What is ‘Forecastable’ About 5G?

A frequently asked question of industry analysts is “how big is the 5G market going to be?”. The real answer is that although it might be possible to forecast the size of certain aspects of 5G, it is nearly impossible to forecast the 5G market as an aggregate entity. Instead, I’d argue that there are several discrete, and not very related, elements of what might constitute a 5G forecast. Hopefully the thought process below will help those who want to gauge the progress and dimension of this exciting new phase of wireless and broadband.

First off, over the next couple of years, there will not be a distinct 5G service, in the conventional way we would think about it. It will be a few “islands of 5G” in a sea of 4G LTE – where a relatively limited subset of cells in a certain market will be equipped with 5G radios. It will look more like roaming onto a 5G hotspot (like Wi-Fi) than a seamless service – even from those who say they’ve deployed ‘mobile 5G’. Some operators might even obfuscate real 5G with services that might look like 5G, or elements of the LTE roadmap that boast 5G-esque characteristics or performance. Full throttled gigabit LTE service will feel as good as early 5G, as we’ve seen from some of the marketing, and even branding, such as AT&T’s 5G Evolution.

The equipment deployment aspect of 5G is going to be especially tricky to count. Many operators are adding small cells and densifying their networks in order support more capacity for LTE, and also to be ready for the higher bands that will be used for 5G, such as 3.5 GHz or mmWave. While 5G might be a driver for these deployments, or a beneficiary of them down the line, they still fall in the 4G bucket.

So, one way to look at this might be measure the percentage of cell sites in a given area that have been equipped with or upgraded to 5G.  Keep in mind that many of the sites that have been shipped over the past 2-3 years are 5G ready, meaning they can be upgraded to 5G with a software update.

Second, some of the 5G services will be based on specific business cases, but will be counted outside of some of the metrics we typically use to count things in the mobile industry. Case in point is Verizon’s soon to be launched fixed wireless access (FWA) service. Here, 5G might be the access mechanism, but really this sits in Verizon’s fixed broadband bucket, as in Fios or DSL. No Verizon Wireless customer will be able to buy this service unless they want to use it for broadband in their home.

This gets even tougher with other markets that will drive the 5G business case. The IoT aspect is a good example. One of the important capabilities of 5G is that it can handle millions of connected devices simultaneously. But it could well be that these are many millions of low power devices consuming very little data. Not the ‘faster, higher, stronger’ flavor of what we normally consider in a wireless network upgrade. Or, take connected cars. Vehicles using V2X will employ 5G for some aspect of a vehicle’s overall communications, but this will be a challenge to actually count.

The most countable – and hence most forecastable – aspects of 5G will come from the equipment and device sides. It will be easiest in greenfield implementations, such as in mmWave, where all the radios are 5G by default. It is possible to forecast and count 5G NR, even though they might not be the same as a 4G radio in the physical sense of the word. It will also be possible to forecast 5G devices that can talk to a 5G radio. Initially it will be 5G bricks and dongles, but in 2019, we’ll see some early 5G phones. There will also be a much larger number and variety of devices that are 5G enabled, meaning they contain a chipset that can talk to a 5G radio. Another new ‘category’ will be the CPE for fixed wireless, both at the site as well as the little box that sits outside the window.

There is also a slew of technologies and products that will deliver some of the capabilities that will make 5G distinct. This includes advanced antennas, the techniques behind advanced beam forming, and network slicing. These are all parts of the 5G ‘market’, but difficult to isolate, as in “the market for network slicing is X”. It is more that the capability for network slicing is one of the key features of 5G, and might help open up new frontiers in the enterprise mobile market.

Those who have read this far might argue that much of my argument could well apply to what we saw with 4G LTE. But I’d argue that this is different, and more complex. 5G will be rolled out on a more staggered basis, on timetables that vary significantly from one country (or city) to the next, and only sometimes on purpose-built spectrum. It will be spread across a much greater variety of use cases/application types and on a much broader suite of devices, not all of which might use 5G in the conventional sense. Actually, a minority of 5G devices will be phones as we know them today.

5G is going to be something very significant over the next 10 years, but it will be some time before we can get our arms around what actually constitutes the “5G Market”.

A Lot Needs to Happen Before Self-Driving Cars Are A Reality

Self-driving vehicles represent one of the most fascinating fields of technology development today. More than just a convenience, there is the potential to radically alter how we work and live, and to alter the essential layout of cities. Their development involves a coalition of many disciplines, a marriage of the auto industry’s epicenters with Silicon Valley, and is attracting hundreds of billions of dollars in annual investment, globally. Exciting as all this is, I think the viability a full-fledged self-driving car in the day-to-day real world is further off than many believe.

My ‘dose of reality’ is driven by two main arguments. First, I think that we’ve underestimated the technology involved in making true autonomous driving safe and reliable, especially in cities. Second, there are some significant infrastructure investments that are required to make our streets ‘self-driving ready’. This requires significant public sector attention and investment which, except for a select few places, is not happening yet.

Self-driving cars have already logged lots of miles and have amassed an impressive safety record, with a couple of notable and unfortunate exceptions. But most of this has occurred on test tracks, along the wide-open highways of the desert southwest, and in Truman Show-esque residential neighborhoods.

For a sense of the real world that the self-driving car has to conquer, I encourage you to visit my home town of Boston. Like most of the world, it’s not Phoenix or Singapore. It has narrow streets, an un- grid-like/not intuitive layout, and a climate where about half of the year’s days feature wet, snowy, or icy roads. Sightlines are bad, lane lines are faded, and pedestrians and cyclists compete for a limited amount of real-estate. In other words, a fairly typical older city. How would a self-driving car do here?

To get even more micro, I’ll take you to a very specific type of intersection that has all of the characteristics deigned to trump a self-driving vehicle. In this situation, the car has to make a left turn from a faded turn lane with no traffic light, and then cross a trolley track, two lanes of oncoming traffic, and a busy crosswalk. So we have poor lane markings, terrible sight lines, and pedestrians moving at an uneven pace and doing unpredictable things, before even getting into the wild cards of weather, glare, and so on. My heart rate quickens every single time I have to make this turn. I would want to see a car successfully self-perform this left turn a Gladwellian 10,000 times before I’d sign that waiver.

I’m sure each of you can provide countless examples of situations that would prompt the question of “can a self-driving car really handle that”? It shows the complexity and the sheer number of variables involved in pulling this off. Think of all the minor decisions and adjustments you make when driving, particularly in a congested area. Rapid advancements in AI will help.

This is not to diminish the mammoth progress that has been made on the road to the self-driving vehicle. The technology is getting there for self-driving cars to be viable in many situations and contexts, within the next five years. It’s that last 10-20% of spots and situations that will prove particularly vexing.

If we believe the self-driving car could be a game-changer over the next 20 years, I think we need to be doing a lot more thinking about the infrastructure required to support its development. We all get excited about how the potential benefits self-driving/autonomous vehicles will usher in, such as changes to the entire model of car ownership, less congested roads, the disappearance of parking lots, etc. This exciting vision assumes a world where the self-driving car is already mainstream. But I think it’s a bit naïve with regard to the type of investment that is needed to help make this happen. This is going to require huge public sector involvement and dollars in many fields and categories. As examples: improvements to roads to accommodate self-driving cars (lane markings, etc.); deployment of sensors and all sorts of ‘smart city infrastructure’; a better ‘visual’ infrastructure; a new regulatory apparatus, and so on. And of course, we will need advanced mobile broadband networks, combination of 5G with vehicle-centric capabilities envisioned by evolving standards such as V2X, to help make this happen.

This will be a really exciting field, with all sorts of job opportunities. There’s the possibility of a game-changing evolution of our physical infrastructure not seen in 100+ years. But worldwide transportation budgets are still mainly business-as-usual, with sporadic hot pockets of cities hoping to be at the bleeding edge.

Getting to this next phase of the self-driving car will require a combination of pragmatism, technology development, meaningful infrastructure investment, and a unique model of public-private cooperation.

 

Why Regulators Should Approve the T-Mobile/Sprint Deal

On the heels of the T-Mobile/Sprint merger announcement (Round 3), the market has been pessimistic, with consensus on the Street that chances of approval stands at less than 50%. I disagree. If T-Mobile and Sprint play their cards right, the chances of getting the deal through this time ‘round are much better. Here are some of the main points I believe regulators should consider.

  1. The Market Has Changed. These two companies first broached a deal nearly 5 years ago, not long after SoftBank had acquired Sprint. Much has changed since then. There have been some serious vertical market integrations involving other operators (Comcast-Universal, Verizon-AOL-Yahoo, and pending AT&T-Time Warner). Cable now seems serious about being in mobile, and DISH sits on a treasure trove of spectrum. So even though the number of national facilities-based wireless providers will go from four to three, we’re likely to have 1-3 additional major MVNO/resale players in the future: cable, some incarnation of DISH, and possibly some Internet giant (Google, Facebook, Apple, Amazon…take your pick).
  2. Why the Focus on Wireless When It’s Broadband That Needs More Competition? I’ve always been curious about the FCC’s maniacal focus on the level of competition in wireless, even though the U.S. has less broadband competition than nearly any other OECD country. Only 50% of U.S. households have a choice of more than one broadband provider. The new T-Mobile, with far greater spectrum breadth and capacity, would be in a much better position to offer a competitive broadband service via wireless, in some contexts.
  3. What Would Have Become of Sprint? I’m surprised there hasn’t been more focus on this. Sprint has been losing share, has huge debt, and still lags on network coverage and quality. Even the wunderkind Masayashi Son has not been able to turn the company around. Without a merger, what are Sprint’s real prospects? Wouldn’t it be better for network investment, the market, and consumers to have three strong competitors, rather than two giants, a sort of strong #3, and a weak #4? Can regulators point to any other countries where there are four healthy and profitable national wireless carriers?
  4. This is good for 5G. The challenge of having four strong national competitors is even greater when one considers 5G, given the level of investment that will be required. There’s a very real risk that T-Mobile, and especially Sprint, would fall further behind as 5G gets built. And it’s not only about having a war chest of dollars and spectrum. With the number of small cells that will be required for 5G, especially in urban areas, the zoning/siting/permissioning process alone, spread across four operators, would be a nightmare.
  5. This Is Partially The Fault Of Our Existing Spectrum Policy. It’s ironic to me that the feds might try to block this deal, while at the same time, it’s been their objective for the past 20 years to maximize the $$ intake from spectrum auctions. T-Mobile, Sprint, and other potential upstarts/new competitors would have a far better chance of building a good network and successfully competing in wireless if they didn’t have to spend tens of billions of dollars to merely acquire the spectrum. In several of the more recent spectrum auctions, well-heeled folks from Comcast to Google have bowed out because, well, it got too expensive for them.Tom Wheeler, former FCC Chairman, now at the Brookings Institutions, has been pushing the idea of spectrum sharing for a number of years. He wrote this week that perhaps the best way to compete in 5G would be for the carriers to build a shared 5G network. This is the sort of creativity we need, rather than government’s current approach of talking out of both sides of its mouth.
  6. Perhaps Some Creative Concessions Would Be In Order. In the wake of closing arguments at the AT&T-Time Warner trial, it’s been suggested that one possible outcome might be that AT&T wins approval to move forward, but must make some concessions, possibly divesting of the Turner assets or some way of assuring against discriminatory pricing.In previous wireless mergers, concessions have mainly revolved around divestment of spectrum. What about something more creative here? For example, perhaps the new T-Mobile has to agree to offer wholesale rates on some reasonable basis, thereby encouraging a more vibrant resale market. This has been the approach in some other countries, especially some broadband markets in Western Europe, which has resulted in more competition and lower prices. Naturally, new T-Mobile would argue that the same rules should apply to Verizon and AT&T, which could be a condition attached to deals extant and likely in the future.

There are valid arguments on both sides of this one, from a regulatory perspective. But given important changes in the market’s structure, plus the road ahead from a strategic and financial perspective, the benefits of this proposed combination outweigh the potential downsides.

Silicon Valley Giants Should Hold A Summit on Data Security and Privacy

Next week, Mark Zuckerberg will be trotted in front of Senate and House committees for what will surely be a high-profile admonishment of his company’s behavior. There’ll be a lot of bloviating by our elected representatives. Zuckerberg will be both prepared and contrite. But this issue is bigger than Facebook. Facebook might be the whipping boy du jour, but most of the Silicon Valley giants have exhibited some form of less than laudatory behavior at some recent point, between the unseemly uses of user data, security breaches, and lack of transparency.  That’s why Tim Cook’s vilification of Mark Zuckerberg earlier this week was actually a bit off-putting.

