An Opportunity for Uber to do Some Good

This was a week of contrasts here in Boston. On the one hand, we saw the launch of Uber Eats, where well-heeled Bostonians can now have everything from donuts to sushi delivered to their doorstep within 30 minutes. Then yesterday, a Boston Globe article, “Want Healthy Food? In Much of Mass. It’s Hard To Get”, pointed out that, in Springfield, the state’s third-largest city, “It’s not hard to find a McDonald’s in the Mason Square section of Springfield. Liz O’Gilvie has counted 10 within a mile and three-quarters of her home. But the nearest full-service grocery store, with plump apples and curly kale? That’s 2 miles away, and going that distance on public transit requires a two-hour trek on three buses.”

Which got me thinking, here’s a possible ‘win-win’ opportunity for Uber, which has come under criticism for some of its practices and the poor behavior of some of its executives. A large number of low-income Americans don’t have a car and/or live in so-called “food deserts”, relying on fast food or overpriced packaged food from local convenience stores. There are now initiatives in Massachusetts and several other states to develop creative financing mechanisms to help fund the development of grocery stores and others means of ‘food access’ in low-income areas. There are also several government options, from food stamps to vouchers, and ‘food trust’ programs that provide reduced prices for groceries, if you can get there.

Perhaps there is a way to put some of this funding into helping people get to places where they can buy healthier food at reasonable prices. Many ‘food deserts’ are in areas where there is inadequate public transportation and taxis either don’t exist or are very expensive. Ride-sharing services such as Uber and Lyft could provide a better option.

This wouldn’t be all that hard to implement. In certain geographies, for a trip to a grocery store that’s more than a mile away, Uber or Lyft could add a discount code or some other option, such as a pop-up “Groceries” icon, to enable a free or reduced-price trip. The app could be smart enough to work for trips to a specified set of grocery stores in an area. I am sure Uber could work with the federal government and local agencies to help subsidize or provide some funding for some of these programs in return for a tax break or other incentives. This might end up being cheaper for the government and local transportation agencies than some of the programs in place today that seem to be perpetually on the chopping block. Plus, it’s likely a healthy percentage of the drivers participating in this proposed program would come from the local community, so there’s a benefit there as well.

Perhaps we could get some of the larger grocery retailers or big box chains such as Costco or Walmart to participate as well. Let’s say a roundtrip to the local grocery store costs $15. Perhaps the user kicks in $5, with the remaining 2/3 covered by a combination of the ride sharing company, public funding, and the retailer. With the apps, data, and proliferation of payment options/services, implementing such a program would, logistically, be far easier to accomplish than even ten years ago.

Doing some good wouldn’t hurt Uber’s image, either. Imagine if Uber, using data gained from these rides, could say, “In 2017, we enabled one million food shopping trips for low-income Americans who lacked good transportation options”. While I’m all for Instacart, Uber Eats, and other services that deliver groceries and meals to your office or home, let’s face it, these services are urban-centric, priced at a premium, and are generally for the well-heeled and/or super-busy. If we put half the energy into helping people living in ‘food deserts’ get to food as we have into apps that get food to affluent folks living in ‘food oases’, we could enable healthier eating and cost savings to millions of people.

The iPhone’s 10th Anniversary Gift should be A Revitalized Apple ‘Experience’

In June, we will commemorate the 10th anniversary of the release of the iPhone. In recognition of this signature date, there’s more than the average amount of speculation on what the 2017 edition of the iPhone will sport and hope it might revitalize the smartphone sector, which is experiencing somewhat of a slowdown.

I have no doubt the iPhone 8, X, or whatever it might be called, will be terrific – as nearly all high-end phones are today. Samsung, with its launch of the Galaxy S8 line last week, pushed the envelope even further, particularly with respect to screen size/display, and innovative features such as DeX.

But what has historically given Apple that cachet and ability to charge a premium for its products is the “ecosystem”. When at the top of its game, Apple’s hardware, software, apps, and media all work magically and seamlessly together. However, even more than the commoditization of the smartphone category, there has been a slow and steady erosion of the vaunted ‘Apple Experience’. This mainly has to do with Apple’s software and services, where the company has lost some of its edge. iTunes, which is now 16 years old, has become bloated– more of a turn-off than a turn-on. Apple’s signature applications such as e-mail/contacts/calendar, photos, music, and TV are all OK, but they’re not great. iCloud has not completely fulfilled its mission and an increasing number of Apple users see the whole iTunes/iCloud/Music blend as sort of a hot mess.

All the while, Google has steadily gained. I’d argue devices and software in the Google/Android/Chrome world now work and sync more seamlessly than in the Apple/iOS/macOS world. Amazon has become the high beta company in tech, with keen innovations and successful products in hardware and software, while exploring new frontiers in areas such as AI. And Microsoft has staged a comeback of sorts, with successful transitions in cloud and a better reimagining of the ‘post-PC’ world, even without a smartphone product.

Apple’s recent hires and actions signal a new recognition and urgency. The company hired Shiva Rajaraman from Spotify to help reshape the music and video experience, new Apple TV executive Timothy D. Twerdahl was hired away from Amazon, and it appears the Mac Pro and iMac line will be getting more love. Reshaping the software and services experience seems to have become a priority.

So, what would a reimagined Apple experience look like? I suggest five pillars:

1. Revamp or Ditch iTunes. This product has had pile after pile of updates and refreshes but seems outdated and disjointed from Apple’s music, video, TV, and photo offerings. What, really, is the role of iTunes in a world of App Store, Apple Music, Apple TV, and iCloud? It should be renamed since today it’s mostly a store and ‘control center’ for settings and management of multiple devices (though some of that has been subsumed by iCloud). The user interface needs to be re-imagined and navigation/synchronization made simpler and more intuitive.

2. Improve iCloud. I feel like iCloud has changed from something as the place all content is shared and safely stored to something that must be managed and is needlessly complex. Many consumers still aren’t fully comfortable with ‘cloud everything’ and how content moves on and off the device. Apple isn’t doing itself any favors here. Example: when you enable ‘family sharing’ for music, you are then told to “delete” your music and then “turn on iCloud” which will ‘restore’ your content. For any consumer who, at some point has lost a hard drive, failed to do a backup, or somehow hasn’t gotten this cloud thing right (i.e. most of us), this is a moment fraught with anxiety.

3. Determine What’s Next with Mail, Contacts, Calendar. These are signature productivity apps but Apple’s versions now seem more workmanlike. Is there something here that could revitalize the category and ‘delight’ rather than merely ‘satisfy’? Despite all the messaging alternatives, it still looks like email is here to stay.

4. Continue to Invest in the PC. Stagnant tablet sales, innovative new combo products on the Windows side, and growing success of Chrombeooks show the ‘post-PC’ world has not evolved in quite the way the late Steve Jobs imagined. The PC will still be the anchor productivity device for the foreseeable future, as shown in a recent survey by Creative Strategies, Inc on Millennials’ device preferences. Apple has work to do in figuring out how the PC and macOS fits into its world going forward. I’ll also go out on a limb and argue this is one category where Apple should consider relinquishing its insistence on having premium products at super-premium prices. One, because in the current product line, it’s not justified. And two, because they don’t want to cede the entire under-30 generation to other platforms. It might not be such a bad idea to have a solid but more affordable Mac product to keep folks fully bought into the Apple ecosystem.

5. Regain the Service Halo. This is harder to quantify but my sense is Apple’s size, and intense pressure to grow, has created the perception the company tries to extract one’s dollar at nearly every opportunity. There was a time when you could get customer service help on the phone without having Apple Care (if you asked nicely). Or, if you brought in a cracked screen a month after you bought the latest iPhone, a ponytailed Apple Store employee would wink and hand you a new one, no questions asked. You felt like Apple had your back, in a way that felt different than other companies and justified, in part, the premium price for their products.

Ten years after the launch of the iPhone, the core of Apple is still very much there. But Silicon Valley’s other biggies – Google, Microsoft, Amazon, Facebook, and Netflix – are all now more significant forces in software, content, and services, making it more challenging for Apple to be in a class by itself as it was for a few years. Which makes me hope that Apple’s tenth anniversary iPhone is about more than just the phone.

Comcast’s Wireless Service Lacks Compelling Reason to Buy

Following years of discussion, hints, and speculation, Comcast finally announced its MVNO wireless service, branded Xfinity Mobile. In its current iteration, I cannot see it being an overwhelming success. There’s no particularly compelling reason for anyone to switch to Xfinity Mobile: it’s only slightly cheaper than the competition and there aren’t any features that offer a distinct competitive advantage. Ironically, perhaps the best reason to consider Comcast is if you want to put your family on a “wireless diet”, by taking advantage of the zero charge per access line and buying a limited amount of wireless data.

So here’s the Xfinity service in a nutshell:
• One has to be a Comcast customer (there are about 29 million households, representing about 130 million potential ‘lines’)
• You buy a phone from Comcast (no BYOD at launch), and sign up for Unlimited or by the GB
• There is no ‘per line access charge’. Voice and text are free and data is $65 per line for Unlimited or $12 per GB. For X1 customers spending more than $150/month, the Unlimited price is $45 per line
• When using the Xfinity Mobile service, the customer is signed into other Xfinity apps, such as home entertainment and Xfinity home – although that’s available to any Xfinity customer
• It’s a digital-centric service in terms of buying the phone, paying the bill, and contacting customer care

The Xfinity service is a bit less expensive than the competition but not sufficiently so to compel one to switch, especially when the purchase of a new device is required. It’s hard for me to see how a ‘family’ will spend $500-700 per device to switch to a service that saves maybe $20 per month over AT&T or Verizon. And, as long as Comcast needs Verizon for the cellular service, there’s little likelihood Comcast will further discount its service, since it is paying Verizon $6-8 per GB for data on a wholesale basis. In fact, since Comcast allows up to 20 GB of full speed data, there’s the possibility the company could be underwater in some scenarios. Although, in reality, average usage is ~4 GB per line and Comcast will be pushing subs onto Wi-Fi.

There aren’t any particularly compelling features. There isn’t any zero rating of entertainment content, unlike AT&T/DirecTV, T-Mobile BingeOn, or some of the content on Verizon.

Ironically, Xfinity Mobile could be a great budget option if you want to put your family on a wireless data ‘diet’. You could have 3-4 lines, with unlimited voice and text, and buy 4 GB a month, for under $50 total. This could be especially compelling if and when Comcast allows customers to bring their own phone or has some other option for customers to get an inexpensive device.

A big question is whether the Wi-Fi aspect will be an asset or a liability for Comcast or its customers. Comcast is relying on the 16 million Wi-Fi hotspots — a combination of indoor/outdoor hotspots the company has deployed, plus residential gateways broadcasting an extra SSID — to siphon a healthy percentage of data off the wireless network. This would clearly help Comcast’s economics. From the customer perspective, data speeds could be faster than cellular in some instances.

