Editor’s Note: Welcome to our weekly Reality Check column where C-level executives and advisory firms from across the mobile industry share unique insights and experiences.
Real estate is said to be about three things: location, location and location. The same is true of radio access networks. Spectrum and heterogeneous networks are all about location. Wi-Fi hotspot operators have known this for a long time; the cellular industry is still learning lessons from Wi-Fi, and this posting will examine some of those lessons.
To serve more customers, mobile network operators need to offer greater capacity. Beyond technological improvements, this means adding cells. They can add more carriers using more spectrum or put the cell sites closer together. One of lessons that the Wi-Fi industry learned is that access points at 5 GHz could be placed closer together for two reasons: there is more spectrum available than at 2.4 GHz; and, the signal attenuates faster. So, for really high density deployments, the higher spectrum band is better.
The cellular industry has not quite learned this lesson. Sub-1 GHz spectrum is valuable for coverage, including in-building penetration; however, in capacity constrained systems, spectrum above 2 GHz will enable operators to place cells closer together to maximize spectrum re-use and network capacity. Ultimately, the almost 200 megahertz of spectrum at 2.6 GHz in the Americas and the 100 megahertz at 2.3 GHz in Asia will be much more valuable for small cells in hetnets than the sub-1 GHz spectrum.
Recent news accounts indicate that a rational approach to network sharing may be finally coming to the United States. The New York Metropolitan Transportation Authority took a forward-looking initiative that is now coming to fruition. Mobile network operators are also becoming neutral hosts. With Wi-Fi, venue owners – landlords – discovered many years ago that they could not accommodate separate infrastructure from multiple services providers; and, multiple infrastructures were much too expensive to deploy, especially in a freemium model.
The dynamics of the U.S. market do not promote cooperation. While we are seeing the first small steps in the United States, there is still not a concerted effort to achieve sharing of active electronics with approaches such as MOCN. We have a long way to go.
The radio access network infrastructure market in the United States has become highly inefficient. On the consumption side, four mobile network operators control about 95% of the market. On the supply side, four major RAN infrastructure suppliers control about 99% of the market; the infrastructure vendor side is even more concentrated than the consumption side, with the top two suppliers having well over 80% market share. This market is inefficient on both the supply and consumption sides—a combination of an oligopsony and an oligopoly.
By contrast, consider the Wi-Fi market in the United States – many access point suppliers and tens of millions of consumers. This is a more efficient and competitive market in which innovation is rewarded and consumer value is maximized.
As the Federal Communications Commission considers making more spectrum available for public use, various stakeholders are exerting the usual efforts to influence the rules in their favor. The potential for 3.5 GHz spectrum to be made available is of particular interest to hetnets. There has been some discussion of shared use of this spectrum. Great idea. Now, consider what the best way to share this spectrum would be given that the expected usage would be small, indoor cells.
Typically, spectrum above 3 GHz is not suitable for mobile applications; this spectrum is better suited for nomadic applications, especially for indoor small cell deployments. With the anticipated demand for in-building capacity – a lot of focus on hetnets and Wi-Fi offload – this spectrum would be most suitable for in-building deployments, and certainly not macrocellular access. To assume that the only path forward is for the FCC to license this spectrum for exclusive use to operators is folly.
The dynamics of in-building deployments include:
–The tenant or landlord of the building must agree to the deployment.
–For Wi-Fi in unlicensed spectrum, there is a single decision point and no other permission is required.
–For licensed spectrum, the license holder has to establish a business case and get tenant or landlord permission. Satisfying both conditions results in a much smaller addressable market and slower time to market.
From the perspective of maximizing consumer value, the best case scenario for utilization of this spectrum would be for the FCC to make it available for use on a shared basis with provisions that enable venue owners and tenants to utilize the spectrum at their sole discretion. Considering the massive congestion in the 2.4 GHz band used by Wi-Fi, and the coverage challenges of using 5 GHz bands, making this spectrum unlicensed would promote not only the most rapid adoption but also a more robust, competitive and efficient market on both the supply and consumption sides. To me, the best case scenario is for the FCC to allocate this spectrum for unlicensed usage as is done with Wi-Fi today. This will not preclude mobile network operators from using the spectrum; it would avoid under-utilization.
Many indications are that more data is being carried on Wi-Fi than cellular – in spite of the limited spectrum available for Wi-Fi. Wi-Fi is popular because of the openness – the lack of barriers to entry – which has resulted in a dynamic, free market. Making the targeted 3.5 GHz spectrum similarly unlicensed would, I believe, promote a similar dynamic market – regardless of the radio standard being used.
Imagine a future in which public access Wi-Fi is less congested than it is today, while relieving pressure from the macrocellular network in a more competitive environment.
Madan Jagernauth started FutureMobile Service in 2013 after more than 20 years in the wireless industry, providing leadership roles for internationally recognized companies like Huawei Technologies and Nortel. With a master’s degree in Engineering and an MBA in Telecommunications Management, Jagernauth provides an understanding of technology, business acumen and a focus on providing innovative solutions to solve real-world problems. Today, Jagernauth applies this broad experience, focus and understanding of the evolving wireless industry landscape to provide wireless solutions for clients in the United States, including market analysis and forecasts, business analysis and planning, requirements analysis and wireless communication applications. futuremobileservices.com/.