Notwithstanding next week’s expected spectacle, we should recognize that this is an important moment in the 20-year history of the broadband Internet. It is time for the Silicon Valley giants – who control a vastly outsized share of how users connect, communicate, and consume content – to come together and establish some rules of the road going forward. They need to show some leadership, and head off regulators from getting overly involved. Perhaps they should do this collectively, in some way. Why not a summit on data security and privacy?

Let’s first recognize that much as these companies compete, they are very much intertwined. Facebook, Apple, and Google, especially, would each be far less without each other. Rather than each of them taking this moment in time to address the issue of consumer data and privacy separately, it might make sense to do something collectively. There are three steps involved in this, in my view.

Step One is to establish some minimum level of what is appropriate to do with a customer’s data. We can call it a ‘code of conduct’, although the term is a bit vague and overused. In some cases, we have been criticizing these companies for crossing a line, when the line itself has not been particularly defined. Consumers know that there’s sort of an unofficial bargain here. Facebook, Google, Twitter might be free, but these companies profit from customers’ data and what they do online. Some subscribers might be OK with some of their data being made available to third parties – especially if they benefit from it in some way. But more direct communication and transparency is crucial here. We also need to recognize that as technology evolves and future opportunities arise, there will need to an ongoing dialog.

Step Two involves doing a much better job of communicating to customers exactly what is done with their data, and what sorts of controls they have over that. As an example, perhaps all Facebook users should be required to take an online tutorial that shows both how their data is or could be used, and what the various tools and settings are available to help them manage that.  It is also incumbent on us to become better educated about what is being done with our data, and what we can do to exert some control over that. Perhaps the leading companies should get together and develop the data equivalent of ‘drivers ed’, as a requisite for using these [free] services.

Step Three is developing better consistency across platforms that enable consumers to manage privacy and what is done with their data. Right now, the experience of managing app settings, from privacy to notifications, is quite different between iOS and Android devices, and fragmented still further within the Android ecosystem. It’s a whole other ballgame on PCs, and across the different OSs, browsers, and the like. Within leading apps, such as Facebook, Twitter, Gmail, Outlook, and so on, it would be great if there was some easy to find and easy to use ‘hub’ that would function as both a source of information, and present a consistent approach to managing settings. Too often, this stuff is in obscure places and the configuration tools somewhat obtuse.

At a minimum, this ‘summit’ would include Apple, Google, Facebook, Twitter, Microsoft, and possibly Amazon. It might also make sense to have AT&T, Verizon, Comcast, and possibly Netflix and Intel at the table. This group collectively represents an astounding 70% of the collective PC/mobile OS, digital advertising, online commerce, mobile/broadband, and pay TV markets.

We’ve loved reckoning these first 20 years of the Broadband Internet as sort of a ‘Wild West’. But now that much of the land has been grabbed, it’s time to bring some order to these parts. I think it’s a cop-out for Messrs. Cook and Zuckerberg to say that maybe there should be some ‘regulation’. I’m not sure that regulators know enough about this stuff to get it right, and let’s face it, our Congressional leaders aren’t exactly high on the customer trust/satisfaction list themselves these days. I’d love to see the extremely smart and capable leaders of Silicon Valley have a collective deep think about how they can rebuild a relationship with their customers that has become a tad fractured of late.

Wearable Device and Fitness App Companies Should Share More Trend Data

This might be murky territory to wade into this week, considering all the news around Facebook. But consider this: some 200 million people worldwide own a connected wearable device, such as a Fitbit, Apple Watch or a Garmin. Hundreds of millions use apps such as MapMyRun, Runkeeper, or Apple Health to track steps taken, miles walked or run, hours slept, and calories both consumed and expended. But some ten years into this wearable device/fitness app market, remarkably little is shared from the treasure trove of information that the leading companies possess. By comparison, we see these aggregated data reports in so many other corners in tech and media. Akamai has its ‘State of the Internet’ report. App Annie releases all sorts of reports on app data and usage.

I think this is a missed opportunity for the wearables industry, in two respects. First, as the devices improve and the data becomes more accurate, it’s likely there are findings or trends that could prove valuable from a health outcomes perspective. Second, the leading companies could use some of the data they collect, responsibly and at an aggregate level, in fun and interesting ways, and to differentiate their offerings.

Let’s start by giving credit to the fitness/wearables industry. The leading companies have, so far, acted responsibly with respect to their customers’ data. You haven’t received an email from your health insurance provider raising your premiums because your Fitbit step count went down by half last year. Nor is Asics trying to sell you high-end sneakers, based on your 7-minute miles tracked by their Runkeeper App. So, prior to discussing what these companies might do with this data, the ground rule should be that individual fitness and health data should never be shared or sold, especially without the user’s express permission and with 100% transparency regarding what’s being made available. A good example of how this is done right is the Strava segments and leaderboard, where their subscribers opt-in to compare their performance on a particular route or ride.

With that out of the way, I’d love to see companies such as Fitbit, Under Armour, and Apple release some aggregate data from all the activity they track. Some of it can be fun and trivial, such as what is the highest number of steps taken by someone in a single day last year? Are there some cities or countries where people walk or exercise more? How might it differ seasonally? Does walking more have any impact on heart rate measurements?

I also think these companies could use the data to increase engagement with their customers. There are primitive examples already, such as ‘run 10 miles this week and get 50% off a T-shirt”. But how about some more interesting contests, such as a Boston vs. New York ‘step challenge’, where, adjusting for population, which city has the highest number of average steps over a certain period? There are all sorts of opportunities to create competitions between not only users but across cities, companies, and so on. This could be a fun incentive to get people outside and active.

For the fitness set, there are myriad geeky possibilities. Take running, as an example. What’s the most frequent time of day people run? Across the zillions of miles tracked every day, what’s the average distance for a run, or time? How many people run more than twice a week? That sorta stuff.

And at an individual level, I’d love to know more. Right now, the only comparison I can set up on my Fitbit is steps compared to other friends with Fitbits I’ve selected. But how do my steps/sleep/other activity compare across other cohorts, such as age, gender, location, season, weather, length of device ownership, and so on?

Then there’s the health side of the equation, which could become more interesting over time as there are more devices that are tracking sleep, ongoing heart rate, etc. How do sleep patterns vary by age?  What % of those over the age of 50 get up more than once a night? How do some of the fitness/exercise patterns tracked by these devices/apps correlate to what we know about national health outcomes?

The enterprise piece is also interesting. Companies have been buying Fitbits and other like devices for their employees, in rather large numbers, for years. They do fun things like run step count contests, and so on. But it would be interesting to hear, even at an anecdotal level, the impact of these devices on employee health. Do companies that run wearable ‘programs’ see any benefits in terms of employee health and wellness? Does this translate into cost savings?  The wearable firms might already share some of this data in their ‘pitch’ to corporate accounts, but little is known beyond that closed circle.

There’s a sense that the wearable device and fitness app category is stagnating. Fitbit had a crummy fourth quarter. Perhaps this data opportunity can give the industry a jolt. And over time, as these devices and apps track more categories of activity, and with higher levels of accuracy, the data will similarly evolve from being merely fun and interesting to compelling and useful.

It’s the U.S. vs. China in the 5G Olympics

Russia might be winning the cyberwars, but it’s China that is emerging to challenge the United States for Global 5G dominance. This issue has crystallized in days pre- and post- the 5G-themed Mobile World Congress. Huawei continues to be blocked from competing in the U.S wireless infrastructure market, and the major U.S. operators were pressured to not sell its phones. Earlier this week, the Committee on Foreign Investment in the United States (CFIUS) stepped in to review Broadcom’s purchase of Qualcomm, over concerns about Broadcom’s relationships with foreign entities, and the possibility that it would sell off piece parts of Qualcomm to…China.

Much of this revolves around concerns about threats to national security, and it looks like 5G is going to be an important battleground. While Europe led the 3G revolution and the U.S. led 4G LTE development and deployment, China is emerging as a major force in the nascent 5G market. Huawei gained significant global share during the 4G era, mainly due to aggressive pricing that made it difficult for companies such as Ericsson and Nokia to compete in many markets outside the U.S. Now, Huawei is seen as an innovator, and offers a 5G kit that is competitive with, and in some respects exceeds, that of its other global competitors. It is also doing leading-edge work in nearly every other telco/Internet infrastructure segment you can think of, from IoT to NFV and cloud.

Second, the Chinese government is playing an active role, investing in infrastructure, and promoting the 3.5 GHz spectrum as a global 5G band. In fact, the pressure being exerted on the FCC to allocate more mid-band spectrum is largely the result of what’s happening in China. And while we dither over issues such as small cell siting and can’t find a way to invest in infrastructure projects, the Chinese are running laps around us with initiatives such as ‘One Belt One Road.’ You can bet that all those road and rail projects will pave the way (or lay the track) for lots of telecom infrastructure deals.

Third, the sheer size of China’s market and workforce has become an incontrovertible force. It is the world’s largest wireless market, by far. And the country’s growing wealth is allowing Chinese students to study at leading U.S. universities and take that knowledge back with them back home.

There are huge complexities here. China is a huge market for U.S. tech companies. On the other hand, companies such as Facebook and Google are largely blocked from doing business there, which has allowed home-grown firms such as Alibaba to achieve outsized market share in China.

Why the focus on 5G in the U.S.-China economic war and the evolving chilly-if-not-cold war/cyberwar? Well, it’s a going to be a multi-trillion dollar market over the next 15 years. Not just 5G infrastructure but all the devices and billions of connected things that form the business case for 5G. And, the adjacent markets, such as connected/driverless car, that are enabled by 5G and are yet another important U.S. v China battleground.

So, what should we do about this? It might take something akin to a national industrial policy, which is anathema to those who promote free market forces. But throw national security concerns into the mix, and at least we might get their attention.

First, a review of the Broadcom-Qualcomm deal is warranted. I’m not saying kill it but let’s make sure there are conditions that address not only Qualcomm’s interests but U.S. national interests. Despite its occasionally icky practices, Qualcomm is a very important company to U.S. interests from a patent and innovation standpoint. I was concerned when I saw activist investors complaining that Qualcomm spends an outsized 25% of its revenues on R&D. Particularly as the U.S. government seems to be relinquishing its support of science and technology, we need the Qualcomm’s and the Googles of the world to invest in the frontiers of tech such as 5G and AI.

Second, if past behavior predicts future results, we need to step back and think about the national security issues related to 5G, and not in the ad-hoc way we’ve been dealing with it. We should define the safeguards that need to be undertaken given the risks of infrastructure, in chipsets, and in all those billions of connected devices. It is good practice to define the rules, and the steps/precautions that must be taken, for foreign companies and governments that want to do business here.

Finally, we need to think seriously about the education/talent aspect here. I hear almost daily from tech execs about the lack of suitable talent to fill jobs in emerging areas such as AI. In 5G, there is enormous turnover, and a different skill set needed, for the jobs that will be involved in building next-generation networks. There is a deficiency of Higher-Ed programs in these areas. Greater public-private cooperation is warranted. Wealthy foreign nationals are coming here and getting their pick of programs at universities where they’re paying full freight, while the average U.S. college student has to spend zillions and get saddled with debt to get the same education that is nearly free (or even sponsored) elsewhere.

In June 2017, China very publicly announced its plans to become the world leader in AI by 2025. China’s ambitions about 5G are similar, if less overt. It will take a coalition of forces – private, public, and institutional – to counter that.

Google, Facebook, and Twitter: Uncle Sam Needs You

This is going to be a controversial column. But these are not normal times. Two terrible things happened last week: The Mueller investigation found that the Russians interfered in the 2016 election. And 17 people were tragically killed in a school shooting in Parkland, Florida. Although these two events are clearly not related, one common thread is that the three prevalent global communications, advertising, and social networks — Google, Facebook, and Twitter — played a role.

Note that Robert Mueller, in his report, described the Russian actions as “information warfare”. In the case of the Florida shootings, Nikolas Cruz had placed a variety of gun- and violence-related posts on social media. Now I am not saying that these companies are to blame for what happened, or bear any direct responsibility. But this is a moment in time to recognize that Google, Facebook, and Twitter, while enabling many wonderful things in our daily lives, can also be tools or vehicles for some very bad things. I single these companies out because of their outsized global role and influence: Google is the dominant search engine; Google and Facebook own a huge percentage of the market for digital advertising; and Facebook and Twitter between them are prevalent sources of digital communications, and news/content distribution and consumption.