In my view, the execution on the Wi-Fi side is the big wildcard here. My personal experience using Xfinity Wi-Fi outside the home has been mixed. I have found many hotspots to be slow and unreliable and my phone occasionally gets stuck in what I call ‘purgatory mode’. It attaches to a poor Xfinity Wi-Fi signal and can’t do anything. So a big question is whether Comcast has improved this issue. How effectively the phone seamlessly attaches to a hotspot and adjudicates whether to use Wi-Fi or cellular in a given context to deliver the best connection will be a major governor of the quality of service. This was a problematic issue when Comcast tested the service last year. It is telling that Comcast is not offering Voice over Wi-Fi, which is a signal Comcast is still nervous enough about the reliability of Wi-Fi to not offer a ‘Wi-Fi First’ experience a la Republic Wireless or Google Fi.

So, why is Comcast even doing this? Given the economics of the Verizon deal, Xfinity Mobile won’t be massively profitable on a standalone basis. Comcast is clearly banking on some increased level of stickiness with regard to its broadband and Pay-TV offerings. More likely, this is an initial foray into mobile (actually it’s Comcast’s third whack at wireless, for the historians among us). Within a week or two, we’ll learn how much spectrum Comcast won in the 600 MHz auction and its potential plans to build some form of a facilities-based wireless network, perhaps even as part of a potential acquisition of T-Mobile, Sprint, or a deal for some of DISH’s spectrum down the line. In the meantime, this is a relatively low-risk and inexpensive way to test the wireless waters (again).

Despite 5G Hype, still a Compelling Roadmap for 4G

5G was the dominant topic of conversation at this year’s Mobile World Congress. While this might be the sexiest topic in telecom right now, there’s still a compelling 4G LTE roadmap, incorporating many of the capabilities promised for 5G – especially the earlier, ‘pre-5G’ versions that have been discussed. What’s clear about 5G is it will roll out in stages, it will be messy, and there will be multiple “versions” of 5G.

Meanwhile, what about 4G, the LTE workhorse we all know and love? Well, there’s still a lot of gas left in the LTE tank. First, even though the US, Japan, South Korea, and a handful of other countries have 80% or more of their subscribers on 4G, that number is still less than a third of total subscriptions globally. So there is still substantial investment going into 4G. Second, even as 5G is deployed, LTE is going to provide the primary coverage layer for the foreseeable future – likely out to 2025 – even among the ‘early adopter’ 5G countries. That’s because 5G is likely to be deployed in islands or pockets until the business case is truly proven. And it will require a massive number of small cells which, as we’ve learned with the early stages of the small cell market, are difficult to deploy at scale.

Most importantly, there is still a compelling roadmap for LTE, promising significant improvements in speed, latency, and spectral efficiency. Much of what is promised for 5G — especially the pre-standard or early stages of 5G — can be accomplished within the LTE roadmap.

LTE Advanced, which was introduced a couple of years ago, has already delivered speeds exceeding 100 Mbps and a 2x or greater boost in capacity per MHz, using carrier aggregation, 4×4 multiple input (MIMO) antennas 256 quadrature amplitude modulation (QAM), and an assorted soup of technologies with even less user-friendly acronyms.

The roadmap for the next two to three years is equally compelling. The next stage is called LTE Advanced-Pro, which some call 4.5G. Some of the capabilities include:

• An even higher number of potential ‘carrier aggregation’ channels (from 5 to 32)
• Support of much wider spectrum bands
• Peak data rates up to 3x that of LTE advanced
• Latency improvements of 50% or more
• Further MIMO enhancements, for better coverage
• Support for unlicensed spectrum, such as 5 GHz
• A host of enhancements for IoT, to support lower speed, narrow band access for low power devices

All this added together promises significant increases in throughput, improved latency, greater spectral efficiency, and other improvements. If you thought we needed to wait for 5G for gigabit services, think again: last year, Qualcomm introduced the X16 modem, which is the first commercial modem to support Gigabit LTE up to 1 Gbps—that’s LTE Cat 16—by using four antennas to simultaneously receive 10 LTE data streams boosted to around 100 Mbps each through advanced signal processing. In reality, the operators won’t offer gigabit LTE, just as peak 5G speeds of 10 Gbps represent more of a theoretical than a practical number.

Another key aspect of LTE Advanced Pro will be using carrier aggregation in the unlicensed bands, such as 5 GHz (used by WiFi). Contentions around this issue were ironed out late last year and we should see services such as LTE Unlicensed (LTE-U) rolled out as soon as this summer, delivering business case-driven speed boosts and capacity increases. This, plus additional bands of 700 MHz, AWS, and eventually 600 MHz spectrum being deployed or becoming available soon, provide a lot more ‘real estate’ to increase channels. That translates into faster speeds and more capacity. The fact the operators are now all offering some flavor of an ‘unlimited’ plan, even with asterisks, reflects their increased optimism with respect to the capacity picture.

The significance of all this is many of the improvements and attributes touted for 5G, especially in its early stages, will be delivered within the LTE roadmap. Now, how exactly LTE Advanced Pro will be marketed is an interesting question. Remember when Metro PCS and Verizon were the first operators to deploy LTE in 2010? Within a few months, AT&T and T-Mobile branded their HSPA+ services, which technically were still 3G under the 3GPP framework, as ‘4G’. Some cried foul although, in reality, HSPA+ in some markets outperformed LTE (it was very situational). Still further, what was originally promised for LTE really wasn’t delivered until some of the first LTE Advanced Services started to be incorporated, circa 2013.

This playbook is likely to be (already is being?) replayed with respect to 5G. I would not be surprised if some operators branded aspects of their 4.5G services as 5G. They might call it ‘Pre-5G’. But ‘4G Plus’ and ‘5G Minus’ are likely to be much the same thing, from the standpoint of the user experience.

The bottom line is we don’t have to wait until 2020 or later for some of the significant improvements promised with 5G. There will be material increases in speed, latency, and capacity along the LTE path and those capabilities are already part of the 12 to 18-month roadmap of the major device vendors. So, while 5G might grab all the headlines, there’s still lots of reasons to get excited about 4G.

Ten Things in Tech that Should be Easier

In an era of self-driving cars, artificial intelligence, and drones that can deliver packages, why is it so hard to turn on the damn TV? Technology has simplified a lot of tasks that used to be fairly involved and complex. The devices, wireless connectivity, cloud services, and so on are, for the most part, amazing.

Even so, I’m willing to bet sometime in the past week, in your dealings with myriad devices, apps, or software, you have muttered the following phrase: “Why is this so hard?” or “Why hasn’t someone solved this problem?” I’ve been developing my own list and polled friends and business colleagues. If there’s one overarching theme, it’s around the ability to more easily and effectively find, store, organize, sync, and manage content.

1. Contact Importing and Syncing — This area remains a mess. First, there’s still no great way to get contacts from an analog (i.e. business card) to a digital form. There are OCR readers and apps that use the phone camera but they’re still not that effective. Then there’s the complexity of “importing” contacts. The default method is to use the .csv format but seemingly every time, there’s some glitch or a column that doesn’t import correctly or a weird trick one has to perform to make it work. Plus, every major program, whether it’s Outlook, Apple, or a database such as Constant Contact, has its own variation on how to do this.

Syncing is Part 2 of my Contacts riff. For anyone trying to keep contacts up to date across a typical contacts list such as Outlook, Google, LinkedIn or perhaps an email marketing tool such as Constant Contact or MailChimp, it is still really tough to make it all work seamlessly and update new info automatically. There’s a fear that checking “sync Google contacts with LinkedIn” box will result in random duplications or some sort of wacky deletion of that carefully cultivated contacts list.

2. A Simplified Log-In and Password Regime — OK, this whole password thing has gotten out of control. Now we have two-step verification, ‘security questions’ even more obscure (favorite type of tree when I was five?), and requirements for password combos that only a savant could be expected to remember. Everyone seems to have their own little secret system for tracking this stuff — itself probably not very secure. With all this hacking stuff, one doesn’t get the sense things are going to get any easier. A lot of money is going to be made by the innovator who develops some über-password capability or some other method that significantly improves upon today’s systems.

3. Electronic Storage of Your Medical History — The federal government has poured billions of dollars into ‘electronic medical records’ and, for the average consumer, there is very little to show for it. It is amazing that every time you visit a new doctor, you’re asked to fill out a faded form that looks like it came off a 1960s-era mimeograph, with the same medical history you completed at the last appointment. Why isn’t there some sort of standard medical history form, coordinated through one’s GP, that can be accessed and updated electronically by the patient and other practitioners, on a permission basis? This sort of capability exists in pockets, within certain ‘ecosystems’ (and in other countries) but is not commonplace in the incredibly inefficient U.S. medical care system.

4. Easier Way of Managing Home Entertainment — How come it is so easy to summon up just about any content ever created but it remains such a logistical challenge to operate a home TV and its various appendages? The average home set-up still remains a clutter of multiple remotes, confusing interfaces, and the challenge of managing multiple input devices. No two home entertainment systems are exactly alike. Here’s a test: If you have guests staying at your house, it should not require two pages of instructions on how to turn on the TV and find the ball game or something on Netflix.

5. Finding, Organizing, Storing, and Syncing Music and Photos, Especially on iTunes — This is still difficult and confusing for the average consumer and, for some reason, it’s become harder, rather than easier, in recent years. Press the wrong button and all of a sudden, thousands of songs show up on your phone, killing your storage. As for iTunes specifically, what was once a wonderful platform has become a bloated, confusing, and outdated mess.

Dealing with storage on an iPhone is a companion issue. It is still difficult for the average person to get a handle on iPhone storage. To begin with, at least half the device’s storage seems to be taken up by stuff that has nothing to do with apps or content. Second, it’s still a challenge to manage and understand what media is ‘local’ (thus taking up storage space) vs. stored in the cloud. Third, when you get the ‘storage full’ just as you’re trying to snap the baby’s first steps, then frantically try to delete 100 photos, does that not free up storage? I pick on the iPhone in particular because there is no way to expand storage on the device.

6. Transferring Financial Info at Tax Time — For those who do a pretty good job of tracking their finances electronically through software such as Quicken or Mint, it’s still a bear to produce a good, aggregated report of income and spending, by category, then migrate that info into a popular tax program such as TurboTax. Quicken is a bit better. Mint, it’s cloud-based cousin, is awful at this.

7. Podcast Management — Podcasts have exploded over the past couple of years. Podcast apps are great for finding and downloading content but I’ve yet to find an app that makes it easy to organize content and develop an ordered playlist. Simple requests: for longer podcasts, especially those with ‘segments’, some sort of time stamp; ability to organize a ‘playlist’ or ‘queue’ so, if you’re in the car or out for a run, you can listen to one segment or podcast after another; and more easily manage how a podcast is downloaded to a device and deleted once played.

