based EPC to provide the total access network which is connected to India RailTel’s fiber optic backbone to reach the ISPs point of presence.

Attributes of WiFi based Internet Access (Google-India Railtel):

• Google’s service operational cost is expected to be sub $ per month per subscriber.  Geng’s clarification comment via email: “What I described was the service operation cost. However, we didn’t calculate the cost of fiber bandwidth etc. which we’re not able to know until we have more data.”

• Users in India are flocking to the service, which is currently being offered at no charge. Long-term, Google plans to offer a paid service, but it will also offer some level of WiFi service for free.
• End to end service stability has been superb so far, with 99.94% availability in the last week, according to a report Geng said he printed out Thursday morning.  That makes for a great Internet user experience!
• 10 WiFi enabled train stations have been deployed since January 2016, with a total of 100 stations to be WiFi enabled by the end of 2016.  The list of train stations is here.
• “The network is now live in 10 key stations across the country and will enable about 1.5 million people to access high-speed Internet service. We are scaling up our efforts to roll out the network quickly to cover some of smaller stations where connectivity is much more limited,” Google India head of access project Gulzar Azad told PTI.

• The aggregated WiFi train traffic has grown by 700% in the past month.  
• Current average usage time is about 50 minutes per day or 366M bytes per user.   “This is more intensive usage than an LTE network user,” Lin said.
• Users can download HD videos and watch mutli-media apps on their mobile devices without interruptions.
• 400 WiFi equipped train stations with a total of 10M daily new Internet users in India are projected in coming years as this project nears completion.

Author’s Notes:  

1.  It should be noted that Google’s free WiFi will only work at the railroad platforms and is not meant for use within the trains. According to Marian Croak, Google VP for Access and Emerging Markets, the company sees a potential of 10 million users accessing its WiFi each day by the end of 2016 from across these railway stations. Google wants to make sure that these 10 million users get broadband quality experience when using its managed Wi-Fi network.

2. In an effort to compete with Amazon’s AWS, Google’s been on a growth spurt with its Cloud Platform (AKA the global Google Compute Engine), which manages and controls this WiFi network. Last month the company said it is adding 12 regions (i.e., data centers) by the end of 2017.

3.  Google’s huge infrastructure of advanced data centers are a big driver of capital expenditures that hit nearly $10 billion last year.  Many of those data centers are used to create Google’s Cloud Platform.

Conclusions –  Looking to the Future:

In closing, Lin said:

• Google’s cloud based EPC and cloud based service operation will scale to tens of millions of users for this WiFi Railtel project.  
• The network architecture is extensible to possibly reach hundreds of millions or even a billion users by leveraging Google’s cloud data center platform. 

Geng’s comment via email:  “While conceptually correct, this perhaps is still a bit early to make a strong defensible statement.”

• The cloud EPC and cloud based service operation could also be offered as a wholesale service on the Google Compute Engine to incumbent carriers (not disclosed) that Google is now partnering with for the WiFi RailTel project. 

End Note:

Revenue from what Google/Alphabet calls “Other Bets” or “Moon Shots” — including its Google Fiber business, driverless cars (autonomous vehicles) and the Nest thermostat — was $166 million, more than double what it was in the first quarter of 2015.  However, losses for “Other Bets” rose to $802 million in the last quarter, from $633 million.  Presumably, the “Other Bets” include Internet access via WiFi balloons and the managed WiFi network for India RailTel/India Railways.

The majority of those costs, according to Alphabet CFO Ruth Porat, are driven by the expense of building out Google Fiber. Alphabet plans to increase spending on bets that show promise, ask outside investors to contribute where it makes sense, perhaps around driverless cars, and cut down on bets where multiple teams are pursuing a similar objective.

Google CEO Sundar Pichai cited the development of machine learning and artificial intelligence as one of the key factors driving the company’s growth.  It remains to be seen if the company can turn any of these research intitiatives into a real profit making business.

Comment by Michael Howard, co-founder of Infonetics and Prinicipal Analyst at IHS:

In speaking with Geng afterward, he observed the following:

1.       Google’s WiFi service is different than the similar Facebook (FB) free network- Terragraph and Project ARIES:

a] Google’s WiFi provides full Internet access;

b] FB has a walled garden with access limited to a FB-chosen set of websites.

–>Geng said Google will not do location- or subscriber-based advertising. I think he hinted that FB does this or will be doing it in their network?

2.       Passengers will now want to spend more time in the stations and the RailTel ridership will increase

My observation:

1.       Google makes its large majority of revenue on search hits, which this service will open up to more people.

2.       Google and FB are in a race to capture the billions of internet-unconnected on the planet, thus their service is designed to be different than FB service.

Update- Sept 27, 2016:

Google today announced a collection of updates aimed at helping get ‘the next billion’ internet users in India and emerging markets online. One of the more subtle yet interesting components to that push is the launch of Google Station, a project to enable free public Wi-Fi hotspots, which is now open for new partners.

In India alone, Google estimates that 10,000 people go online for the first time each hour, while in Southeast Asia the figure is 3.8 million per month.

The company made a big push on the free Wi-Fi initiative, and today it revealed that it now covers 50 national stations, providing internet access to 3.5 million people each month. (That’s up from 1.5 million in June.) Google and RailTel are targeting 400 stations nationwide, and, in addition to that, it has now opened the program up to other public organizations.

Google Station is aimed at all manner of public businesses, from malls, to bus stops, city centers, and cafes. And not just those in India, too, Google said.

“We’re just getting started and are looking for a few strategic, forward-thinking partners to work with on this effort,” it added in a statement.

For all the excitement around how Google is disrupting U.S. internet access with Project Fi and Google Fiber, Google Station has the potential to take things even further by giving the hundreds of millions who lack decent quality internet access, a reliable connection to get online regularly for the first time. That is potentially life-changing for many.

No doubt the project is in its early days, but it has the potential to do an incredible amount of good — and hopefully without running into conflicts of interest, as the free internet project from Facebook did.

https://techcrunch.com/2016/09/27/google-station-free-wifi-hotspots/