I believe it is time to start having a serious conversation about the role these companies should play in our national interests. If cyberattacks represent among the greatest dangers to the international community today, one could argue that companies such as Google, Facebook, and Twitter could be the digital/information equivalent of giant defense contractors such as Raytheon and Northrop Grumman. Now this might get me into hot water on privacy and a host of other issues, but I believe that the Department of Defense and key intelligence agencies should be working a lot more closely with these companies than they probably already are. I would also argue that Google, Facebook, and Twitter, as U.S.-based companies, have some obligation here as well. One could see this as the 21st century equivalent of the Manhattan Project.

In the wake of the Russia investigation, we should be demanding that Facebook take steps to prevent similar meddling in the mid-term elections and the 2020 Presidential election. Of course, this might go against their politics, their ethos, and might not even be good for their bottom line. But, their collective resources, the information they possess, and their growing capabilities in AI and big data are becoming as important to our national security as any military hardware. In the wake of the Mueller investigation, and other sordid examples of cyberwarfare, shouldn’t Messrs. Pichai, Zuckerburg, and Dorsey be raising their hands and asking, “How can we help?”

Among the many issues a conversation like this raises are how this would be operationalized. After all, these are global companies, and they do huge business in some of the countries that are not exactly our friends. But there should be some arm, or division, within these firms that provides critical services to our national intelligence. It’s likely that cyber-intelligence will be as critical in preventing, say, an attack on our electrical grid or our banking system as any satellite, drone, or other physical piece of military technology.

If it were known that there was a stronger relationship between our government and this tripartite, then perhaps our enemies would think twice about using them as platforms for bad behavior. Plus, the public might feel reassured that our defense agencies are more ‘on it’ on the cyber front.

Now, I think there are similar issues and obligations with respect to incidents such as the Florida school shooting, or other recent mass casualty events, such as the shootings in Orlando and Las Vegas. These are incidents of domestic terrorism. In some cases, ISIS or other international bad actors might be involved (or certainly influence). A critical question is whether a company such as Facebook has an obligation to more systematically alert the authorities when someone such as Nikolas Cruz posts what he posted. What are Google’s obligations if someone is doing a search on “how to make a bomb”?  This clearly gets us into murky territory on issues such as privacy. But we should recognize that our ability to use a platform such as Facebook or Twitter represents sort of a social contract. We know every day that our searches are being tracked, by virtue of the ads that we see. So, for example, if we’re talking about better background checks, doesn’t it make sense to be thinking about how someone’s actions on Google/Facebook/Twitter might figure in here?  The rapid development of AI and analytics tools should be able to be helpful in alerting us to whether someone’s application for a gun might be for illicit purposes. Still further, perhaps these tools can be used to enable us to get help to these individuals before it’s too late.

We are in a unique moment in time. The same digital/cyber tools that make our lives better, more convenient, and entertaining are also enablers of some of our society’s darkest forces and attacks on our personal and national security. So I believe it is time to be having a deeper, and likely difficult and uncomfortable conversation, about the role the Internet giants should have in working more closely with those agencies that we pay and expect to protect and defend us, on a local and national level.

Learnings from Qualcomm’s ‘5G Day’

This past week, Qualcomm hosted analysts and trade press for a ‘5G Day’, where they charted their progress on 5G and announced 18 operator and 19 OEM commitments to their X50 5G chipset. But in addition to the major news, this presents a good opportunity to reflect on the state of 5G, particularly on the eve of Mobile World Congress, where I’m told you’re admitted unless you pledge to say the words ‘5G’ at 50 times a day.

So here are my top takeaways:

  1. 5G is on track. If only our government could pass a budget or we could get going on repairing our infrastructure with this level of urgency! Qualcomm’s announcements about modem availability and OEM/operator agreements (plus expected news from the network equipment folks at MWC) tell us that we will large scale trials and some initial mobile 5G services (i.e. not just fixed wireless) launch in late 2018, with more widespread launches and commercial device availability in 2019. This initial phase will be ‘non standalone’, which means a simultaneous connection to both LTE and 5G. We’ll see a handful of cities turned up initially, and within those cities, swiss-cheesy type coverage and on a limited number of devices. This will be on a combination of sub- 6 GHz and mmWave spectrum, depending on the operator (but tending toward sub-s6 GHZ initially).
  2. The Level of Technical Accomplishment is Impressive. A few of the highlights:
  • Smaller than expected form factor in the X50 chip, which will help from the standpoint of power efficiency
  • Carrier aggregation of up to 8 channels in the X50 chip. That’s what will allow us to get to GB or better service, if the operators have the spectrum and open up the floodgates.
  • Real world demos that showed download 4 Gbps speeds or better, latency below 5 milliseconds (ms), and in a pleasant surprise, upload speeds of up to 360 Mbps (a dramatic improvement over today’s LTE).
  • Important advances in antennas, beam forming capabilities, and spatial multiplexing. This is reflected in the improvements in latency and performance at the cell edge
  • The sheer complexity of RF systems and the number of bands and band combinations that have to be successfully supported
  1. Millimeter Wave Remains a Bit of a Wildcard. My impression is that there is still a lot that is still being figured out about how to design devices given the finickiness of mmWave signals. For example, the signal degrades much more quickly if your hand is covering part of the phone. This presents particular challenges in antenna placement. Another under-discussed wildcard, in my view, is what battery performance will look like in mmWave.
  1. LTE Will Play an Important Role for the Foreseeable Future. Irrespective of the standalone/non-standalone discussion, LTE is going to be a big part of 5G. For the next several years, it’s going to be ‘islands of 5G’ in a sea of LTE. We will need LTE in order to continue to provide reliable voice coverage (yes, some people still make calls on their phones), since a standalone 5G network would be all IP and would not have reliable enough coverage to support voice.Even with all the hype of 5G, the LTE roadmap is compelling. Don’t get me wrong – 5G is a big jump up from 4G in many respects and opens up some new market opportunities. But, if the operators enable some of the new capabilities in the LTE roadmap, your phone will be able to do pretty much anything you would want it to do, until someone comes along with that killer AR/VR app. Economics and data capacity will be big drivers of the move to 5G.
  2. 5G Will Be About A Lot More Than Smartphones. This is really one of the big stories in 5G. It’s being built to support a very large number of connected devices, with highly varying demands on the network. This has been the #2 or #3 item in 5G PowerPoints up till now, but this is being incorporated as a development priority in reality. At the Qualcomm event, we saw some impressive real-world simulations of millions of IoT devices connected with a part of a city.
  3. Major Investment is Going into Building New ‘Ecosystems’ for 5G. I was impressed with the level of effort going thinking about specific solutions for some very large verticals, among them the automotive and the industrial IoT segment.

There will be a lot more 5G related news in the coming weeks. But on some of the most challenging aspects of 5G development, things appear to be well on track and the accomplishments are impressive.

Why Aren’t There More Industries with ‘Dynamic Pricing’?

On a recent episode of Recode’s podcast Too Embarrassed to Ask, Kara Swisher and Lauren Goode interviewed Recharge CEO Manny Bamfo about his startup, which lets customers rent hotel rooms by the minute rather than by the night. Bamfo cited that there are many hours in the day when hotel rooms are unoccupied, and a set of users who have different needs than the traditional ‘overnight’ booking. He sees Recharge as “ a living network and in that network, [we] allow people to use living space for as long or short as they like”. But this discussion ended up being about the bigger picture themes of inventory and dynamic pricing. It got me to thinking about how certain other businesses might do what Recharge is doing with hotels.

In the era of AI and big data, it is curious to me why more industries aren’t doing a better job of optimizing their inventory. We all love to complain about the airline industry – but if there’s one thing they’ve done well, it’s fill seats — with passengers paying wildly variable prices. By contrast, think about how many seats go unfilled at movie theaters, baseball stadiums, restaurants, and the like, especially during off-peak times.

Here are some examples of some industries that I believe are ripe for creative ways to leveraging their unfilled inventory.

Movie Theaters. When’s the last time you went to the local multiplex at mid-week? Movie theaters might be busy on weekends and during the opening couple of weeks for popular films, but they’re practically barren at 9pm on a mid-winter weeknight. Given the fact that most of their profit comes from concession sales anyway, it’s surprising that theater chains don’t try harder get bums in seats so they can sell more $8 popcorn. With apps and websites like Fandango, they know who you are, what you like, and how to reach you. Why not send an email or an alert, “see your favorite Oscar-nominated film this Tuesday for $5.”  There are a couple of companies that have tried to get at this issue for the movie business, but they’ve had trouble getting the big theater chains to participate.

Sports Tickets. Especially baseball. Even though baseball attendance is near all-time highs, the average ballpark is only half-filled on many nights. Sure, the well-heeled and corporados will gladly fork over $100 or more for a primo seat at Fenway to watch Sox-Yanks, but what about Rangers-Rays on a sultry August night in Arlington? Most MLB teams have introduced dynamic pricing, and there’s a more ‘regulated’ secondary ticket resale market (StubHub, SeatGeek). But this could go a step further. For example, send an alert when tickets for games against X teams in Y parts of the stadium go below Z prices. Again, baseball stadium cost structure is quite fixed from game-to-game (employees, food & beverage inventory, etc.), so why isn’t there greater desire to fill the stadiums with more people who will likely buy (overpriced) beer, hot dogs, and souvenirs?

Ski Resorts. All but the true destination resorts suffer from highly variable lift ticket sales between weekday and weekend/holiday, and also when ski conditions or weather are sub-par. Yet they’ve still got to make the snow, groom the trails, run the lifts and fill the hot chocolate machines. Pricing in the ski industry has become airline industry-esque over the past several years (purchase in advance, buy an Epic pass), but many resorts make much more money from food, gear, lessons, and the real estate they own. So, again, I’m wondering why resorts don’t more aggressively court skiers during off-peak times, perhaps with some guarantee or alternative (stay in our on-mountain hotel and if conditions suck then you can use our spa for free).

Restaurants. Most cities now have a ‘restaurant week’ a couple of times a year, where participating restaurants offer discounted prix-fixe meals during what are typically slower periods. But in a typical week, a restaurant might have a slower night or two, due to seasonality, weather, competing events, etc. And, this is an industry where margins are notoriously thin  — most nights, they’ve hired the staff and bought the food. So why isn’t there more of a focus on having a consistently filled restaurant? I could see this being a nice feature of OpenTable, with various parameters to configure (type of food, distance from home/work, vacant seats/discount offers, etc.).

An added benefit of this ‘inventory optimization’ model is that it makes certain experiences that have become awfully expensive (going to a ball game, downhill skiing) more affordable to a broader segment of the population.  Additionally, with surging numbers of retirees and aging Boomers, there are going to be more people with time—and some flexibility—on their hands.

In reality, this is Priceline applied to other verticals. Or how MLB Advanced Media started out with MLB.com and the MLB app, but then spun out and now handles TV operations, websites, and streaming for other sports leagues, such as the NHL. The biggest challenge is getting the key players in each industry (i.e. theater chains, sports teams) to use next-generation tools and embrace a less monolithic model.

Some Common Sense Approaches to Solving the Smartphone Addiction Problem

The tech world was atwitter this week and a slight pall was cast over CES with reports that an activist investor is calling on Apple to do something about the ‘smartphone addiction problem’. Let’s admit it: most of us are addicted, in some shape or form, to our pocket computers. No one entity is to blame here. It’s partially our fault and it’s partially industry’s fault. And the responsibility lies just as much with Facebook, Twitter, Snap, all sorts of dumb games, and pretty much any app that abuses ‘notifications’. Solving this issue doesn’t require lawsuits, new regulations, apps that tell us how much time we’re spending on these devices, or any particularly fancy technology. It does require some common step approaches, both on the user side and the industry side. So here’s my prescription.

Step 1 is to admit we have a problem. I’d imagine most of us would admit we both spend too much time on our screens, and engage in some degree of unseemly behavior. We’re distracted. We look at our phones in the middle of conversations, during meals, at movies, in bed, and at our kids’ school performances. Many work tasks take longer to complete because of constant distraction.

Industry must take responsibility too. Yes, Apple, Samsung, and others have made the hardware and capabilities in the OS that foment this addictive behavior. I’m less concerned about ‘substitutive’ use (for example, reading a book on a kindle or watching a TV show or YouTube video on a tablet or a phone) than I am with the types of apps or capabilities that cause near constant checking of devices and interruptions. The culprits for most of this: messaging (texting, Snap, etc.), and, even worse, notifications. Notifications have gotten out of control — and are a big cause of the constant pinging and checking.
This problem is solvable. It will require concrete action and behavior modification on behalf of users, and some recognition and steps by industry, too. Here are my suggested steps, for both users and industry.

Users (Us)

Here are some suggestions on what users might do to reduce screen time and modify what, for some of us, is addictive behavior.