8. Saving Content to be Read Later — How many times during the day do you see some sort of content you’d like to queue up and read later? There are tools on individual browsers, great apps like Pocket, and content aggregators like Feedly. But they aren’t ubiquitous across all content and they work differently depending on device, browser, etc. I’d love an overall, “Save for Later” button, across content sources and platforms, that works the same on any screen/device, with the option of reading on any device, online or offline. Social media, namely Facebook, LinkedIn, and Twitter, are increasingly becoming content destinations/sources and need to be incorporated into this.

9. Organizing Email — Even with the growth of other messaging platforms, from texting to Facebook, email remains the dominant communication platform, especially for work. Lots of folks have taken a whack at developing tools for more effective email management but it doesn’t seem like anyone has cracked the code yet. This includes more effective filtering of spam/junk/suspicious emails.

10. Bluetooth — File this under the ‘could be better’ category. Bluetooth is now a big part of our lives but it can be still be challenging to pair a device or to make sure devices stay paired. Bluetooth ultimately works but often requires multiple attempts, toggles, and so on. And pairing it with a car system, especially with a non-familiar vehicle such as a rental or Zipcar, is always more complicated than it should be.

Do you share this same list? Are there some apps or features that get at some of these issues perhaps I wasn’t aware of? I’d welcome your thoughts and feedback. Perhaps this can be a semi-regular column.

With ‘Unlimited’, Network Management and Capacity become Paramount

The major story in U.S. wireless so far in 2017 is the Big Four operators are now all in on unlimited offerings. Sprint had used this as a differentiator for the past two years and T-Mobile set the tone with its announcement of T-Mobile ONE last summer. Over the past couple of weeks, Verizon and AT&T announced their version of unlimited. With mobile data traffic projected to grow some 50% per year, driven by video, will the operators be able to support unlimited data?

Let’s first recognize that unlimited in wireless is not truly unlimited. There’s always an asterisk. All the operators have fine print that says they can slow down your speed if you reach a certain usage level, typically in the 22-28 GB per month range, depending on the operator. This is a very generous amount of data from a wireless perspective, given average usage is in the 4 GB/month range. But this does prevent you from binge-watching “Game of Thrones” over LTE. There are other tools being used to manage usage, such as slowing down video and restricting tethering, although that has become a new battleground in ‘whose unlimited is better’ over the past couple of weeks.

Now that unlimited seems to be the default, I believe the competitive battleground will increasingly shift to network management and capacity. Marketing around network capabilities over the past couple of years has been about network speed. But the difference between the operators has narrowed and who has the ‘best LTE performance’ now seems to vary by market and often comes down to one’s personal context or experience (or who’s testing regime one prefers).

We have already seen network capacity being worked into the marketing message. AT&T has touted it has 65 MHz of ‘fallow’ capacity to deploy. T-Mobile issued a press release earlier this week about launching LTE-U to ‘boost capacity’.

So, which operator is in the best position, capacity wise? There are different ways of looking at this but many Wall Street analysts believe T-Mobile has the most capacity deployed per subscriber. Sprint has the most ‘raw’ capacity of any operator, mostly at 2.5 GHz, much of which has not been deployed yet, and with less favorable propagation. AT&T plans to put some of its ‘fallow’ capacity to work over the next two years, although 20 MHz of that is predicated on its winning the FirstNet contract. Verizon is the most capacity-challenged, in theory, because it has less spectrum per active subscriber. Verizon has been on a mission to boost capacity, densifying its network with small cells, refarming 2G/3G spectrum, and putting any capacity it has to work. And all of the major operators, except Sprint, are expected to gain significant new spectrum from the 600 MHz auctions, which will conclude in the coming weeks (although it will be at least a couple of years before that spectrum can be put to work).

Capacity, and the tools to optimize and manage it, will become key differentiators over the next couple of years. I believe this will lead to some important changes in the wireless industry and in the way wireless services are delivered. First, there will be a spur of innovation in order to bring more capacity online. Examples include LTE Unlicensed (LTE-U), shared spectrum (the 3.5 GHz band), and various ways of leveraging Wi-Fi and broadband. Wi-Fi and small cells will play a more important role as well. The work done by companies such as (which owns Republic Wireless) and Google, with Project Fi, to develop a viable mobile/Wi-Fi service could work its way into more offerings.

Second, operators will implement a greater array of network management tools. The slowing of video to 480p is an example used over the past couple of years. There will be additional ways to ensure video and other bandwidth- consumptive uses are optimized and managed. I could also see a situation where there is a premium charge for HD video, tethering, or other features. As well, with network neutrality being sidelined in the new FCC administration, I believe operators might begin offering tiered service options, similar to what we see in broadband. Alternatively, as operators implement carrier aggregation and other improvements along the LTE roadmap that increase network speed, one can see there might be ‘premium speed options’, where there might be a premium offering for 50 Mbps or something of that order.

Finally, I think some of these unlimited moves set the stage for further industry consolidation, especially once the 600 MHz auction dust settles. Sprint and T-Mobile, which are moving closer to a consolidation, will use spectrum and network capacity comparisons to AT&T and Verizon as an important justification for a deal being approved. DISH, and its treasure trove of spectrum (some of which needs to be put to work soon, by law), will be involved in some sort of deal as well. Cable might also be involved in some way. We’ll learn more about Comcast’s ambitions, for example, once the 600 MHz auction results are made public.

With more aggressive price plans and continued growth in data demand, network capacity will become as important as traditional competitive benchmarks such as speed and coverage.

This will be a Big Year for Wireless Network Innovation

2017 is shaping up to be a year where we will see more new things out of wireless networks than we have in some time. Some of this will be in the form of select market trials while, in other cases, these will be new services offered by cellular operators and even some wireless upstarts. There are four themes to this: the first commercial 5G trials, centered around fixed wireless access; testing higher parts of the spectrum band to deliver wireless service; new techniques to deliver faster services and increased capacity, such as leveraging power lines and the unlicensed bands; and new types of networks or approaches, such as LTE-Unlicensed, 3.5 GHz ‘shared spectrum’ services, the FirstNet public safety network, and IoT-centric networks using LTE.

5G Trials

We are still a good two years away from the official 3GPP standard being released for 5G, although there will be some steps along the way. Even so, Verizon and AT&T have both announced they will conduct 5G trials this year in several cities. Mainly, they are testing 5G for fixed wireless access, as a potential broadband alternative in markets where they don’t currently offer broadband. The other important aspect is the operators are testing millimeter wave spectrum for 5G – that is, higher spectrum bands that can deliver ultra-fast speeds but have more challenging propagation characteristics, such as requiring line-of-sight.

These 5G trials are not restricted to the cellular operators. For example, Starry, founded by Aereo CEO Chet Kanoja, plans on testing broadband via fixed wireless access using the 28 GHz band in Boston and several other cities this year.

Keep in mind the difference between ‘real 5G’ and ‘marketing 5G’, or pre-5G. These initial tests might deliver ‘only’ 400-500 Mbps, whereas true 5G is focused on 1 Gbps or better, and much lower latencies.

New Techniques to Deliver Faster Services and Greater Capacity

There’s a lot going on in this corner. After nearly two years of delays, Unlicensed LTE, in the form of LTE-U, is set to roll out this year, with T-Mobile and AT&T leading the charge. This technique augments licensed LTE spectrum with channels in the 5 GHz unlicensed band (used by Wi-Fi) to deliver faster speeds and greater capacity. It’s a win for the cellular operators because they don’t have to buy extra spectrum to use the unlicensed band. While there is contention within the Wi-Fi community because of concerns about interference, the two sides have finally agreed on techniques to minimize the risk.

This will be an interesting test of the ‘coexistence’ of licensed and unlicensed spectrum and the potential for new and creative business models around a differentiated service. Most mobile data services today deliver the same speed to all users, at least in theory. Operators might test the potential for a ‘premium service’, such as speed or capacity boosts, using LTE-U. There are several other approaches to combining licensed and unlicensed services in the works as well, such as LAA, LWA and MulteFire. So LTE-U will be an important litmus test.

LTE Roadmap

Even though there’s already plenty of pre-5G marketing, the LTE roadmap for the next couple of years looks pretty compelling as well. Operators are using additional spectrum they have acquired and deployed to deliver additional channels of carrier aggregation. The most advanced, three-channel carrier aggregation (“3CA”), continues to be rolled out in select markets.

You will also hear more about “4.5G”, or “LTE Advanced Pro”, which employs 20 MHz wide radio channels, carrier aggregation, and advanced antenna techniques to deliver additional capacity and download speeds of 400 Mbps or more. Ironically, this is what is being discussed for some pre-5G services. In fact, per my earlier point, LTE Advanced Pro services might be marketed as early 5G, in the same way WiMAX and HSPA+ services were marketed as 4G even though they weren’t officially LTE.

Finally, AT&T will also be testing AirGig (a technique the Bell Labs folks have been working on for ten years) that uses plastic antennas over power lines regenerating millimeter waves to deliver gigabit speeds. The potential is for a more flexible and cost-effective last mile solution which would have application for both broadband and wireless (for 5G, and backhaul) services. This also leverages existing infrastructure, as finding locations to deploy antennas or small cells has proven vexing for service providers.

New Type of Wireless Networks

During 2017, we will see initial tests and deployments of several new types of mobile networks. During 2016, the FCC issued an order for shared spectrum services, using the 3.5 GHz band (see here for more). Sometime over the next few months, rules and procedures about Spectrum Access System (SAS) will be decided and administrators chosen. During 2017, we could well see some market tests or trials of shared spectrum services. This is an area where the US could really lead in wireless. The proposal for 5G also relies on shared spectrum techniques for some of the millimeter wave spectrum bands.

Also on the LTE front, the provider of the FirstNet public safety network should be chosen within the next couple of months, pending some litigation currently underway. We should see some early FirstNet deployments this year, with a more comprehensive rollout in 2018. More than $7 billion has been earmarked for FirstNet, using proceeds of past spectrum auctions.

Finally, there will be a lot of action related to purpose-built IoT networks this year. Networks using the unlicensed band, such as Sigfox, Lora, and RPMA, are being rolled out. During 2017, the cellular operators are getting into the action, launching IoT networks over LTE (LTE Cat-M and NB-IoT, see “The Emergence of Purpose Built IoT Networks“).

In short, this should be an exciting year for wireless network innovation.

Will Wireless ever Replace Broadband?

It’s 2020. 5G wireless is being rolled out, with speeds exceeding 10 Gbps, latency below 1 millisecond, and the ability to accommodate vastly more traffic and connections. Will the average household, which doles out some $400 monthly for mobile, pay TV, and broadband today, be able to go wireless only?

The thought is enticing. This could be Cut the Cord 3.0. Version 1.0 cut the landline phone in favor of wireless only, which nearly 50% of households have already done. Version 2.0 has been about cutting the cable (pay TV) cord and going internet only for TV content. It’s happening slowly but steadily. With the 4G LTE and ultimately 5G roadmap promising speeds and latency as good as or exceeding today’s fixed broadband, might customers ultimately look to cut the wire that delivers fixed broadband?