  1. Put yourself on a diet. It’s the New Year. Like other resolutions or those extra trips to the gym that happen in January, resolve to spend less time looking at the phone screen. This might mean pro-active steps, such as going for an hour or two or completing a work task, or even a leisure activity such as playing a game or watching a TV show…without checking your phone.
  2. Reduce the opportunity. If it’s always with you, always on, and constantly pinging and beeping…you’re gonna check it. This is the gerbil-like gene in all of us. So, reduce the opportunity by banning the phone at mealtimes, at bedtime, and during other important moments, such as family conversations, helping the kids with homework, and so on. And, remember there’s something on the phone called Settings. You can put on Do Not Disturb, Airplane Mode, Silent, etc. You can turn off notifications or manage them more effectively. Workplaces can play a role here too. Companies could set rules for phone use during meetings, and other ‘codes of conduct.’
  3. Set some examples. The focus of news this week was on teenage phone addiction – but behavior in many adults is just as bad. We need to start setting better examples. When we check our phones at meals, while in the middle of a conversation with a friend, or during a lull in the monthly poker game, we’re setting a bad example. Our teenagers will think this is OK, and so will their younger siblings.
  4. Make Some Rules. The low-hanging fruit here is banning phone use (or even presence) during meals, and other important ‘family time’ – conversation, games, homework help, etc. A little tougher is setting rules for your teenager while they’re in their room, behind closed doors, doing Lord knows what. But it can start with ‘phone out of the room while you’re doing homework, practicing your instrument’, or after 11 p.m., etc. Schools have actually been reasonably effective at setting rules. We should be able to do the same at home.

Industry

I’m sure there will be a raft of apps that monitor screen time. But this sort of defies what should be common sense stuff, like the calorie count in the donut shop. You know it’s bad for you and when is too much. Still, there are some steps industry can do to help.

  1. Improved ‘do not disturb’ type settings and capabilities. One recommendation here is what I call the ‘homework’ or ‘work’ button. When activated, texts, alerts, notifications, and so on do not get through. And, importantly, those trying to text you know that it’s on, so there’s less ‘attempting’, and you don’t fall victim to the ‘you didn’t respond to my text’ note. This would have to be widely adopted and encouraged, so it’s used and respected. If your teen is the only kid using this feature, you know how that’s going to go.
  2. Smarter Notifications. Notifications and alerts are a major contributor to the overload. I’ll bet you could turn off notifications for half your apps and you wouldn’t be any worse off. Also, app makers need to show some commitment to reducing notifications. And key players such as Facebook and Twitter need to dial it down and provide easier tools for users to reduce or eliminate notifications. This is also an area where AI could play a role.
  3. Better Training/Education. I find that the training and user education capabilities related to phone use are woefully inadequate. Here’s where industry could be more proactive, prodded by some of what we’ve seen this week. Apple, Samsung, the OS crowd, and the messaging/social media crowd should make it easier to change settings, turn off notifications, etc. There should be better and more accessible tools and training videos to help users how to manage this. Maybe users should be required to watch these when purchasing a new device. With that $1,000 device that’s always with you and always on, comes some responsibility, too.

I’m hoping that industry and users can be mature enough to admit that although these smartphones and their apps are truly exciting, there are some disturbing trends. I’d rather us be proactive now, rather than regulators or others needlessly step in, and employ the tech equivalent of Mayor Bloomberg’s Soda Ban.

A Post Net Neutrality World Order

Yesterday, as expected, the Federal Communications Commission repealed 2015’s Open Internet Rules, also known as ‘net neutrality’. Much ink has been spilled (or keys tapped) on this issue, including my own Techpinions piece two weeks ago, arguing about the paradoxy of repealing Network Neutrality, while at the same time blocking AT&T’s acquisition of Time Warner.

I see credence on both sides of the Network Neutrality argument, and I tend to agree with Jon Leibowitz’s Wall Street Journal op-ed yesterday that the sky didn’t fall when Title II was imposed in 2015, nor will it now that it has been repealed.

So, as this continues to be litigated over the coming months, it might be a good time to think about the best protections from anticompetitive practices, while recognizing the rapid changes occurring in content, digital media, and communications. In this “Post Net Neutrality World Order”, I urge the major actors in the game—service providers, content providers, regulators—to adopt the following Code of Conduct.

  1. Task 1: Read and adopt the words of AT&T’s Senior Vice President Bob Quinn, who pledged in a November blog post that “We Will not block websites, degrade internet traffic based on content, [or] unfairly discriminate in our treatment of Internet traffic”. This, in principle, is now in the remit of the Federal Trade Commission, which in the past has been fair and balanced on this issue.
  2. Positive Practices Are More Permissible Than Negative Practices. It’s not that big a deal if AT&T zero-rates content DTV content for its wireless subscribers, or offers some attractive bundles. It’s more concerning if engage in a practice to slow down services for subscribers that are competitive with DTV. Similarly, on the B2B side of the equation, there’s a good case for ‘fast lanes’ in some instances. ‘Slow lanes’ will be harder to justify.
  3. Refrain From Practices Clearly Impinge On the Idea of the Open Internet. Some of the biggest concerns have to do with the potential for service providers to take a “cable” approach to the Internet, such as charging for access to specific sites. It will take only one or two airline-esque practices like this to set us back.
  4. Recognize that Wireless Is different than Fixed. I’ve long argued that the FCC should look at wireless through a different lens, when compared to broadband. Wireless services will forever be capacity constrained, even in a 5G world. That’s why ‘unlimited’ plans always come with an asterisk. There have been practices such as throttling and zero rating, where regulators, even in a Title II world, treaded lightly. New services such as LAA, and the concept of network slicing will introduce more opportunities to offer tiers of service.
  5. There’s Nothing Wrong With Tiers of Service. It’s 2020, and Nintendo introduces a new, multi-player online virtual reality game requiring faster speeds and lower latencies. So they pay some sort of ‘fast lane’ surcharge to a service provider, some of which gets passed on to the consumer. I don’t see anything wrong with that. Even though more and more households might be able to get 1 GB services, they might not necessarily need Or need them all the time.
  6. DOJ meet FCC, FCC Meet DOJ. We have to work toward a broader policy framework. As I argued in an earlier column, repealing network neutrality and blocking AT&T-Time Warner don’t seem to be coming from the same thought process (yes, I recognize that these are handled by different agencies). That said, we’ve seen more practices in the content business that have been detrimental to consumers—DISH standoffs with networks, Amazon-Google—than any violations of Open Internet rules.
  7. Be Transparent. There are going to be situations where some of the practices that have been the focus of those in favor of greater regulation make sense, given business realities or this changed landscape. This is where the FTC could step in if the service providers are not more proactive themselves.

More broadly, the tectonic changes occurring in our communications, digital media, and content landscape beg for a broader strategic review of our policy framework. This is one of the reasons there’s been a call for Congress to legislate this, rather than have it be in the hands of the FCC, whose philosophy could change every four years.  The 1996 Telecom Act seems increasingly outmoded, as it fails to properly account or adjust for, the emergence of wireless broadband (LTE, 5G), smartphones, the rise of OTT and streaming, and consolidation in the content landscape (Comcast-NBC Universal, AT&T-Time Warner, Disney-Fox).  It seems like right now, we’re dealing with all of these changes on a deal-by-deal basis: impose NN and then repeal it; allow Comcast-NBC/Universal but block AT&T-Time Warner; allow Internet companies to do things that telecom companies can’t. In this giant Venn diagram of telecom and the Internet, you’ve got AT&T and Verizon owning important content assets, while Google and Facebook provide broadband services and OTT communications and messaging services.

The other thing this all points to is that we need more competition in broadband. Currently, only 50% of households have access to more than one decent broadband provider. A more competitive broadband market would more naturally prevent some of the practices we’re now trying to legislate our way out of. There’s the potential for some change here with the approach of 5G and fixed wireless.  A 2020 Telecom Act might, for example, revisit the rules around network resale, which has led to more robust broadband competition in other countries.

Blocking AT&T-Time Warner and Repealing Net Neutrality Are Inconsistent

Within the past two weeks, the Department of Justice announced that it intends to block AT&T’s proposed acquisition of Time Warner, and the FCC’s new Chairman Ajit Pai announced its intention to repeal network neutrality. These actions, when looked at together, reveal a mixed, and inconsistent signal from our government. How so?

To begin with, let’s recall that Pai declined to review the merger, leaving it in the hands of the DOJ. Now, one of the concerns that the AT&T-TW deal has raised is that AT&T could potentially advantage its subscribers by zero-rating services such as HBO. But a strict application of network neutrality rules could be used to block such practices. Doing away with network neutrality does remove a potential check and balance to the sort of behavior that the DOJ is concerned about.

That said, the FCC, even with network neutrality in place, has not gotten in the way of zero-rating, whether from AT&T-DTV, T-Mobile BingeOn, and so on. And while zero-rating video content for AT&T customers who get DTV is a ‘feature’ that has undoubtedly led to some subscriber gains, there hasn’t exactly been an outcry from competitors, or much evidence that consumers are being ‘harmed’ by such practices. I think we recognize that this is just part of the rapidly altering telecom/media landscape, which is leading to much experimentation with business models. As an aside, how is AT&T zero-rating video services for its subs any different than Amazon offering certain content free to its Prime subscribers?

The DOJ makes a lot of assumptions about what AT&T would do if it acquires TW. If it’s concerned, why not impose conditions or some form of oversight? The two most valuable properties, CNN and HBO, are in tens of millions of homes on other pay TV services and cord cutter services. Plus, anyone with a broadband connection can get HBO on a standalone basis, which is a refreshing departure from the historic practice of it being tied to a pay TV subscription. This is evidence alone to the DOJ that the landscape has changed. If AT&T took any action on discriminatory pricing for HBO, or, in the most extreme case, blocked competing services from carrying it, the harm to HBO’s business would be much greater than the advantage gained by AT&T.

(With regard to the AT&T-Time Warner deal, I’m assuming that the DOJ is acting on its own and that there’s not any White House because-of-CNN influence that would affect a rational calculus. On that front, I’m sort of surprised Trump hasn’t made a similar case with HBO, since John Oliver has been far harsher on the president than CNN.)

Now, I’m not expecting the FCC and the DOJ to ‘coordinate’, since they have different charters. The DOJ’s primary mission here is antitrust, not setting telecom policy. But it’s antitrust ‘lens’ must take into account changes in the technology and media landscape. It did allow the Comcast acquisition of NBC Universal, with conditions on the sorts of potential practices it’s ostensibly concerned about with regards to AT&T-TW.  And what has happened since then? Tens of millions of consumers have cut the cord, there are now several viable competitors to the traditional cable ‘pay TV’ model, and there is no evidence that Comcast has engaged in any unseemly practice with regard to competitors carrying its content properties. Ever more so, whereas Comcast might view Netflix as the ‘enemy’, in that it’s one of the reasons some folks cut the cord or downgrade to a skinny bundle, the company has instead integrated Netflix quite nicely into its X1 interface, thank you very much.

This tells us that looking at telecom and media from a 1934 (Communications Act), 1996 (Telecom Act), or even a 2005 lens (pre-iPhone, pre-LTE, pre-streaming), is outmoded. Rather than appearing to be in-line with the ‘reverse everything Obama did’ motif of the Trump administration, perhaps it’s time for the FCC to take a broader look at network neutrality within the context of a broader revisit of the Telecom Act. This would allow the FCC to account for some of the massive changes occurring in telecom/media/internet, and as a byproduct enlighten other government agencies, from the DOJ to the FTC. The outcome would hopefully be sounder, more consistent approach that provides greater flexibility around industry structure, while preserving reasonable protections for consumers.

The Four Tiers of Global Wireless Services

As we head into the latter part of this decade, it appears that the ‘digital divide’, which has historically referred to the haves and have-nots of broadband, is hitting wireless services, as well. This theme has crystallized in my mind over the past week, having been part of three important wireless-related events: The Telecom Infrastructure Project Summit, spearheaded by Facebook; the Qualcomm/T-Mobile launch of Gigabit LTE; and an industry analyst day hosted by leading infrastructure vendor Ericsson, which focused mainly on 5G and IoT.

It looks to me like the world is separating into four ‘tiers’ of wireless service. In Tier 1, you have the United States & Canada, Japan, South Korea, and, increasingly, China. These countries have 70% plus of their customers already on 4G LTE, and are rapidly moving along the LTE Advanced path toward Gigabit LTE. They are also likely to be among the first to deploy initial 5G services. A healthy (but not unhealthy) level of competition, and high income correlate here, not only with regard to wireless service spend but also on the most advanced handsets that take advantage of the best LTE has to offer.

Then there’s Europe, which has fallen a step behind. A decade ago, if you traveled to Europe, you’d marvel at how good wireless coverage was in comparison to the U.S. But Europe has lagged on the depth and breadth of LTE deployment. This has been a huge change from the 3G era, where many European countries were among the leaders. There are a multitude of reasons, but chief among them are a somewhat stagnant economy, overheated competition that has depressed spend (and as a consequence, capex), and where the epicenters of wireless innovation shifted from Europe to the U.S. and Asia. Actually, like an airplane circa 2017, Europe has more like two classes of economy: basic economy (some countries, and many areas outside cities), where good LTE services are still lacking; and premium economy, where 4G is closer to the top tier.

Tier 3 is where the fastest subscriber growth is. But it’s easy to forget that with our $1,000 smartphones and hype around LTE Advanced and 5G, many countries are just getting to 3G. Take Africa: Only 50% of the continent has access to 3G coverage, and whereas we have phased out 2G here, it is critical for voice on that continent. In fact, most of the deployment in Africa over the next 5-10 years will be 3G (because 4G remains too expensive). In India, 69% of the population is still on 2G, although that is changing, and rapidly.  Similar story in Latin America, but slower pace of change. Getting mobile connectivity to folks in these areas is critical, since wireless is likely to be their primary form of Internet access for the foreseeable future.

Expanding and improving connectivity to these regions is the major focus of the Telecom Infrastructure Project (TIP). Spearheaded by Facebook but now consisting of some 500 members, the objective of TIP is to connect the next 1-2 billion people at much lower cost than your typical $150,000 base station, using develop an open, software defined network platform. Although still in its early stages with respect to deployments, TIP will at least push, if not disrupt, the incumbents. If TIP is successful with the new LTE OneCell, it might accelerate Tier 3 countries’  upgrade or leapfrog to 4G.

In addition to disruptive infrastructure, innovative business models are needed. One oft-cited example is more of a partnership arrangement with operators, where revenue sharing arrangements could help fund projects. Then there’s Reliance Jio, which has disrupted the Indian market by focusing on alternative revenue streams, rather than trying to finance a build of hundreds of thousands of cell sites on the back of sub $5 per month ARPU.

Finally, there’s the ‘connecting the unconnected’ tier. This is still the intractable segment of the market, where a lot of effort is being expended but no viable, scalable connectivity solution yet exists. Developing cheap base stations doesn’t solve all the problems here. The main challenge is power and backhaul. The lack of a reliable power grid, inaccessible roads, issues of on-site equipment theft, and even the lack of commercial/network data makes planning difficult. It will take something different to get to the “last 1-2 billion”. Google Loon, OneWeb’s planned satellite service, and other ‘airborne’ solutions are all possibilities, but it will still be several years before we know whether these are viable options, at scale, and can deliver the sort of speed and capacity that will be at least in the ballpark of 21s century infrastructure.

So, four themes from “telecom infrastructure week”: 1) the rich will get richer, as 5G will be driven by the already haves; 2) China will play a much bigger role in 5G innovation that it did in 4G—in infrastructure, chipsets, IoT deployments, and even driving global spectrum bands; 3) getting connectivity to the next 1-2 billion subs in Africa, Asia, and Latin America will have to be done in a dramatically less expensive fashion; and 4) reaching the ‘last 1-2 billion’ remains a yet unsolved challenge.

Key Themes from 5G Americas Meeting

Last week, the 5G Americas organization hosted a gathering in Dallas of senior executives from major wireless operators, equipment suppliers, and 80+ industry analysts to discuss wireless network evolution, with an emphasis on 5G. I’ve been attending this annual meeting for 10+ years, and find it a valuable annual benchmark for the state of wireless networks and where they’re going. With roundtables on topics such as eICIC, things got quite into the techie weeds, but I’d like to share some overarching themes I came away with from this productive two days.

One major change in thinking from a year ago is that it appears that the existing bands could well lead on 5G, with millimeter wave (mmWave) being secondary. Operators are anxious to deploy some flavor of 5G sooner rather than later, and equipment for “non-standalone” 5G, which would use sub-6GHz spectrum, could be ready as soon as next year. Greenfield 5G networks based on new 3GPP standards are more likely toward 2020. Second, there appears to be greater emphasis on providing broader coverage and some degree of mobility in 5G, which would favor sub- 6 GHz spectrum, at least initially.

Another key development, which I wrote about in October, is that the so-called “mid-bands” are emerging as a significant potential force in the future of wireless networks and in 5G. Yes, AT&T and Verizon have amassed a strong collection of assets in the mmWave bands, and there will be auctions of additional mmWave spectrum in late 2018 or more likely 2019. But the 3.5 GHz band (CBRS) is emerging as an important potential global band for 5G. China’s emphasis on 3.5 GHz for 5G is one of the key driving forces here. Additionally, there is momentum behind allocating spectrum in the 3.7-4.2 GHz band for mobile broadband, which, combined with the 3.5 GHz band, would create a significant swath of capacity in a part of the spectrum more favorable to mobile, in some ways.

It is remarkable that we are even considering mmWave for 5G, given that five years ago, many might have considered mmWave as technically unfeasible for anything other than point-to-point services. My sense is that although it has become technically possible to use the mmWave for an important piece of next generation wireless services, it remains an enormous math and physics challenge, especially if mobility is added to the mix. One of the most telling quotes from the meeting is that “real life has foliage”. When we got into nitty gritty discussions about how in New York City the ‘avenues’ are easier to deploy than the ‘streets’, it became apparent that there is still a lot of technology that needs to be developed and refined between now and the early 2020s, when broad deployment of 5G is planned. This is not necessarily a bad thing, because Gigabit LTE, which is a key part of the LTE-Advanced roadmap, offers many of the performance characteristics of what we have considered to be ‘5G’. So, for the foreseeable future, we will see islands of 5G deployed in a sea of steadily improving 4G, and/or advanced LTE services marketed as 5G.

“It takes a year to get a permit for something that takes an hour to put up” was the other most telling quote from the meeting, reflecting the universally echoed frustration at the challenge of deploying small cells at scale. The wireless industry is still smarting from a major setback in California, where the governor vetoed a bill that would have streamlined policies for small cell deployments. More than any technical obstacle, the high cost and lengthy timeframes involved in siting small cells are the greatest challenge in improving wireless network coverage, speed, and capacity. A related issue has been the slowdown in expanding fiber deployments, which are needed to connect the small cells and provide greater wireless capacity. There are serious alarm bells being sounded here, and a genuine worry that the U.S. might fall behind other countries, where regulators have played a more active role in facilitating the deployment of wireless infrastructure.

This bridges into another, larger concern, which is about the future of U.S. leadership in wireless networks. Although we cannot boast of the best roads, trains, or even fixed broadband networks, the United States has led on wireless. Some 73% of U.S. wireless subscribers are on LTE — among the highest in the world— and we have four national facilities-based LTE networks. But Japan, South Korea, China, and other countries are moving quickly on 5G, due in part to a more activist industrial policy. The universal fiber networks in Japan and South Korea provide them with a head start on 5G. Our stalled politics, un-ending litigation, high cost structure, and even some byproducts of industry consolidation are starting to become serious inhibitors to U.S. competitiveness in networks. This was a thread of several side and mealtime conversations at what was overall an optimistic gathering last week in Dallas.

An Interesting Battle is Shaping Up on 5G

In July 2014, the FCC released its Spectrum Frontiers plan, which allocated up to four large swaths of spectrum in the millimeter wave (mmWave) bands, above 20 GHz, for 5G. This spawned a bit of a land grab, with Verizon snapping up mmWave spectrum with the acquisitions of XO and Critical Path, and AT&T acquiring FiberTower’s assets. It was a windfall for these companies, sort of the tech equivalent of having held onto a house in a lousy neighborhood that suddenly gets hot. With these acquisitions, AT&T and Verizon now own close to 60% of the licensed mmWave spectrum. The FCC still retains about 1/3 of it, and plans 5G auctions at some point. Verizon and AT&T have been marching down the 5G road, testing fixed wireless access in several cities in the mmWave bands as one of the initial use cases.

But even though 5G had been heading in a mmWave, circa 2020 direction, mid-band spectrum, characterized as that below 6 GHz, is proving to be an important contender for 5G as well. T-Mobile was among the big winners in the 600 MHz auctions completed earlier this year, acquiring 31 MHz of nationwide spectrum. In August, the operator announced that it would deploy a ‘5G Ready’ network at 600 MHz, meaning that new equipment from Ericsson would be used that supports both LTE and 5G at that band. Also in August, the FCC opened an inquiry into new opportunities in the 3.7-4.2 GHz band, to be used for the “next generation of wireless services”. This effort is backed by Google and several wireless ISPs, who would want to use this spectrum for fixed wireless services. At the same time, T-Mobile and the CTIA are leading an effort to make the 3.5 GHz (CBRS) band more ‘5G friendly’ by lengthening the terms of the licenses and expanding the geographic service areas.

The upshot of this is that mid-band spectrum is emerging as a viable alternative for 5G. One can see the battle shaping up, especially if Sprint and T-Mobile merge, which is looking increasingly likely. Sprint/TMO’s main 5G play would be in their 600 MHz and 2.5 GHz spectrum, plus leveraging their holdings in other bands as well (it should be noted that TMO owns mmWave spectrum serving about 1/3 of the country, through MetroPCS). It’s not clear how active they would be in a future FCC mmWave spectrum auction.

This is setting up a pretty interesting marketing battle and debate over 5G. The mmWave bands offer a huge amount of spectrum, which would deliver orders of magnitude improvements in network speed, capacity, and latency. The tradeoff is that mmWave spectrum generally requires line-of-sight, can be affected by weather, and offers a small coverage radius. Providing service in these high spectrum bands will also require the deployment of large numbers of small cells—and we haven’t yet found the formula to be able to do this at scale, yet. There is also still quite a bit of work to be done to develop the beam-forming antennas and other technology required to deliver wireless services in the mmWave bands.

So, what does this mean for the 5G rollout? We will see services marketed as 5G, even using sub-6 GHz versions of 5G New Radio, starting in 2018. AT&T has already prepped us by launching ‘5G Evolution’ in a handful of markets. In reality, these 4.5G, or Gigabit LTE services will offer considerable improvements in download speeds and latency, which are certainly in the neighborhood of what has been envisioned for the early stages of 5G.

It’s also becoming clear that there will be different flavors of 5G. Gigabit LTE, and other services offered in the mid-bands, will look more like today’s cellular services, supporting broad coverage and mobility. Think of it as a base layer. Then, mmWave band networks will be built in denser urban areas and other targeted coverage deployments, where it makes the best economic sense and where the most subscribers can be reached. The map will look like ‘islands’ of 5G in a sea of LTE and LTE Advanced.

It will be well into the next decade before there is broad coverage of mmWave-based 5G, and there is still some question regarding the extent to which mobility can be supported in these bands or how good the coverage will be in buildings. But thinking about 5G in this way, and with this timeframe, provides a good runway for the technology to evolve. Consider that the average LTE speed is 4-5x what it was only five years ago. Apply that multiplier to 5G, as a base case, and things start getting interesting.

In the meantime, fasten your seatbelts for the upcoming marketing war between T-Mobile/Sprint and Verizon/AT&T, over 5G. With no official body really calling the shots over the definition of 5G, it will be up to the market to decide.

Why is Google Making Phones, Anyway?

Google-branded phones own about 1% share of the smartphone market, have limited carrier distribution, and won’t make real money for several years. Amazon and Microsoft both tried, and failed, on phones. Even Google’s initial phone foray, with Motorola, was a bomb. As my Techpinions colleague Jan Dawson pointed out in his excellent piece yesterday, Google doesn’t even seem all that serious about selling phones.

So, why is Google making smartphones? In fact, they just doubled down, acquiring HTC for $1.1 billion (a bargain) and introducing two new Pixel models.

The historic argument was that for Google, the more screens on which to view Google ads and do Google searches, the better. But Google is getting plenty of traffic from iPhone as the default search engine on iOS, as well as from Android devices. So selling a few million Pixels won’t really make a material difference to Google’s mobile search business.

My view is that Google’s commitment to being in the phone business is part of a broader strategy, with three central elements. First, there are those who believe that Pixel is an important component of Google’s commitment to hardware, along with Home speakers, Clips camera, Daydream VR headset, Pixelbook laptop, and even the AI-powered Pixel earbuds. But I think Pixel phones are necessary to some things that Google wants to accomplish in the wireless and connectivity arena. No, I don’t think they’re going to buy Sprint or T-Mobile. But I think they do want to play a broader role in connectivity, which includes multiple forms of wireless. Google continues to invest in Project Fi, their hybrid Wi-Fi mobile offering that works best on Google-centric phones such as Nexus and Pixel.