This possibility might get a serious test drive in 2017. Verizon Wireless, which has developed some of its own “pre-5G” specifications, plans to test fixed wireless access in as many as ten cities this year. This would involve getting fiber or other ‘broadband’ infrastructure to within a couple of hundred meters of a household and then use wireless for the proverbial “last mile”. This approach has a lot of appeal to a company like Verizon. First, it allows them to bring broadband service to households without building fiber to every dwelling, the cost of which has slowed the rollout of FTTH services from FiOS to Google Fiber. Second, it allows Verizon to potentially offer a competitive broadband service outside its ‘landline’ footprint. This is compelling because, while the mobile market is very competitive with four national providers, broadband is a near monopoly in many U.S. markets and average speeds are decidedly middle of the pack when compared to other developed economies.

In addition to Verizon, a company called Starry, founded by the folks who did Aereo, has raised $60 million to build out a competitive broadband service using wireless. They’re currently testing in Boston using 28 GHz spectrum, which is one of four bands the FCC has allocated for 5G services. As another example, Redzone Wireless, a Wireless Internet Service Provider (WISP), is offering a “5GX” service to some areas in Maine, using a combination of LTE Advanced capabilities and unlicensed (Wi-Fi) spectrum, promising households average download speeds of 50 Mbps, for $80 per month.

This certainly bears watching. What are the barriers to Cutting the Cord 3.0? The most significant relates to the intertwined challenges of wireless capacity and economics. A typical wireless user consumes about 4 GB per month at an average retail price of roughly $10 per GB, all things considered. Let’s call that 10 GB for a 2.5 person ‘household’. Now, a typical Netflix-watching broadband household consumes some 250 GB per month. That’s a big delta between fixed and mobile consumption.

Mobile operators are acquiring more spectrum and investing in 5G in order to accommodate ~8-10x more traffic, circa 2020. But we should also consider there will be growth in fixed broadband usage too, with 4K, virtual reality, and so on coming down the pike. It’s not inconceivable that a broadband household could approach 1 terabyte (TB) of average monthly use within the next 3-5 years. That would be a tough number for wireless to digest, even with the technology being developed for 5G. Plus, that’s an awful lot of capacity the mobile operators would have to somehow build (or lease) within a few hundred meters of a home or building.

Wireless economics is a related challenge. It costs a wireless operator like Verizon $1-2 to deliver a GB of traffic to a consumer. That’s why everybody’s ‘unlimited’ plan comes with an asterisk, usually kicking in when usage exceeds 25 GB or so. One would have to take a pretty big whack at the costs of delivering those wireless GBs in order to get into the broadband neighborhood. Even if we chop the low-end of today’s $ per GB delivered by half, the math remains challenging.

A final issue many bring up is how do you get the equipment, which might look like a small dish or box, into a building or household? This is something folks have heretofore been hesitant to muck around with. I see this as the least of the barriers. After all, over the past few years, people have become more comfortable installing Nest thermostats, fancier Wi-Fi routers, mesh networks, and femtocells in their home. The equipment piece will sort of look like that by the time these services are ready for prime time.

I think there’s potential here but it might initially be focused on particular market segments. The lowest hanging fruit would be in rural areas, where mobile/internet coverage is currently lacking or sub-par. If we can get enough capacity close to a building, fixed wireless access might be a great solution. Another segment might be the burgeoning multiple dwelling unit (MDU) market, which has been a challenge for broadband anyway. This seems to be one of the target markets for companies like Starry. A third and potentially vital market segment might be households that are budget-challenged. $400 per month for today’s cocktail of mobile, pay TV, and broadband is a tough financial nugget for a lot of households. There’s definitely room for the “Metro PCS” or “Cricket Wireless” of broadband, offering a compelling plan, combining fixed and mobile, with some limits on broadband speeds and consumption, particularly during peak times (to address the ‘Netflix’ problem). Lord knows we could use some competition and pricing options in the broadband world.

One final consideration is how the industry structure might evolve to deliver on this vision. Comcast is aiming to get into wireless, through both an MVNO and apparently having also spent several billion dollars in the recent 600 MHz spectrum auctions. The wireless operators will be reliant on cable and other providers for small cell sites, capacity, and backhaul, in order to build 5G. Then there’s DISH which owns a treasure trove of spectrum that will have to be put to work at some point during our lifetime. And all the big internet players, from Netflix to Amazon to Facebook and Google, are playing in the 5G sandbox in some capacity thinking that, at some point and to some extent, they will need to be at least partial masters of their own network domain. And there’s been a very active M&A market in the fiber biz of late.

So while we are not yet forecasting a significant shift toward Cutting the Cord 3.0, this is the year discussions on the issue will get a serious start.

Memo to President-Elect Trump: Networks are a Critical Part of Infrastructure

President-elect Trump says he wants to spend upwards of one trillion dollars “rebuilding our nation’s infrastructure”. I urge him to consider that mobile and broadband networks, along with connectivity, are just as important for business and national competitiveness in the 21st century as improving our roads, bridges, airports, and the energy grid.

So far, the incoming Trump administration has signaled a key telecom priority will be reversing what it believes to be the Obama administration’s bureaucratic overreach, with net neutrality being the poster child. It’s consistent with Trump’s views on the Affordable Care Act, Dodd-Frank, and other issues.

But Mr. Trump, and the soon-to-be Republican majority FCC, should not ignore the significant progress made in improving the nation’s broadband infrastructure during Obama’s presidency and Tom Wheeler’s FCC tenure. Over the past eight years, we have seen:

The launch of four national 4G (LTE) networks. Although our roads and airports might be “third world”, our wireless networks are among the best in the world and mobile data usage is among the highest.
The FCC setting the stage for continuing this leadership with 5G, under the Spectrum Frontiers Act announced last July.
A series of successful spectrum options, resulting in an approximately 50% increase in the amount of spectrum held by the leading wireless operators.
Several broadband-related initiatives which have led to an increase in household broadband penetration from about 60% when Obama took office to more than 80% today.
A significant increase in average broadband speeds, from less than 10 MB download at a typical household in 2009 to more than 50 MB today. Among other things, this has enabled successful video streaming services such as Netflix and the ability to consider new, over-the-top (OTT) options for television.
The 3.5 GHz spectrum sharing initiative which, if successful, would be a first and a model that would surely be adopted by other countries.
Robust capital expenditures by broadband and mobile operators during Obama’s term. North America and China are the world’s capex ‘bright spots’. Europe is stagnating and Latin/South America is challenged.

I would like to see the Trump administration build on these trends. Rather than spending a lot of time and energy on dismantling, reversing, and score settling, Trump should send the message that re-establishing our nation’s physical infrastructure as the ‘envy of the world’ includes having the world’s best communications infrastructure.

There are three priorities, in my view. First, we need more, better, and cheaper broadband. Although the U.S. leads in many metrics related to mobile networks, our fixed broadband networks are, on the global stage, decidedly middle-of-the-pack. Household penetration is stalling – getting that last 15-20% is not going to be easy, both physically and economically. Investments in fiber to the home initiatives have stalled, with AT&T and Altice being among the lone bright spots. And we need more competition in broadband. More than 50% of households have a choice of only one decent broadband provider. I’ve always been surprised at the FCC/DOJ’s position on wireless operator consolidation, given the near monopoly structure that exists in broadband. The lack of competition also makes broadband service comparatively expensive.

Over the next few years, we are going to need a significant increase in speeds and broadband capacity to accommodate the 4K TV, AR/VR, & 500 GB+ per month consuming household, circa 2020. I am not sure the current telco/wireless incumbents can fund all this themselves. What can Trump do? He can take a serious look at finding a way for some of the ridiculously wealthy internet players (Netflix, Apple, Amazon, Google, Facebook) to fund some of this. He can also earmark more of spectrum proceeds into some level of subsidy for network construction, rather than see tens of billions of dollars melting into the miasma of the Dept. of Treasury.

Second, we need to continue the momentum in mobile. The Wheeler FCC achieved a lot in making more spectrum available, developing an innovative spectrum sharing scheme at 3.5 GHz, and laying the groundwork for 5G. There is still a lot of work to be done here and these are complex issues.

I would not be opposed to consolidation in wireless, particularly if it appears we can’t have four healthy, profitable wireless operators. If Sprint does not have the resources to truly leverage its 2.5 GHz assets, then let’s get it in the hands of an entity that can. And let’s get DISH to put its treasure trove of spectrum, which the company has been amassing and sitting on for years, to work.

On 5G, the Trump administration has a great opportunity to make this a category of infrastructure where the U.S. leads the world. A great deal of innovation is already coming from U.S.-based companies. Trials will begin in earnest in 2017. There is still a lot of work involved to ensure the millimeter wave bands are, in fact, viable for commercial wireless services. The public sector can also play a role, developing a structure that will make it easier to deploy the vast number of sites required for 5G in cities.

5G will also push the question of what networks and the industry structure will look like in the early 2020s. Will we still need separate fixed and mobile network subscriptions? How can public infrastructure be leveraged to facilitate the deployment of the millions of Wi-Fi/5G-equipped small cells and the concomitant backhaul capacity? Can fixed wireless, with small cells 100 or 200 meters from the home, be a viable alternative to fixed broadband?

Third, I believe IoT can play a significant role in infrastructure improvements envisioned by Trump. We are at a tipping point with IoT: module prices have come down, purpose-built IoT networks are being built in both the licensed and unlicensed bands (see my December 2 column, The Emergence of Purpose-Build IoT Networks), and both enterprise and industry are investing in the sector. So IoT is starting to happen.

All of these devices and sensors can play an important role in key verticals such as transportation, smart grid, smart cities, and so on. The new administration can encourage the use of sensors to make our infrastructure smarter, cheaper, more efficient, and data-driven. Major tech companies, from Cisco to IBM, are aligning to play a role here. This will also require better coordination between various branches of the public sector, including municipalities.

On a final note, it has been interesting to see that Trump has filled several senior positions with executives from the private sector – mainly the financial and energy industries. Why not bring in some of the tech industry’s all-stars to help “Make America Great Again”? After all, many of these people, and the companies they founded or led, have been among the “Greatest Things About America” over these last several years.

The Emergence of Purpose-Built IoT Networks

One of the ‘next big things’ in the mobile landscape is going to be the Internet of Things (IoT) – the billions of devices that will be connected to the internet in the coming years. Major categories of IoT devices include the connected home, automotive/telematics, industrial, smart cities, healthcare, and transportation. After several years of analysts talking about and forecasting IoT, the market is starting to become real. Module prices have fallen to under $10 in some cases. Enterprise CIOs are starting to invest in IoT projects.

Most of the major mobile network operators are putting significant resources into developing an IoT business. It isn’t as sexy as the next iPhone or virtual reality – more of a series of base hits than triples or home runs. But Verizon has said it is on track to reach about $1 billion in revenues in 2016 and has acquired three IoT-related companies this year. AT&T reported, in the second quarter of 2016, there are 29 million connected devices on its network (non-smartphones or tablets).

One of the inhibitors to more rapid IoT growth has been the lack of the right type of network to connect these billions of devices. Many of the devices or sensors have different connectivity requirements than the typical smartphone, tablet, or connected car. They need a network that will support low power requirements (batteries that last years, not days), have wide area and strong in-building coverage, and support relatively low and/or bursty data speeds. Historically, legacy 2G networks (remember GSM?) have supported some IoT devices. But the operators are slowly retiring these networks so they can refarm the spectrum to meet the demand of bandwidth-hungry smartphone users. And the typical LTE network isn’t really suited for many types of IoT devices: requiring too much power, not having adequate reach, and costing too much for a sensor that might only consume a few kilobytes a day.

Fortunately, help is on the way. We are seeing the emergence of purpose-built networks for IoT, called [wait for the really unwieldy marketing name] Low Power Wide Area Networks (LPWANs). LPWANs are intended for IoT solutions that need low power consumption (under 1 MB per day), extended battery life (5-10 years), long range (10km or more), and good penetration in buildings and underground. They are an alternative to wide area network technologies (cellular) and to short range networks (Wi-Fi, ZigBee).

But, like most things in tech, it’s complicated. During 2016, we have seen the launch of three types of LPWANs in the United States, all using the unlicensed band (like Wi-Fi), but each employing a different standard and business framework:

LoRa is an emerging standard for LPWANs and has attracted a fairly diverse group of tech sector players. In the United States, LoRa uses the 915 MHz band. A company called Senet is building a LoRaWAN network in the US.
Ingenu is a vertically integrated company that uses its own technology, called RPMA, in the unlicensed 2.4 GHz band, branded The Machine Network.
Sigfox has emerged as a rival to LoRaWAN. The company has raised some $300 million and operates several IoT networks in Europe. It has just started building in the US and also uses the unlicensed 900 MHz band.

Mobile Ecosystem estimates that, as of the end of Q3 2016, LPWANs covered 50-100m POPs in the US, between Ingenu, Sigfox, and LoRa (some overlapping). We predict the number of markets will at least double in 2017. Building these networks isn’t like building cellular: these companies say they can cover a city using only 20-30 towers.

If your head isn’t already spinning, just wait. Mobile network operators also plan to build LPWAN networks, but using the licensed spectrum they own. The first phase, LTE Category M1 (LTE-M), could launch in 2017. A second phase, called NB-IoT, will follow LTE-M, featuring greater range and the ability to accommodate devices with even lower power and transmission requirements.

AT&T says it is testing LTE-M this year. Verizon says it will be commercially available by the end of 2016 in some markets, with a broader launch in 2017. T-Mobile has not announced LTE-M plans but is seeking to capitalize on AT&T’s sunsetting of 2G by aggressively marketing its 2G network for IoT, encouraging ‘stranded’ A&T customers to switch to T-Mobile and enjoy free 2G services until the end of the year. Sprint hasn’t said much but is rumored to be considering a LoRa based deployment (its parent company, SoftBank, is deploying a LoRA network in Japan).

The deployment model for LTE-M is quite different than the unlicensed LPWAN crowd. Mobile operator IoT networks can be deployed relatively quickly (requiring only a software upgrade to existing radio equipment) but it will cost some $15,000-25,000 per base station.

This is all good for growth in the IoT sector but one can already sense a bubble brewing. It’s hard to see how the market can support three different types of unlicensed networks plus the approaching LTE-M networks from the mobile operators. Enterprises considering large scale deployments aren’t going to want myriad devices operating in different bands.

We can already see cracks in the plans. Sigfox splashily announced in May it plans to reach 100 cities in the US by the end of the year but does not appear anywhere close to achieving this goal. Ingenu continues to build out in the US but appears equally focused in licensing its RPMA technology in other geographies. LoRa in the US is relying on venture-backed Senet and a couple of smaller players. Comcast is testing LoRA under the brand MachineQ. All this activity in the unlicensed band will all shake out over the next year or so, depending on how extensively the cellular operators build out LTE-M and how aggressively they try able to sell it.

The good news, however, is the stars are starting to align for IoT: falling module prices; enterprises committing to larger scale deployments; a growing and diversifying supplier community; and the rollout of purpose-built networks and more suitable business framework to connect these billions of things.

The Wireless Industry is Changing Before Our Eyes

There are moments in time where one can sense important shifts going on in an industry. I think now is one of those times in wireless. First, some historical context – what have been the other ‘big shift’ moments?

Introduction of the portable phone (early 1990s) – made this the ‘mobile’ industry, not the ‘car phone’ industry
Move from analog to digital (mid 1990s)
Introduction of AT&T Digital One Rate – all but eliminated domestic LD and roaming
First popular smartphones (mid-2000s) – starting with Blackberry and Palm Treo, culminating in the introduction of the iPhone in 2007
Apple launching the App Store (2008)
Launch of LTE (2011) – the first real ‘mobile broadband’ network

This particular shift is different, in that it is not rooted in the introduction of a signature new product or service or a major technical advance. On the surface, wireless looks like business as usual: the carriers are still raking in the dollars; the latest iPhones haven’t wowed but are still selling well; and the industry has started on a path toward the ‘Next G’.
So you have to read between the lines to see a developing trend. Just look at what has happened in 2016:

Major operator moves. The mobile operators have realized growth in core wireless has slowed. Yes, IoT represents an important next area of opportunity but it’s going to take a while to get to those ‘billions of connected devices’. IoT is more a series of base hits than doubles or homers. As an example, total US wireless operator revenues from IoT (outside of tablets) are likely to be about 3% of total wireless revenues. Even if that grows 50% year-on-year for the next several years, investors want more. Which is why we’ve seen AT&T and Verizon aggressively expanding into new and adjacent areas of business in the hunt for top line growth and not betting all their marbles on IoT.

A wave of acquisitions. In addition to Verizon-Yahoo (and three IoT companies) and AT&T-Time Warner, we are seeing a spike of acquisitions across the mobile ecosystem, including Qualcomm-NXP, Broadcom-Brocade, CenturyLink-Level 3, and a large number of smaller deals. A combination of consolidation and horizontal integration.

Diminishment of hardware. The iPhone 7 is selling fine but, let’s face it – there has not been a new ‘must have’ phone since the iPhone 6 two years ago. Look at how hard it is for a smartphone OEM to gain share, regardless of how good the device is. The theme can be extended to the tepid reaction, in my opinion, to Apple’s new Macs, slowing tablet sales and the industry still figuring out how to blend the PC and the tablet where, ironically, much of the innovation is coming from Microsoft. It is really now about software and ecosystems.

Layoffs and disappointing spectrum auction. Major industry bellwethers are going through a fairly painful round of layoffs: Verizon, Sprint, Qualcomm, Ericsson, Cisco, and others. Earnings last quarter weren’t so great and the lower than expected bids in the 600 MHz auction show that spectrum values might have peaked. At the same time, momentum toward spectrum sharing opportunities has intensified.

The results at Facebook and Alphabet. A contrast to 3Q earnings in the core mobile business and perhaps the most jolting statistic: Facebook and Alphabet command nearly 70% of all mobile advertising.

These trends show we are now moving toward a new set of industry drivers and the emergence of some new players. Rather than one ‘mega-development’, such as the iPhone or launch of LTE, I believe the next phase of developments in mobile will center around five themes – maybe a bit different than the drumbeat around IoT and AR/VR that you have been hearing from other prognosticators.

1. Shifting Power Centers. This trend has been developing for some time. Leading operators are diversifying their business. Apple and Samsung are less dominant. Google, Facebook, and Amazon are innovating and ascending. Microsoft is coming back. Some of the hot Silicon Valley startups are about messaging and chat! In advertising, Verizon has its work cut out, but there is pent-up demand to break up the Alphabet-Facebook juggernaut.

2. Content. We are in the midst of a multi-year re-imagining of how content is developed, distributed and monetized. Mobile is poised to play an important role, especially in the development of shorter form, democratized content where the latest YouTube sensation can become a media star in a fortnight. A new/old player to keep your eye on here: Comcast (cue the eye roll). They are creating a new UI and ecosystem around the X1 Platform that others – notably Apple – have failed to do. Look at the softly launched Netflix integration on X1 and you’ll see my point. There has been some worry that network neutrality might get in the crosshairs of zero rating for video content, which is one way for wireless operators to gain some competitive advantage. We expect the Trump administration and a Republican-dominated FCC to either overturn net neutrality or tread very lightly.

3. The Rise of Artificial/Intelligent Assistants. This has its parallel with the rise of the mobile revolution, which was driven by the confluence of hardware, networks, processing, and app ecosystem. Here, it’s processing (per usual), cloud, big data, and voice-related technologies. We’re in the early innings of a re-imagined way in which we interact with devices – phones, TVs, and so on – and software/apps that are more proactive and do a much better job of talking to each other. This is one of the main reasons Google has intensified its push into the hardware business (Pixel phone, Google Assistant, Google Wi-Fi, Daydream VR headset and platform, new 4K Chromecast stick), with Google Assistant becoming more pervasive throughout the products.

4. New Network Economics. Leading network operators are in a race toward an evolved network. More agile and ‘internet like” is what you’ll hear AT&T’s John Donavan talk about when discussing ECOMP, which is AT&T’s new ‘network operating system’ it hopes other operators will adopt. Another important part of this is altering network economics, which I still think needs to be a bigger part of the discussion. Mobile networks are going to have to handle much more video traffic in the coming years and at a substantially lower cost per GB delivered than they do today. A related question is how fixed and mobile networks coalesce as we move toward 5G and to consider whether, circa 2020, households will still be paying for separate fixed and mobile subscriptions.

5. Back to the Future With Chat and Messaging. While the internet and telco giants work on their respective AI and SDN moonshots, the biggest thing in 2016 is turning out to be messaging and chat (here is a good piece in the WSJ from a couple of weeks ago by Christopher Mims). With apps getting into the game, these past few years have seen the messaging/notification world trending toward overload. Yes, these tools are becoming more important for workplace collaboration (Slack, Teams) but I think the longer game is about simplification and contextualization. And, over time, more functionality – paying for things, ordering things, predicting things – as an evolution from today’s app-driven framework that is starting to feel a bit cumbersome and stale. Uber’s new app provides a glimpse of where things are headed.

There’s no catchy term or moniker for this new phase because it applies to developments within the mobile ecosystem and to adjacent sectors that have a big effect on mobile. But these themes, added together, spell the biggest changes to the mobile sector since the iPhone/App Store/LTE perfect storm that emerged in the 2008-2011 timeframe and will define the mobile space for the next several years.

The Election’s Impact on Tech Regulation

The Obama presidency and the FCC, under Chairman Tom Wheeler, have been among the more activist and ambitious in recent memory. There have been some big victories — successful spectrum auctions, innovative spectrum sharing and 5G initiatives, the National Broadband Plan — and some acrimonious proposals, notably around network neutrality and cable set-top boxes. Justice has been a bit mercurial: opposing major consolidation in mobile and broadband (AT&T/T-Mobile, Sprint/T-Mobile, Comcast-Time Warner Cable), but allowing Charter’s acquisitions of TWC and Bright House and Comcast’s acquisition of NBC Universal.