Google is also playing an increasingly pivotal role in the evolution to 5G. The company has a good chance of being selected by the FCC as one of the Spectrum Access System administrators for the shared 3.5 GHz spectrum (CBRS). Google has also been part of an industry push to make spectrum in the 3.7-4.2 GHz band available for 5G. Alongside this effort on the ‘mid-band front”, Google is part of a group of 30 key industry players pushing the FCC to set aside more spectrum for unlicensed (AKA Wi-Fi) users in the 6 GHz band, which sits in proximity to the 5 GHz band used for Wi-Fi. Also on the “5G” front, the Pixel 2 incorporates the latest LTE advances—3 Way Carrier Aggregation, 4×4 MIMO, and 256 QAM—which will allow Google to learn more about what some advances on the road to 5G might mean.

Google is investing in other forms of connectivity as well, from Google Fiber in the U.S. to Project Loon, an effort to bring the Internet to unserved areas. A test this summer kept one of its Loon balloons over Peruvian airspace for fourteen weeks. Google also needs to keep its eye on Facebook, which itself is involved in some of these groups but is also leading the Telecom Infrastructure Project and doing some other super-secret stuff.

Second, I think that being more directly involved in phones is important to Google’s AI push. Mobile devices are going to be a big part of how users experience AI, in ways different than they might from PCs or other types of hardware. And even though Google search is the default on iOS and Android, Google Assistant faces much greater competition from Apple (Siri) and Samsung (Bixby), plus of course Microsoft and Amazon. So Google needs its own hardware, from PCs to home speakers to phones, to work on some of its important AI efforts, such as Assistant. One of the new/unique aspects of the Pixel 2 is the Active Edge, which allows the user to squeeze the side of the phone to launch Assistant.

Third, Pixel represents a relatively cheap way to do some public R&D around several initiatives. If you think about it, Pixel is really a big public beta. They get HTC for $1.1 billion – a relative pittance in Google/Silicon Valley terms, plus they can now use Google powered phones to test things from Project Fi to AR (Google’s ARCore framework is fully active on the Pixel 2), to some nifty tricks on Assistant, in a way that they can’t on other Android-powered devices. And the risk is relatively low, by comparison. Something messes up, and they upset a few million Pixel/Nexus customers, not a few billion iPhone and Galaxy customers.

With a relatively modest investment, at least in Big Internet Player terms, Pixel phones allow Google to be masters of their own Android domain, providing a walled-off mobile testbed for new capabilities related to connectivity, AI, AR, and other concepts.

Five Suggestions For Improving Mapping Services

There are certain apps that we use every day that are just fantastic and that I think we take a bit for granted. Google Maps is one of those. It is amazingly useful, works exceedingly well, and just keeps getting better. And, rather quietly, helpful new features are introduced without a lot of fanfare. For example, I’ve noticed that parking information is now integrated into directions in certain cities.

One of the more interesting meetings I had recently while in San Francisco for Mobile World Congress Americas was at the headquarters of Mapbox, a VC-funded company that crafts beautiful maps and provides a location data platform, APIs, and SDKs for developers to build into applications. For example, they provide the weather layers that we’ve all been seeing too much of on the Weather Channel over the past few hurricane-filled weeks. The market for digital mapping services is active and very competitive (even though Google is the behemoth). And there’s been huge growth of mapping APIs over the past couple of years.

This dip into the digital mapping world got me to thinking about a few new features that would be very useful for mapping apps.

  1. Greater Delineation of Road Surface Type. Especially Dirt Roads. Many people use mapping services to plan out bike routes. I’ve found that in many more rural locations, it is not clear whether a road is paved or dirt. This can spell trouble for bikers, especially if it’s a ‘road bike’ with thinner tires. Plus, it’s hard to determine road surface type using ‘satellite view’. Some of the services do a good job of delineating surface type for trails, such as running or bike paths, but, curiously, not as well for roads.
  2. Offer A ‘Best Route’. For driving directions, there’s usually an option to ‘avoid highways’. And the mapping services have been steadily incorporating more information about roads that are ‘cycle friendly’ (e. have bike lanes). How about a ‘pleasant’ or ‘scenic route’ option, which would guide the user to more interesting, less traffic-y roads? For pedestrians, this might mean using side roads between two spots that are more enjoyable or interesting for walking. In cities, I could see some cool AI applications, for example for those who like art, designing a walking route that goes by galleries.
  3. Incorporate Car Pool/HOV Lane Into Traffic Info. This idea came about as a result of a recent experience. It was a Friday afternoon, and I was on 101 South in the San Jose area. Lucky me. The map said it would take 45 minutes to get to my destination (12 miles away). So happens, there were two of us in the car, so we were able to use the car pool lane and get to our destination in 20 minutes instead. The time did adjust once we were in the lane, whizzing by other cars.Incorporating HOV lane information into mapping apps would be very useful. When requiring directions to a location, there could be a setting where the user is asked if there are two or more passengers. Then the app could also help plan the optimal route using HOV lanes, if applicable, and also adjust the time to destination. Or, in the route option, show ‘use HOV’. Even letting the user know that “you saved 10 minutes by carpooling” would be a helpful incentive.
  1. Greater UI Consistency Between Web and Mobile App. This might be more specific to Google Maps, but I find that there are some major usability differences between Google Maps on the web and on smartphones. For example, it is easier on the Web to obtain directions between two places. And I think the “search nearby” function works more quickly, intuitively, and effectively on the Web. On my PC, if I enter an address, there’s a nearby button with prompts for restaurants, hotels, and so on, or I can enter something in the search box, such as ‘hardware stores’. But the “explore nearby” function, or trying to find out what’s near a particular spot, is much less intuitive or user-friendly on a phone. Funny thing is, it used to be better and easier. There have actually been petitions to bring back “search nearby” function which was on what is now referred to as the “classic’ version of Google Maps.
  2. Better Tutorials & Help Information. There are many very useful features and settings in Google Maps and other digital mapping applications that I don’t think are well known, or are under-utilized by the average consumer. A search for “how to” usually yields helpful results, but many people don’t have a good idea of what to even look for. I think the digital mapping companies, or even third parties — Google, Apple, and third parties — could develop an improved set of visual tutorials on how to maximize the wonderful capabilities available in their services.

What To Expect At Next Week’s Major Wireless Conference

Lost amid the hype surrounding Apple’s September 12 event in Cupertino, the Bay Area is also host nest week to a major wireless conference, MWC Americas. Developed in partnership with the CTIA, the objective is to breathe new life into the concept of a big tent wireless event in North America, leveraging successful MWC confabs in Barcelona and Shanghai.

Every indication is that MWC Americas will be a success. Attendance figures are looking positive, major players across the mobile ecosystem will be there in force, and the conference program looks strong. So, what to expect?

I believe that the two major themes will be IoT and 5G. So far, the IoT has been slower to develop than anticipated. There have been few breakout sectors — lots of base hits but no doubles or triples — and several key components of the value chain needed for IoT have not yet fallen into place. But I think folks will leave San Francisco more positive on the status of IoT. In addition to several purpose-built IoT networks that are being deployed using unlicensed spectrum, the wireless operators are also building out dedicated LTE-based IoT networks, which will support low cost, low power devices requiring greater coverage range. Module prices have come down, and there has been a lot of progress on the ‘back end’ of IoT, such as the systems for provisioning, authentication, security, and billing. Although there aren’t any breakout consumer devices as of yet, we are starting to see some significant deployments and lots of trials in the areas of smart cities, medical devices, and the industrial sector.

5G will be another key theme. The major equipment vendors will be demonstrating 5G radios, while at the same time, selling gear that offers continued improvements in LTE performance. In fact, even with the hype around 5G, there will be talk about “gigabit LTE”, which could result in operators marketing services as 5G in advanced of the standards-based version (example: AT&T’s ‘5G Evolution’). And even though the incumbent equipment vendors are in a pole position, the move toward a more open, virtualized network framework means that the barrier is lower for a broader supplier ecosystem. Expect to see some new kids on the wireless block at MWC.

There will also be a significant policy track at the show. This year is of particular importance, with a new Administration and FCC. I expect FCC Chairman Ajit Pai, in his Day One address, to solidify the FCC’s commitment to expanding broadband access to unserved and underserved areas. Wireless is figuring to be a bigger piece of this, as fixed wireless access is becoming an increasingly compelling option. There will also be lots of discussion about unlicensed, particularly the 3.5 GHz “CBRS” band spectrum being proposed for Shared Spectrum. There is intense lobbying to change some of the rules proposed by the Wheeler FCC, namely to increase the size of serving areas and also allow for longer license terms. At the same time, there’s an effort to get the FCC make available more ‘mid-band’ spectrum in the 3.7-4.2 GHz band (adjacent to CBRS).

I am also hoping that Chairman Pai will reinforce former FCC Chairman Tom Wheeler’s call to action on siting for small cells. It is all well and good to have 5G Spectrum and 5G radios, but a way must be found to more easily deploy small cells in greater numbers. A big part of this is simplifying the permitting process.

Finally, amidst the discussion about artificial intelligence, connected cars, smart cities, and fancy accessories for the new crop of smartphones, there’s the rather unsexy underbelly of products and services that really make our networks tick. Hundreds of component manufacturers, selling antennas, filters, power amplifiers, and so on, will be at MWC. So for those taking a trip down the road to Cupertino on Tuesday or having one eye on Apple’s website while they hear a pitch from some antenna manufacturer, let’s remember that the iPhone would still be an iPod without all this wireless gear.

Shows We’d Like To See From Apple’s $1 Billion Content Budget

It has been reported that Apple is planning to spend $1 billion on developing and acquiring content. Apple will be joining a crowded landscape — Netflix, Amazon, HBO, Hulu, and, oh yeah, the traditional broadcast and cable networks. With so much competition already out there, in terms of other content providers and also for our limited time in the era of ‘peak TV’, how can Apple differentiate? Here’s a bit of a lighter look at some shows we’d like to see from Apple’s dip into content:

Life In A Chinese Phone Factory. In this pseudo-reality series, we’ll get an in-depth look at the lives of four workers in Foxconn’s Zhengzhou factory, known as ‘iPhone City’. The factory conditions. The dorms. The perks. The side deals with city and customs officials to get subsidies and tax breaks. It’s all there!

Patent Wars. Apple dips into the law genre in this tense courtroom drama. We’ll get an unvarnished look at Apple’s various patent battles. See high-ranking execs and star lawyers from Apple, Qualcomm, Samsung, Nokia, and more! You’ll get inside the ‘war room’ Apple uses to prepare for these cases. Hundreds of hours of testimony is boiled down into an exciting weekly highlight reel.

Game of Phones. This fall is gonna be epic! iPhone 8 vs. Samsung Galaxy S8/Note 8 Google Pixel 2, and more! This series leverages the growing trend in broadcasting professional level competitive gaming. Power users will face off in this contest to determine the best smartphone out there! Which phone takes the best picture? Who can make their battery last the longest? What’s the easiest device on which to bang out a 100-word email? Who has the best screen in sunny conditions? We’ll have special episodes on accessories, ruggedness, usability, and more!

The World’s Funniest Auto Corrects! The smartphone version of the hugely popular TV series, America’s Funniest Home Videos. Admit it – we’ve all had that ‘genital’ instead of ‘genial’ moment. The funny. The awkward. The embarrassing. You’ll see it all. Note: Designed for Mature Audiences.

Battle of the Assistants. Five Assistants: Siri, Alexa, Google Assistant, Cortana, and Bixby. Not All Will Survive. In this Survivor-esque show, we put them to the test. This is way beyond ‘what’s the weather tomorrow’, ‘who won the ball game last night’, or ‘Siri, will you go out with me?’. How do they do with challenging questions? How do they perform in noisy environments? Who does best in different languages, dialogs, and accents? Which assistant ‘learns’ the fastest? Who will be the first to develop a sexy voice?

Free Lunch Freeloader Freakout. There is such as a thing as Free Lunch if you work in Silicon Valley, or for some tech company in some tech epicenter. The food might be plentiful, but is it good? We bring in top chefs to visit a different company cafeteria each week. Can anyone unseat Google? Upcoming episodes include “Who Has The Best Snack Food”, “Who Has the Largest Craft Beer Selection on Free Beer Fridays”, and “Whose Break Room Fridges Are the Cleanest?”