In a few days, there will be a new President-elect and transition teams will begin strategizing for the post-January 20, 2017 world. What might be the impact of the election on comms and media regulation? I’ll start with a broad view and then drill down to a few of the more prominent items.

Of course, who is elected President will potentially have a significant bearing on tech. Hilary Clinton has a pretty detailed and well-articulated platform, with a particular emphasis on expanding broadband availability. She is likely to continue many of President Obama’s initiatives and priorities. If Secretary Clinton is elected, it is likely FCC Chairman Wheeler stays on until July or so. If she is true to form, expect FCC Commissioners and senior-level FCC staffing to take on a ‘FOC’ (Friends of Clinton, and by that I mean Hilary and Bill) flavor. On the other hand, President Clinton could signal intent to bridge gaps with the Republicans by ensuring a balanced FCC. The current FCC has three Democratic and two Republican commissioners, but the Democrats (especially Commissioner Rosenworcel) have not always been in lockstep with Chairman Wheeler.

If Donald Trump is elected, things are more of a wild card. To begin with, he has said little about this sector during the campaign and there isn’t much to glean from his policy platform. Trump is likely to be much more hands off than President Obama (who was very hands on). He will also be more pro-business and anti-regulation, which is why his off-the-cuff remark about the proposed AT&T-Time Warner deal was surprising. If he ends up being Delegator in Chief, his appointments could have an outsized influence.

What happens in terms of control of the House and Senate, as well as the overall post-election ‘tone’, will also be important. If the temperature remains highly acrimonious, there will be contention and delays in the naming and confirmation of senior staff. This could affect the process, prioritization, and timing of some big ticket items on the FCC’s docket. The FCC has a lot going on already. The AT&T-Time Warner deal will land at least partially on its plate, at minimum as an important litmus test for network neutrality.

Here is a quick run-down of some of the issues a new Administration is likely to face.

Network Neutrality — This is something President Obama strong-armed through the FCC. So far, the FCC been fairly hands-off in its application of NN. For example, allowing zero-rating services such as T-Mobile’s Binge On. The AT&T-Time Warner deal will be an important test, given AT&T’s current practice of zero-rating DTV content for AT&T subscribers and plans to do the same with the upcoming DirecTV NOW service. I think the FCC’s tone will continue to keep the application of NN at a high, “B to B” level. For instance, ensuring combined distribution and content companies (AT&T-Time Warner, Comcast-NBC Universal) do not discriminate against new media and OTT players (Netflix, Amazon).

Spectrum — There is a lot going on in the spectrum department right now. The new Administration is likely to inherit the 600 MHz auction – both its final rounds and its implementation. It’s a complex undertaking. Hot on the heels of that is the re-auctioning of DISH’s AWS licenses. The 3.5 GHz ‘shared spectrum’ (CBRS) initiative also has some important milestones hitting sooner rather than later, such as selecting and certifying the Administrators and coming up with an auction framework and other procedures. There is still some opposition to the FCC’s April CBRS Report and Order that the next FCC will have to address to keep this moving forward.

Another priority will be keeping the early momentum going on 5G. This is important from the standpoint of the US continuing its leadership in advanced wireless networks. A lot of innovation and work needs to happen to make the millimeter wave bands usable for commercial wireless services.

Broadband — The National Broadband Plan was one of the signature tech initiatives of the Obama presidency. Its implementation has been somewhat of a mixed bag. Broadband availability expanded and average speeds steadily improved. But there was also a lot of squandered money, the broadband market is not very competitive, and US average speeds are still very much middle of the pack.

A Clinton administration would be more likely to keep the broadband gravy train going. Fixed wireless/5G and deployment of large numbers of small cells will become a bigger part of broadband evolution over the next four years. The FCC’s Mobility Fund II, which is wireless’ version (and contribution) to the Universal Service Fund, is part of the equation, too.

Business Data Services — These are the FCC’s new ‘special access’ rules, which would impose price caps on what telecom companies can charge other companies or businesses for bulk data connections — often referred to as backhaul. The FCC is racing to get this done by the end of the year. BDS is important to the evolution of broadband and 5G, because bigger pipes are needed to deliver the capacity required by those services. Backhaul prices can be prohibitively expensive in un-competitive markets. If the FCC doesn’t vote on BDS by the Inauguration, its status could be in limbo and/or its proposed rules could be revisited.

Set-Top Boxes — The vote on this controversial Wheeler initiative to open up the set-top box market to competition has been delayed, after FCC commissioners could not come to an agreement. The FCC could try to get this done by the end of the year and before a new Administration takes power in January (although the expiration of Rosenworcel’s seat in December adds a tasty plot twist). But it is equally likely this will land in the new Chairman’s lap. The direction of the winter of 2017’s political winds, plus the new Administration’s having to deal with the AT&T-Time Warner deal, could affect the direction of this proposal.

M&A and Industry Consolidation — The approaching election has certainly been a factor in the accelerated pace of tech M&A activity during the second half of 2016. The new Administration will have to rather quickly deal with the proposed AT&T-Time Warner deal. This will be an important litmus test for future deals because it touches on many fractious issues that both the DOJ and the FCC will have to deal with more broadly: cross-ownership of assets, media consolidation, and the Internet’s impact on traditional distribution channels.

I also believe the wireless industry will revisit the consolidation issue early-ish in the new term. Sprint and T-Mobile could try again to get a deal done, or one of them could get acquired by a cable company. DISH is also a factor here.

Congress might be on hold between November and January, but the FCC still has a lot on its plate. From a tech industry perspective, Obama’s eight years were certainly active on the regulatory front, which no doubt angered those preferring a more hands-off public sector. But Obama’s initiatives, particularly with regard to broadband and spectrum, will be almost universally viewed as laudable. There is a lot—a lot—going on in our sector and, regardless of who wins on November 8, we will need some minimal level of government effectiveness to keep our fast-changing market moving forward.

Samsung’s Challenges Reveal Need for Greater Vendor Diversity

Much has been written about how a debacle like the Note7 happened and what Samsung might do to repair its reputation. Samsung’s challenges also shed light on a unique fact about the U.S. smartphone market: the high degree of vendor concentration. Industry research houses show Apple and Samsung represent nearly 75% of smartphone share in the US (Apple about 45%, Samsung 29%) and about 90% of the profits. The remaining share is spread among several vendors, with LG at nearly 10% and Motorola at about half that. Concentration has been creeping up in recent years. Four years ago, the combined Apple/Samsung share was just under 60%.

The picture is quite different in other parts of the world. Globally, as of Q2 2016, Samsung was the leading vendor at 23%, Apple had a 12% share, Huawei had 10%, and all others had 55% combined, according to IDC. The vendor share picture varies quite dramatically by region and even by country. Chinese vendors Huawei and ZTE have made significant progress in Europe, having captured some 25%+ share between them in certain countries. China, the world’s largest handset market, is a veritable vendor free-for-all. Nowhere is the market as concentrated as in the US.

Why is this the case? Well, one factor is our iOS-centricity: Apple’s share in North America is some 2x that of just about anywhere else. We also like our flagship devices. Average selling prices here are among the highest in the world, and US consumers show a particular penchant for the ‘latest, greatest’ iPhone or Galaxy. Another factor is the strong role the carriers play in the US market. Many of their pricing promotions and ad campaigns are centered around iconic iPhone and Galaxy launches.

This fall’s handset developments have revealed why this might be a problem. First, Apple introduced the iPhone 7 which, although a terrific device, received mixed reviews. I am sensing a bit of Apple ennui, particularly among younger users. Sales have been pretty good but replacement cycles are creeping up. Then there’s the Note7 debacle. It is hard at this point to gauge the long-term damage to Samsung’s reputation and whether it will significantly affect the company’s market share. But this has been both difficult and costly for Samsung’s major customers in the US, the wireless carriers, who play an outsized role in distribution compared to operators in other countries. We learned last week that Samsung is offering $100 vouchers to consumers, among other measures, but little has been said about what Samsung is doing to repair its reputation with the operators.

I believe US operators and consumers are left vulnerable by this concentrated market. First, Apple has never been all that operator-friendly — in fact, it continues to do things in the crosshairs of the operators, such as last year’s move into equipment financing. Second, what if the next iPhone is a dud or gets delayed by a few months? Operators have become pretty addicted to that clockwork September iPhone launch to meet their 4Q numbers. What if Samsung’s supply chain and QA problems are more far-reaching? What are the fallback options?

The challenge other handset OEMs have had in capturing share in this market over the past several years is a bit baffling. LG, Motorola, and HTC, among others, make excellent devices. In segments of the market where price is more of a factor, such as prepaid and MVNOs, their combined share is proportionately higher. But they can’t compete with the gargantuan ad budgets of Apple and Samsung and the carriers just haven’t given them all that much love.

I’m surprised the operators haven’t pushed harder. Why are they leaving themselves so vulnerable to an Apple or Samsung hiccup? Why haven’t they put more pressure on pricing? Why aren’t they exerting more influence on the phone’s user experience? With a leveling off of smartphone growth and longer replacement cycles, I am a bit surprised at operators’ order-takery mentality on devices.

Perhaps this is why Google is taking a renewed and more vigorous crack at the handset business with the recently announced Pixel phones. It realizes the market is increasingly tilting toward ecosystems and software—areas where it can exert an influence as long as the hardware is good (which seems to be the ante needed to play in developed country markets). Consumers buy iPhones, in large part, because of the Apple ecosystem. There is no single torchbearer for the Android ecosystem or even a device that maximizes Android’s potential to deliver a fantastic user experience. So, Google is thinking that embedding Google Assistant into the Pixel, plus the ability for Pixel to integrate with other announced Google hardware, such as Home, Hub and even the fledgling Project Fi service, could be part of a next-generation ecosystem play.

Why would vendor diversity be good? As protection in case of an Apple or Samsung hiccup (or worse); a hedge against said vendors’ occasional arrogance; a lever on inflated prices; and as a spur for innovation. This would also give the operators more skin in the game—a position they had not so many years ago.

Takeaways from Two Days Spent with AT&T

AT&T hosted two days of meetings with industry analysts last week, covering a broad array of topics across its consumer and enterprise businesses. Having attended many such tech industry analyst meetings over the years, I found the discussions last week to be unusually wide-ranging and forthright. AT&T has made some pretty significant bets over the past 2-3 years — acquiring DirecTV; investing heavily in the Mexico market; moving aggressively to re-architect its network; and increasing its commitment to building out fiber, among other initiatives. Although Wall Street might be unexcited about big telco stock prospects in the near term, I came away with a fairly positive impression of AT&T’s long-term direction.

What follows are some big picture takeaways across some of the major business segments.

When AT&T announced its plan to acquire DirecTV in 2014, I was skeptical. It was clear then, and it remains so now, that traditional pay TV, a la big bundle, is a flat=to-declining business. Rising content fees have trimmed margins. Having spent time speaking with AT&T executives in recent months, I have started to warm to the deal. First, AT&T has moved quickly to leverage its two largest (and not very fast growing) businesses as an important customer acquisition and retention tool. It’s a believer in the bundle, offering healthy incentives to attract the 15 million DTV customers to who don’t have its wireless service and the 21 million wireless customers who don’t have DTV. This has started to show some positive results. Second, in the hyper-competitive wireless market, where the deltas on network quality and price have narrowed in recent years, content and TV Everywhere could be an important differentiator, especially given Verizon’s recent moves with AOL and Yahoo, and Comcast’s potential entry into the wireless business. AT&T has also renegotiated a lot of its content deals so they are technology agnostic.

The next year will be critical, however. Within the next several weeks, AT&T will be launching DirectTV Now, its skinny, over-the-air bundle aimed at Millennials. It is premature to speculate on the prospects for Now, since AT&T did not reveal the content lineup. The skinny bundle market is becoming a crowded space and successes so far have been modest. AT&T is also spending big sums to revamp the back office operations of DTV, improving its somewhat dated looking user interface, and steadily rolling out more contemporary set-top boxes. Part of the grander plan is to use big data to deliver more relevant, targeted advertising to DTV subscribers. AT&T is firing on a lot of cylinders here – much lies in the execution.

AT&T has moved quickly in Mexico since it acquired Iusacell and NII Holdings in 2015. Mexico under-indexes its peers in terms of wireless penetration, network quality, and level of competition. Deploying LTE to the mass that is Mexico City in barely a year is no small accomplishment. There is no question Mexico is an important growth opportunity in the longer term and offering free roaming to U.S. and Mexico subscribers is a good differentiator. The risk is the significant level of investment required, given Mexico’s still high economic and political beta.

Fiber and AirGig
AT&T has increased its commitment to fiber deployment, which is somewhat of a contrast to the plans of some of its competitors such as Google and Verizon. Part of this plan is a commitment to bring fiber to 12.5 million locations by 2019. But the bigger deal is the plan to deploy more fiber closer to a lot of homes, businesses, and MDUs. Why the evolution in strategy from only a couple of years ago? AT&T claims the costs of deploying fiber have come down significantly, so the economic equation is more favorable. The other catalyst is the need for big fiber backhaul pipes to support the growth of video, AR/VR, and even 5G wireless.

AT&T also provided a few details on its innovative Project AirGig, which uses antennas sitting above (but not on) utility poles to regenerate millimeter waves from station to station, potentially delivering fixed wireless broadband of potentially 1 Gbps speeds. AirGig is to AT&T what the self-driving car is to Google: a ground-breaking, still experimental technology, ten years in the making, that could radically alter the economics of backhaul and small cells. This is a 2020 thing, not a 2017 thing.

AT&T has been at the forefront of the move to a software-defined network, having already virtualized 30% of network functions, with plans to get to 70% by 2018. Why is this important? Network service providers have realized for some time that the monolithic, hardware-centric network approach is not sustainable from the standpoint of capacity, agility, and economics. Most major telcos are on relatively the same page with respect to where their network architecture needs to go. Nevertheless, it is a huge transformation, in terms of approach, what it means to vendor relationships, the skill set required of employees, and ultimately moving to new models of how the network will be monetized.

AT&T was a little more sanguine about 5G. On the one hand, network executives are excited about 5G’s potential to deliver the faster speed and lower latency required for certain devices and applications. On the other hand, there was a dose of realism that 5G is a 2020 and beyond thing, and deployment will be in pockets, with LTE still forming the primary coverage layer for the foreseeable future. I am of the view LTE still has a lot of legs. The LTE Advanced Pro roadmap, plus opportunities in the unlicensed band, has the ability to deliver significant improvements in network performance and capacity over the next few years, with many of the attributes envisioned for 5G.

Mobile comprises more than half of AT&T’s total revenues, but the traditional cellular market is showing signs of maturing. This is why both AT&T and Verizon have made some pretty aggressive bets over the past two years to provide them with the source of the next $10+ billion in growth. AT&T’s key strategic pillar is focused on mobile entertainment, leveraging the DirecTV asset to deliver video to subscribers wherever they are and to any device. AT&T says it has the mobile network capacity to accommodate what could be a 7-10x increase in data traffic over the next 3-4 years. One key question is whether it can deliver all that mobile video profitably. Remember, its wireless services business has had pretty impressive margins over the years. Another question is whether AT&T needs unique content in order to deliver a differentiated value proposition. There was some tacit acknowledgment this might be the case, but the strategy around this still appears to be formulating.

IoT is another area of major emphasis and potential. AT&T has built a large organization and has devoted significant resources toward IoT. The company has seen some solid success in the connected car segment. Although AT&T will capture its fair share of the ‘billions of connected devices’, it is still difficult to gauge the dimension and timing of the opportunity and which sectors will drive it. IoT is a different type of business: base hits and maybe a couple of doubles, but few triples or home runs.

One disappointment was on the device side. AT&T did not lay out a compelling vision of the device and wearables roadmap, other than being the channel for lots of iPhones and Galaxies. I would like to have heard some more forward thinking about how AT&T might deliver a differentiated experience on those devices, about efforts to partner with OEMs to create exciting devices to help AT&T execute on its video and IoT vision, or plans to offer greater vendor diversity.

AT&T has held these industry analyst gatherings for several years running, so it’s an interesting benchmark on the state of the company and of the industry. This year, I find AT&T with a more finely honed strategic direction, focused on becoming a premium mobile entertainment company and evolving its network to deliver on that vision. The next stage will be very focused on execution, and how a transformed telco fares in a broader competitive landscape.

Are Cable’s Wireless Ambitions Viable?

The news has been aflutter this week with announcements by both Comcast and Charter that they plan to enter the wireless business as Mobile Virtual Network Operators (MVNOs). For the wireless historians among us, this is cable’s third run at the wireless business over a 20-year span.

The question is, do Comcast and Charter have a chance in an already competitive and saturated wireless market? Well-respected equity research analysts at New Street Research have looked at this in depth and concluded cable could capture some 10% or more of the wireless market. I see some important hurdles and am a little less optimistic.

The idea of a Wi-Fi centric MVNO is to offer a less expensive plan by offloading a significant amount of traffic from the cellular network. Voice, texts, and data default to Wi-Fi, with cellular acting as a ‘backup’. Cable’s particular advantage is the millions of private and public Wi-Fi hotspots they have deployed over the past several years as part of the “Cable Wi-Fi” initiative. In Comcast’s case, there are some 15 million hotspots, including residential access points broadcasting a second, ‘public’ SSID. They have also deployed a core network to support residential and business fixed line telephony service. Their ‘Wi-First’ service, as I call it, would theoretically deliver attractive margins for their wireless business. Adding wireless as part of the bundle that includes broadband, pay TV, and even fixed line phones, makes for a compelling value proposition, in their view.

Now, this is not the first attempt at a Wi-Fi centric MVNO. Republic Wireless and Google’s Project Fi are the two leaders in the United States, with one million or so subscribers between them, according to our estimates. There have also been some failures, notably Scratch Wireless and Cablevision’s Wi-Fi only Freewheel service.

There has been substantial progress in the Wi-First experience over the past couple of years. Republic Wireless has developed a lot of intellectual property around the idea of “Adaptive Coverage”, which dynamically and seamlessly switches between cellular and Wi-Fi, even on the same call, always searching for the optimal signal. Google’s principal and important contribution with Project Fi is the ability to dynamically choose the best connection between Sprint and T-Mobile (its MVNO partners), in addition to Wi-Fi. Work done by the cellular operators on Wi-Fi Calling and VoLTE have also made Wi-Fi more viable.

Cable’s prospects in wireless come down to five fundamental questions, in my view.

1. Progress on Usability

Cable has its work cut out for it if they plan on leveraging Wi-Fi hotspots into a quality wireless service. The “Cable Wi-Fi” experience, which leverages indoor and outdoor hotspots to provide subscribers with Wi-Fi coverage outside the home, has been fraught with usability challenges. My personal experience (and that of many others I’ve talked to) with Xfinity Wi-Fi is that the phone automatically attaches to any Xfinity hotspot it sees, even if the signal is weak or the AP is functioning poorly, often resulting in a service that simply doesn’t work on cellular or Wi-Fi, with the added insult of draining the battery. Heard of ‘airplane mode’? I call this ‘purgatory mode’. In fact, many customers say they’re forced to turn off Wi-Fi when outside the home so their phone doesn’t get stuck on a cable Wi-Fi access point.

I wrote about this issue two years ago and, unfortunately, I have seen little progress. Since this is a feature the cable companies provide for free to their broadband subscribers, it isn’t mission-critical. But if they’re going to start charging $30 or more a month for an add-on wireless service, significant improvements need to be made on usability.

2. iPhone Must Be Part of the Offer

Wi-First services have historically been available on a limited number of purpose-built Android devices. This has started to change as a result of the evolution of the Android OS. Most newer Android phones can now support Wi-First services without a lot of custom configuration, which has led to an expansion of device choices from companies such as Republic Wireless.

The elephant in the room, however, is iPhone. Historically, Apple has chosen not to support Wi-First services and does not provide the equivalent configuration tools as the Android crowd. I believe any cable company foray into wireless must support iPhone. It might not be necessary for a niche player such as Republic but, if you’re the cable guy, you’ve gotta support the device that commands nearly 50% of the U.S. smartphone market. The good news is Apple does not have to do anything particularly special to support, say, a Comcast wireless service. This is not a Brian Roberts-Tim Cook level discussion. However, there are lots of things Apple could do to make the service work better, from a usability and subscriber experience perspective, on the scale of what Apple and T-Mobile have done to make Wi-Fi calling a good experience. Additionally, I’d imagine that, since cable has little retail presence, they might rely on Apple for distribution to a certain extent.

3. Is the Business Model Viable?

Do not expect a deeply discounted wireless service from your cable company. Much as subscribers might like to complain about the cost of their wireless service, per-gigabyte data prices have come down markedly over the past three years. $40-50 basically gets you unlimited voice & text, plus a substantial chunk of data. And $35-40 gets you a pretty competitive pre-paid plan. It’s hard to see cable undercutting that substantially. Yes, their goal is to have some 75% of traffic on Wi-Fi, which would provide for a less expensive offering. But even though they have an MVNO deal with Verizon, that doesn’t necessarily mean they’re getting fantastic wholesale pricing. So any substantial data usage on the cellular network will come at a premium.

Roaming is another issue. Remember that cable companies, despite their size, are still regional players. Does Comcast want to support heavy out of market use on cellular?