Smile, You Got a Free Smartphone! The cost for a flagship phone is approaching $1,000. That’s beyond the reach of much of the world’s population…and doesn’t even include the $50 or more per month needed for the average decent data plan. In this Candid Camera style show, Apple visits a different spot each week and gives away a free iPhone and unlimited data plan for a year. The joy! The laughter! The tears!

What Wireless Bands Will the New iPhone Support?

As we approach September and the anticipated announcement of the next iPhone(s), speculation is running high about what game-changing new features will be offered — glass body, wireless charging, high quality screen, AR, and so on. But an under-addressed question is whether the Apple’s next phone will support all the new wireless spectrum that is being deployed. There has been a lot of action on the spectrum front: recently completed 600 MHz auctions; operators’ launch of new LTE bands; rollout of LTE Unlicensed; and the awarding of FirstNet. Not surprisingly, Apple and the operators have been mum on the wireless specs of the new device. Lots of ‘no comments’ in response to inquiries. But there are 3-4 important bands which the iPhone 8 (which we’ll call it for the sake of this column) will need to support in order to be competitive with the current state-of-the-art, and keep up with what the operators are planning to launch over the next year on the LTE and LTE Advanced roadmap.

Big question #1 is whether the iPhone 8 will support Band 66, also known as AWS-3 (2100 MHz). This was the big piece missing from the iPhone 7, and Apple received quite a bit of criticism for that omission. This is an important capacity band for AT&T and T-Mobile, especially (DISH also has spectrum here). Most competing flagship phones, such as the Galaxy S8 and LG G6 support this band. It would be a huge gapper if Apple didn’t support this, so I’d give this a 95% likelihood.

Next up is Band 71, and this one is likely to land in the ‘no’ category for the iPhone 8. Band 71 is 600 MHz spectrum band from the recently completed incentive auction. T-Mobile and AT&T were the big winners here, with DISH and Comcast also picking up healthy chunks of spectrum. Because of its dearth of low-band spectrum, T-Mobile is especially eager to deploy services in the 600 MHz band. The company has said it plans to have commercial operations in the 600 MHz band later this year, which is “when new 600 MHz smartphones from leading smartphone manufacturers are anticipated to arrive”, the carrier said in a June press release. We do expect some flagship devices supporting Band 71 to be made available by the end of the year, but I’m not betting on the iPhone 8. In part, that’s because Apple does not tend to support bands that have not been widely deployed. Additionally, Apple’s tilt toward Intel (and/or the use of multiple modem suppliers) would reduce the likelihood of 600 MHz support, since Intel’s latest chip does not support Band 71. So that would be a bit unfortunate for T-Mobile, especially since 600 MHz is a key part of its strategy to narrow the coverage gap with AT&T and Verizon, especially outside cities.

The next big question pertains to LTE Unlicensed. LTE-U provides additional speed and capacity using carrier aggregation in the 5 GHz (Wi-Fi) band, as part of LTE Advanced. T-Mobile announced LTE-U support in six cities in June, with more planned in the coming months. Verizon is also planning to launch LTE-U in 2017. LTE-U utilizes Bands 252/255. The Samsung Galaxy S8 is the one flagship phone currently available that supports LTE-U. To me, it’s a toss-up as to whether the iPhone 8 will support this band, since it’s still in the relatively early stages of deployment. Given that some current and planned competing phones support LTE-U, I’d put the likelihood at 50% or better.

Finally, there’s FirstNet, which is the LTE-based Public Safety Broadband Network in Band 14 of the 700 MHz spectrum. AT&T was awarded the contract for FirstNet earlier this year, and will likely start building the network in earnest in 2018. In addition to deploying 20 MHz for public safety agencies, AT&T will also have the ability to use 40 MHz of spectrum for commercial cellular services. The first group of devices to support FirstNet are likely to be more ruggedized, purpose-built phones, such as the currently available Lex F10 from Motorola. I’m not optimistic that the iPhone 8 will support this band.

The ability of the latest devices to take full advantage of cellular networks’ improved coverage, greater capacity, and faster speeds are as important as all the whiz-bang features promised with the current and anticipated crop of flagship phones. For example, T-Mobile has extolled the Samsung Galaxy S8 as one of the first phones capable of supporting so-called ‘Gigabit LTE’ phones, which is achieved through a combination of carrier aggregation, 4×4 MIMO, and 256 QAM. So for all those having all sorts AR and AI dreams about the next iPhone, let’s also hope that Apple will continue to support the state-of-the-art in cellular.

What Industries Have Been Least Disrupted by Tech?

There’s a long list of industries that have been disrupted by tech. The internet, broadband, and the PC/smartphone have all had a significant impact on how we communicate, shop, create and consume content, book travel, play games, and so on. But I’ve also been thinking about what industries or consumer experiences have NOT been as significantly affected by tech, at least so far. For example, even though Uber and Lyft have disrupted the taxi business, and cars are practically computers on wheels, it still takes as long or longer to get from A to B by car or plane as it did 20 years ago.

So, what are some other examples of industries that have been least disrupted by tech?

The Health Care System. Technology has contributed to enormous strides in the diagnosis and treatment of disease and illness. But the actual medical care system is not significantly more efficient than it was 10 or 20 years ago. Yes, there are now electronic medical records, and some consumers have access to their health history online. But the process of booking appointments, getting a referral, determining the price of a service, or determining the efficacy of a physician or the quality of a hospital or other treatment facility remains a rather arcane process. Sort of like why mobile payments are not more widespread, this is not a technology problem – it’s an industry problem.

Buying and Building A House. I just went through the process of buying a house for the first time in ten years, and it was interesting how the process of applying for and obtaining a mortgage is still very much an analog affair. Actually, there were more forms than ever to fill out…and the house closing – deed, title, and so on – is a fairly time consuming and paper-driven process. About the only improvement is that one can e-sign some of the documents, or scan and email them to the mortgage broker, which saved some stamps.

Christopher Mims of the Wall Street Journal wrote an interesting column recently on how over the past 60 years, productivity in manufacturing has increased eightfold, yet we haven’t seen the same improvements in the $1 trillion construction industry. There are some compelling startups, such as Katerra, that are starting to address this opportunity.

Transportation. Elaborating a bit on the earlier point, segments of the transportation industry, such as taxis, have been disrupted. And cars have an amazing amount of tech in them and are much better built, thereby requiring fewer repairs and lasting longer. But the process of getting around? Tech hasn’t yet solved traffic. We are potentially at the dawn of a new era, with driverless cars (and trucks), smart cities, the Hyperloop, and so on. And big data has the potential to make public transportation systems more cost effective and efficient. This is a space likely to experience more change in the next 10 years than it has in the past 25.

Government Services. Yes, you can pay a traffic ticket, do your taxes, and renew your driver’s license online. But tech has not yet had a significant impact on the effectiveness of government services, or the consumer experience with the public sector. Sort of like the medical care system, many government processes remain arcane and laborious. Consumers don’t have a good view into the quality or effectiveness of public services or their elected officials. A simple example could be providing consumers a dashboard into how quickly streets are cleared after a snowfall. One promising area has been apps for reporting minor issues like potholes or broken street lamps, and the 311 system, which is starting to collect large amounts of data.

The Judicial System. What, there aren’t handcuffs that can be unlocked by an iPhone? From Perry Mason to L.A. Law to the Good Wife…most aspects of the legal process haven’t changed all that much over the years: how lawyers work, how cases are tried, what happens in a courtroom. It’s almost quaint. I served on a jury for several weeks in 2016, in a courtroom more than 100 years old, and it struck me that the experience of a juror, and the whole process or preparing and presenting a case is essentially unchanged. Sure, briefs are typed on PC, and evidence is catalogued electronically, but it does seem that the legal industry is a major contributor to keeping pen, paper, and three piece suits alive…

I’m sure there are some other good examples, but these are the industries that sprung to mind. So, tech hasn’t disrupted everything…

Much Has Changed in Tech in 10 Years…But Much Has Not

There have been numerous columns by thought leaders over the past couple of weeks commemorating the 10th anniversary of the introduction of the iPhone and its impact on consumers, businesses, tech, and various industries. As sort of a companion piece, I’ve been thinking about some other momentous changes in tech over the past decade…as well as some areas we thought we’d be further along.

What Has Changed in a Big Way.

A Computer In Your Pocket. If we knew then what we know now, we should have called smartphones ‘pocket computers’ or some alternative moniker. It’s a phone, camera, media player, navigation device, e-reader, gaming device, health/fitness tracker, etc. – all in your pocket, doing much of what a PC can do, and in many instances more easily, quickly, and nimbly.

Cloud Everything. The other huge growth space over the past ten years has been cloud. It has had an enormous impact on the enterprise market. But one way to think of how cloud has changed things in a big way for the everyday consumer is the fact that if your laptop breaks or you get that dreaded ‘blue screen of death’…it is not ‘cataclysmic’ in the same way it used to be. If e-mail, documents, and media are stored in the cloud (as they should be), the PC has become the device to create content and access your (cloud stored) content.

Broadband Ubiquity. We are now accustomed to having broadband nearly everywhere. It might still be in vogue to complain about the cable company or the relative monopoly in fixed broadband, but broadband speeds have improved steadily, and prices have remained stable. In wireless, LTE is ubiquitous and fast in most places, and data plans allow for nearly unlimited consumption, with some safeguards.

Massive Improvements in Voice Recognition. AI and services such as Siri, Alexa, Google Assistant, Cortana, and so on would not be possible without the significant improvement in voice recognition. It’s gone from barely usable in voice response systems to working with fairly high accuracy, enabling a new wave of apps, devices, and ways to communicate.

Rise of Social Networking. Facebook, Twitter, Snapchat, and LinkedIn have become a huge part of our communications, and content creation/consumption fabric. Each of them with its own purpose, and some used by certain market segments more than others.

Content Creation and Consumption. Three big changes here. One, is the proliferation of content sources and channels, (Netflix, Hulu, YouTube, etc.), with the full continuum of content quality, from fantastic to awful. Second, is the how we consume content, with the expectation that all content is available on-demand. And third, the growth of user-generated content, enabled by digital technology and smartphone video cameras.

What Hasn’t Really Changed.

This list applies to aspects of mainstream tech that haven’t really changed or changed less than we would have thought by now.

Still Using PCs. Smartphones are ubiquitous and tablet growth has plateaued. But the ‘post-PC’ era has not materialized as some predicted during the peak of the 2010-14 tablet boom. Most consumers and business professionals still mainly use a PC or laptop as their default device. There’s lots of experimentation with hybrid devices, Chromebooks, and the like, but PCs look like they’re here to stay, in some shape or form, for the next several years.

The E-Mail Experience Has Not Changed. Texting and enterprise messaging solutions such as Slack have proliferated. Voicemail is hardly used by anyone under the age of 30. But e-mail is still the mainstream form of messaging, especially for professional purposes. And nobody has yet found the formula for making e-mail more manageable. There’s some AI, and features at the margins, but most of us still wade through our email (and more and more spam) in the same way we did 10 years ago.

Digital Wallet/Mobile Payments Not Mainstream. Square, Venmo, Apple Pay, and Samsung Pay are all great, in that the technology is there and the user experience is good. But the digital wallet and mobile payments are still not mainstream enough that you really can leave your wallet at home. This is an industry problem, not a technology problem.

TV Hasn’t Really Changed. There has been growth in cord cutting, skinny bundles, and ‘sticks’ to enable access to Netflix, Amazon, and the like. But if anything, the experience of watching TV has become more complex, and each ‘skinny bundle’ offering comes with a major ‘asterisk’ (i.e. no local channels, sports, CBS, etc). This category is still in the ‘going to get worse before it gets better’ phase, like living through a house renovation.

Broadband Remains a World of Haves and Have Nots. Above, I mentioned how fixed and wireless broadband speeds for the average urban/suburban customer have continually improved. But for the 15% of U.S. households, and a couple of billion users globally, fast broadband remains elusive. There’s lots of work going on in this area, with folks from Google to Qualcomm to Facebook exploring creative solutions to spread broadband to poorly served areas. But this is tough slogging, and will remain one of tech’s biggest challenges over the next ten years.

Electronic Medical Records. With smartphones, apps, and digitization of nearly everything, it’s still surprising to me that most doctor visits involve filling out some poorly photocopied form, with one’s personal info and medical history, by hand. Tons of money has been thrown at this, and there’s been some change, but it’s really in pockets.

Sprint-Cable Deal Would Be Mixed Picture for Industry, Consumers

It was reported this week Comcast and Charter are in discussions with Sprint regarding an expanded MVNO arrangement, or a possible equity stake/outright acquisition of the company. Wall Street has weighed in on the cost synergies of a deal, plus the possible stock impact on the various stakeholders. But what would this mean for the industry, and consumers?

The biggest beneficiaries of the deal would Sprint and the cable companies. For Sprint, this could be a win-win. A tie-up with cable would provide needed capital and, potentially, valuable infrastructure (pole sites, backhaul) for its small cell centric network buildout. For cable, this would allow them to go ‘all in’ on wireless in a way that the current deal with Verizon doesn’t. Plus, if the joint network assets are effectively combined, this could really position the two entities to offer the wireless/broadband ‘network of the future’, combining DOCSIS/fiber, wireless towers (macro cells), small cells, and Wi-Fi.

The impact on the industry and consumers would be mixed. One negative is that the current imbalance in the level of competition between broadband and wireless would be maintained. In the current U.S. broadband internet (BBI) market, some 50% of urban and suburban areas have only one ISP option for 25 Mbps or better internet. This deal would further cement that concentration. Alternatively, a Sprint/T-Mobile combination could offer, in part, a competitive broadband alternative in a 5G world, and could possibly push Verizon and Charter together, plus other cable/telco deals that might result in a 2-3 player near national BBI landscape.

It’s a mixed bag for wireless, too. I have argued that consolidation from four national wireless operators to three would be good for the industry and consumers, especially given the capital needed to keep up with capacity demand and build 5G. It is very difficult to envision four national 5G networks, given the number of small cells that would be required.

A Sprint-Cable tie up would lead to a cascade of deal activity. DISH becomes the power broker, as a potential spectrum supplier to Verizon and/or acquirer of T-Mobile. This might also hasten further consolidation in the cable industry. I would also not rule out one of the big Internet players doing something, possibly Google or Amazon.

What is the impact on consumers? Well, the wireless industry isn’t all that healthy right now. All the major operators except T-Mobile are pretty battered and bruised from the ‘unlimited’ price war. Sprint is committing increasingly irrational acts to win subscribers, while cutting costs and under-investing in its network. With continued data traffic growth and a wave of investment needed to build out newly acquired spectrum and ultimately 5G, the industry needs to be on a healthier financial footing. A combination of T-Mobile and Sprint would be better for the industry and consumers, long term, than today’s four player battle royal. Actual cable company skin in the game increases the likelihood of a viable four player market. And the other deals that a Cable-Sprint deal could trigger might usher in more competition in broadband.

We also need to take the longer-term view here. Historically, mobile and broadband internet have been on their own separate islands. Now, with small cells, Wi-Fi, 5G, and more abundant spectrum, this starts to become more of a giant Venn diagram. Testament to this is the number of fixed wireless access pilots, deployments, and trials planned for the next year or so by Verizon and AT&T. If successful, 5G could become a viable broadband alternative. Between the results of those deployments and the various industry M&A scenarios, we’ll know a lot more about the future shape of the cable-telco-wireless space by this time next year.

Five Internet Companies That Need Better Consumer-Facing Customer Service

A year ago, when Google announced an aggressive push into the consumer hardware business, I wrote that the company needs a better consumer-facing customer service infrastructure. The column was published in Recode and received quite a bit of attention.

I’ve been thinking about some other consumer-oriented Internet companies and brands that also need to improve their customer service. My bias is toward actually being able to talk to a human being, in real-time, by phone or via live chat. Because sometimes, in certain situations, the miasma of e-mail, help forums, Zendesk and the like, just doesn’t cut it. A common approach of many Internet companies is to shift the burden of customer support to the customers themselves, which means that Mary from Kentucky might be telling you how to connect your bank to Mint.

Companies that do this well — Amazon, Apple, Netflix, and even some of the cellular operators such as T-Mobile — have higher levels of customer satisfaction and loyalty. Some have shown marked improvement (Dell, Microsoft), while others, such as some of the airlines, have started to use Twitter fairly effectively, especially during times of high call volume.

So, here are five companies in the B2C realm that need to make improvements in their customer service infrastructure.

Mint. If you read the help forums, the tens of millions of people who use this web-based personal finance management service have a love-hate relationship with the company. Mint has email and the Zendeskian support site, but there is no way to actually talk to a human being at Mint. The types of problems and questions that can come up – bank can’t connect, wacky duplicate entries, transactions that suddenly get lost – require an immediate and often quick discussion and not the multi-threaded email that can stretch out over several days. Curiously Mint is owned by Intuit (Quicken, TurboTax), so there’s no shortage of customer support infrastructure there. Perhaps they can dispatch some of that army of folks who staff the support lines at TurboTax during the “off-season”!

Uber and Lyft. If you ever have a problem with one of these popular ride-sharing services, you might be wistful for that cranky local taxi dispatcher you used to call when the cab didn’t show up. Because unless it’s a real emergency, there is basically no way to contact a human customer support person at Uber or Lyft. If one uses these services with some frequency, there will inevitably, at some point, be an issue with an incorrect fare, being charged for a canceled trip, etc. If there’s ever an actual dispute, web/email is the only recourse – some nameless person (maybe even a robot?) is judge and jury, and there’s little opportunity for any back and forth. There are some situations where one needs to be able to talk to a person to provide some background and context. Uber and Lyft should do better here.

Airbnb. Sensing a theme? The vaunted ‘sharing economy’ operates lean and mean when it comes to customer support. Now, it is possible to contact Airbnb when there’s an emergency. But if there are any other issues or questions, as a guest or a host, there are lots of hoops to jump through in order to talk to a person. Airbnb does have a number to call, but it is hard to find on their website. My personal experience has been that hold times can be very long, with customer support generally outside the U.S. and reps not adequately trained or equipped to deal with contextual situations. This isn’t like calling your cable company to do a modem reset; each situation is unique.

Airbnb handles some 500,000 stays daily…situations are bound to come up. Even though @AirbnbHelp can be very effective, when one is in a foreign place, it would be good to know that there’s an ability to call a person at AirBnB to get help, real time.

Another frustration is that Airbnb does not provide the ability the ability for a guest to contact a host until a reservation is actually booked, other than through its internal messaging system. Again, there are situations and contexts during the ‘reservation inquiry phase’ where electronic, asynchronous communication just doesn’t cut it. Airbnb has said they withhold contact information due to privacy concerns, but I’d imagine that another reason is AirBnB doesn’t want the guest/host to ‘go around’ its system in order to avoid fees. If a host is willing to provide their phone number to a potential guest, shouldn’t they be able to?

LinkedIn. This is a bit more of a B2B site, but still, I think that the issue of customer support still applies. LinkedIn does not offer any phone-based support, and chat support is uneven and unpredictable. E-mail support is through the dreaded “web form, with drop down options”, which, again, put the onus on the customer and lacks the ability to provide context. Now, the issues might not be of the ‘urgent’ B2C variety as with Uber or AirBnB, but LinkedIn is a large and fairly complex site, and getting any help figuring out how to best use LinkedIn or answering FAQs can be an unwieldy and time-consuming process.

Facebook. Whether it’s help using the site, posting an ad, or dealing with a more urgent issue such as customer privacy or an emergency type situation, it is difficult, if not impossible, to talk to a human being at Facebook. The company has a very extensive Help Center, with literally hundreds of forms, and a very active Facebook community. And I understand that with some 2 billion users across many types of services, high-touch customer support might be a huge challenge to undertake. But there are a few types of situations, specifically with regard to privacy, or other types of emergencies, where it would be good to know that one can get help from someone at Facebook, and quickly. I did a little research, and found some situations where, for example, a Facebook user was reporting unauthorized usage use of their child in photos, and they were told to ‘fill out a form’ by someone on the ‘Facebook Help Team’. Not very reassuring.

Now, folks might complain about the high cost of cellular or cable service, but at least you can call them for tech support…or argue about a bill!

Data Consumption Continues to Grow. Why Are Network Equipment Makers Struggling?

Data consumption continues to skyrocket, growing at about 50% per year. Average usage in mobile now exceeds 4GB per month in the US, with video an ever increasing percentage of that. Fixed broadband isn’t standing still either, with the typical Netflixing household consuming north of 200GB per month.

You would think these would be boom times for the major suppliers of network equipment to the operators. This is a market where three players — Ericsson, Nokia, and Huawei — split about $125 billion in annual global mobile network capex. But in reality, Ericsson and Nokia have been struggling of late and the forecast isn’t all that favorable. Ericsson’s mobile network business declined 10%+ in 2016 and they forecast a decline of 2-6% for 2017, indicating in their annual report that the addressable market for networks is flat to down 2% in the 2016-2018 period. Nokia’s numbers are a bit better, in part because 2016 was the first year of full reporting post the Lucent acquisition, but they nevertheless project flat-ish sales for networks this year. Cisco has had a rough time of it as well, announcing a cut of 1,100 workers this week, on top of a 7% workforce reduction in 2016. By contrast, Huawei’s revenues from network operators grew 24% in 2016, although nearly 60% of that business comes from Asia-Pacific (40% China).

Given the continued robust growth in data consumption, why is the network business so crummy and will the picture get any brighter? It is difficult to find any one reason for the relatively flat market. Our analysis boils it down to six broad factors.

1. The global nature of the business. The major suppliers do business in 100+ countries and with hundreds of operators. There are some parts of the world where network spend has gone way off. In Europe, for example, much of the 4G LTE buildout is complete but follow-on work, related to increases in network capacity, has not been as robust as anticipated. Additionally, the macroeconomic environment in certain regions, such as the Middle East and Latin/South America, has been challenging. There has also been operator consolidation in large markets, such as India, which has affected the addressable market.

2. Their share in growth markets under-indexes. The major 4G LTE buildouts in markets where Ericsson and Nokia are strongest, such as North America and Western Europe, have peaked, and those markets are now driven more by harder to project capacity enhancements and small cell deployments. Huawei’s share is stronger in geographies where there is still a large 3G/4G buildout.

3. Network operator revenues have flattened. The U.S. market is symptomatic. Although there is continued growth in data consumption, prices have declined and mobile revenues are not growing. This is playing out similarly in numerous geographies, putting put pressure on capex spend, with operators pushing their vendors harder on price.

4. The Huawei factor. We don’t see this in the US market because Huawei has been largely kept out of the network equipment business here but Huawei has taken significant share from Ericsson and Nokia and has also been very aggressive on price. Huawei now leads the global market, with 30% share, compared to 28% for Ericsson and 24% for Nokia, according to Dell’Oro Group.

5. Not capturing fair share of the fixed broadband market. Although mobile capex is flat to down in some markets, fixed line (broadband) capex is seeing an uptick, driven by fiber deployments, DOCSIS 3.1 upgrades and, in some geographies, spending on G.fast and PON. Ericsson and Nokia’s share in fixed under-index that of mobile. Nokia’s recent acquisition of Gainspeed is a signal of its efforts to grow that market segment.

6. Cost structure has not kept up with network transformation. We are in the early innings of a major transformation in networks from a hardware to a software-driven model. This impacts the equipment suppliers in three ways: they need to lower their cost structure, evolve the skill set of their workforce, and recognize that the competitive playing field will expand.

Even though the picture is currently mixed, with Ericsson especially under some pressure, I am bullish on the long-term prospects. I’ve spent time with senior level executives at the major equipment suppliers in recent months and they all recognize the business will be fundamentally different in five years than it is today.

In some ways, we’re in a bit of a ‘pause period’ before the next big wave of opportunity. First is IoT and the ability to connect the billions of devices that are projected. This market is materializing but growing more slowly and more unevenly than thought. So it’s a long game. Second, the transformation from hardware to software. The suppliers will have to keep in lockstep with their customers, the operators, on this one, and capture their fair share of this market going forward, which will undoubtedly feature a larger and more competitive playing field. There is still lots of work to be done to determine how to price for a software/cloud/network slice world. Third, a lot of resources are starting to be devoted to 5G, but it will be a couple of years before 5G-related spending begins in earnest. Finally, with much of the growth in traffic coming from video, equipment suppliers will need new technologies and offers to capture their fair share of this opportunity.

This transformation will also involve a new suite of potential customers, partners, and competitors. The Ericssons and Nokias of the world will need to do more business with major ‘webscale’ companies, such as Google, Facebook, and Amazon. A more open, software-centric network environment means there will be more competitors and lower barriers to entry but also the opportunity to partner with best of breed firms. Ericsson and Cisco are still, for example, in the early innings of their partnership. Another example is managed services and the broader world of OSS/BSS, where the network equipment suppliers will have to take share from (or work with) firms such as Amdocs, IBM, Accenture, and Oracle.

The future of the network equipment market won’t be one where three firms carve up some 80%+ of the revenues. But there’s plenty of market opportunity, as long as they capture their fair share.