Another pro-cable argument is that, even if wireless is a break-even proposition or a loss leader, it’s part of a larger bundle, which contributes to long-term subscriber value, especially in an era of declining margins for pay TV. I get that. The question is whether wireless is ‘worth the trouble’ as a bundle add-on if it’s not successful as a standalone business.

4. Why Would A Subscriber Switch to Cable?

I think it is going to be tougher for the cable companies to get subscribers to switch than they think. Postpaid wireless industry churn is already in the 1% range, in a competitive four carrier market. We’ve already established that cable wireless services aren’t likely to be deeply discounted. Also under-recognized is the fact that some 50% of U.S. wireless subscribers are on some sort of family or shared usage plan, many of whom are also enmeshed in some form of equipment installment plan, with upgrade opportunities and aggressive promotional offers around iconic device launches. This all makes it tougher to get customers to switch to a company that, let’s face it, they don’t exactly love.

Content could be another form of differentiation. One could certainly see a situation where a cable subscriber can get TV content extended to mobile devices, as part of their service plan. Comcast especially, with its NBC Universal and other content assets, could put some pretty compelling packages together.

The fact is, however, that a lot of this already exists in the industry. Comcast subscribers can already get a fair chunk of content on mobile, through the excellent Xfinity app. They can even download DVR content for offline viewing. AT&T is already being aggressive in this domain, offering unlimited data plans to subscribers who have both AT&T and DirecTV, and zero-rating DirecTV content for AT&T subscribers. Cable companies will have a hard time competing with zero rating or unlimited data plans on cellular, since they don’t own their own network. So it’s hard to see a truly unique value proposition related to content as part of an MVNO.

One opportunity in cable’s court is value-added services. Their IMS core and role in fixed telephony provides the basis for some potentially compelling rich communications services involving wireless. I could see small business being a target here.

5. What About Successes in Europe?

There have been several successful Wi-First forays by cable companies in Europe. I’d argue it’s different here. First, most of Europe’s cities have a high population density, making them easier to cover with Wi-Fi. Second, because of the SIM-centric culture there, switching between providers with the same phone is more fluid. Third, wireless services are more expensive, which improves the Wi-First value proposition. And fourth, we consume a lot more data on cellular, which affects the economics.

A final wildcard is whether the cable entry into wireless is predicated upon eventually having their own network of some sort. Comcast is participating in the 600 MHz auction, so there’s that. There’s a lot of activity in the unlicensed band (LTE-U, MulteFire, etc.), which will result in more seamless cellular/Wi-Fi services over time. There’s also a chance cablecos could be involved in some sort of consolidation involving Sprint and T-Mobile, as has long been speculated.

I am more optimistic cable could play a role with at least a partial facilities-based network. They would have more control over pricing, handset relationships, and distribution. Their other assets would be a greater value-add. So, perhaps a limited scale MVNO is an important first step.

Key Takeaways from ‘Super Mobility’ Week

While a lot of the tech world’s attention last week was focused on Apple’s announcements in San Francisco, some 30,000 people attended CTIA’s ‘Super Mobility Week’ in Las Vegas, the largest annual wireless convention in North America. There was some concern the show would be a bit flat, with no major device announcements and Mobile World Congress and CES having stolen a bit of the CTIA event’s fire over the past several years. But many key executives from major industry players were there and there was substantive focus and important developments in areas such as the Internet of Things, 5G, and technologies that are an important part of what’s next in wireless and that power many of the devices and apps we enjoy every day.

My takeaways from the CTIA show fall into three broad themes.

Real Progress on the Internet of Things

One of the great quotes from a presentation qas, if there are supposed to be a 20 billion connected “things” by 2020, well, we still have 15 billion to go. So, perhaps it will just be ‘many billions’ of connected things, the wireless version of the McDonald’s sign. But I sensed some real progress on IoT being shown. CTOs at many large enterprise companies are talking about IoT in a different way than before and are starting to commit real resources towards it. One thing should be realized about IoT: when we’re talking about things like connected utility meters, packages, and sensors in buildings regulating temperature, success is going to be measured in base hits, rather than home runs.

There has been significant progress in networks and platforms for IoT. One example is Verizon’s ThingSpace platform announced nearly a year ago, which is seeing success in some sectors such as ‘smart grid’ solutions. There was also a lot of discussion and some great demos at the show in the area of ‘smart cities’. Real progress has been made on developing the technology for smart cities, such as the chipsets and the sensors, and major tech companies have formed alliances to develop a ‘framework’ for smart city projects. There was a lot of discussion about how to urge local governments to embrace smart city concepts more aggressively and how we can get these types of projects to scale more effectively, rather than the onsie-twosie way they are occurring today. As New Cities Foundation Founder and Chairman John Rossant said in one of the keynote sessions: “There are new, innovative models for financing these big infrastructure projects for them to move forward quickly and efficiently”.

Pharma will be another burgeoning area of IoT as a requirement of the Drug Safety Act of 2013 (shipments of pharmaceuticals be tracked from the point of manufacturing to the point of distribution) is phased in.

The Road to 5G

Even though true 5G is not likely to be standardized until 2019 at the earliest, important seeds are being planted today. There was a lot of discussion about the business case for 5G, such as its potential for fixed wireless broadband, given the scaled back fiber deployment plans of companies such as Alphabet.

But just as important as the 5G discussion were vendor announcements of products along the LTE roadmap, which will have many 5G-esque characteristics. Recently, you have heard operators talk about Deployment of Carrier Aggregation and 4×4 MIMO, which are leading to increases in LTE speeds. The next phase, which we will see layered in over the next 2-3 years, is LTE Advanced Pro, which could result in data speeds exceeding 500 MB and significant improvements in latency, among other features.

Alongside the LTE-Advanced roadmap was discussion about some waves of new spectrum becoming available over the next few years, with the potential for significant increases in capacity. None of this is going to be easy. The 600 MHz auction, which we are in the midst of right now, is complex and requires incumbents to clear before it can be commercially deployed. Ironically, several discussions I had were about whether 5G or LTE should be deployed for 600 MHz, if it’s only going to be available circa 2019.

There was also frustration expressed about the status of LTE Unlicensed, whose progress is being held up by a fairly nasty dogfight between the cellular world and the Wi-Fi world. Things are at a bit of an impasse right now, the result being the pre-standardized version of LTE Unlicensed, LTE-U, might not get deployed and we have to wait for the 3GPP version, called LAA.

The industry seems more excited about the prospects for the 3.5 GHz (CBRS) band, where several vendors showed 3.5 GHz – ready products. And there was a lot of praise for the FCC’s ‘Spectrum Frontiers’ plan for 5G, where the U.S. could be in a global leadership position with regard to millimeter wave deployments and the associated technology required to support these high frequencies.

The Unsexy Underbelly of Wireless Networks

The CTIA show has tilted toward network infrastructure rather than shiny mobile gadgets in recent years. And while this stuff might not make headlines, these are the unsung products and technologies such as base stations, antenna arrays, filters, and myriad other components that help power our fancy devices and bandwidth-consuming apps.

One area of collective industry frustration at the show was progress on small cells, both for outdoor and in-building. The products are there and small cells have the potential to deliver meaningful improvements in network coverage and capacity. But there is mounting disappointment about the process required to deploy small cells with any level of scale —the zoning, permissions, and so on. FCC Chairman Tom Wheeler even weighed in on this, calling for cheaper and more available backhaul solutions, which are important to the deployment of small cells.

Overall, the state of the wireless industry coming out of the ‘Super Mobility Week’ is optimistic: steady progress on IOT; a pretty aggressive spectrum roadmap, with opportunities for real business model innovation and new market entrants; and a constant stream of product announcements and demonstrations revealing what should be continued improvements in wireless network performance over the next several years. Subtext: lots to get excited about on the road to 5G.

Has Tech Forgotten Boomers?

Even for those who never watched The Brady Bunch, “Marcia, Marcia, Marcia” is a well-known meme. When it comes to consumer tech, I think we can invoke a similar meme: “Millenials, Millennials, Millennials”. A huge amount of attention, as well as many new products and services, are focused on this admittedly large and amorphous segment comprised of people currently aged 15-25. Barely a day goes by without seeing something in my inbox akin to “Marketing to Millennials”, “Understanding Millennials”, “Why Millennials Aren’t Buying Houses”. Investors seem to love anything with good prospects for success in the millennial market.

But what about Baby Boomers? Even though millennials overtook boomers in 2015 as the largest group in the U.S., there are still around 75 million boomers (those born between 1946 and 1964). Some 10,000 are retiring every day. This is the group that drove email, the early days of the Web, AOL, the late 1990s internet boom, the early days of cellular and e-commerce, played a big role in the success of Blackberry and the initial iPhone, and even got comfortable with online dating ( understands this).

Whether it’s Mary Meeker’s seminal “State of the Internet” report, or the hottest Silicon Valley companies, products, and apps, boomers don’t seem to be a big part of the conversation or the focus of product development. Yet, this is a fascinating group, currently aged 50-70, going through important life stages — mid-life issues, empty nesterdom, downsizing, and retirement. I think tech companies are missing some opportunities, given the disproportionate focus on millennials and the up-and-coming Snapchatting, Cord Cutting, Pokemon Go–ing Gen Zers.

What are some of the wants and needs of this group and what product development opportunities might match up? First, this is a group that wants tech to be easy. They don’t want to have to do a lot of self-provisioning and troubleshooting. They over-index iPhone to Android, they buy AppleCare, and they still have cable. I think this is a segment ripe for what Apple is planning for TV. Millennials are cutting the cord because they are comfortable with the perambulations of what’s needed to do it. They think on-demand when it comes to entertainment (what time? what channel? Who knows/cares?). But if Apple or somebody else can make cutting the cord and the whole search/discovery process easier, there is real potential to shake up the traditional pay TV space.

Boomers are also a segment that want some level of human interaction when it comes to customer service. Older boomers want someone to do it for them (make sure my phone is set up before I leave the store), while younger boomers might be prepared to do some self-service but will want a human being on the other end of the [phone!] at a certain point. Younger boomers are now reaching a stage where their teenagers, AKA, VP of Technology for the Household, are leaving for college. So they are going to be on their own when it comes to tech. GULP!

A great case study here is Fitbit. They have achieved dominance in the fitness tracker segment and basically created this market for boomers because top sellers such as the Flex and HR do three things: address a growing area of interest for the segment (health and light fitness, not super geeky or competitive which is the target market for folks like Garmin); are easy to install and configure, with a limited but vital set of functions; and an easy company to deal with (lots of help resources, good customer service). They’re the Apple of the fitness tracker space. On the other hand, boomers are not unlocking some of the real value of these products because product and feature extensions are hard or cumbersome. Try to configure and connect a scale? Works out of the gate, but often breaks and hard to troubleshoot. Track nutrition? Gotta be easier. Integrate with other apps? Not a lot of standards yet.

We also recognize the boomer segment is moving through different life stages. At the younger end, they are becoming empty nesters, starting to downsize, moving back to the city, divorcing at higher than the average rate, and spending time thinking about what’s next, with more leisure time on their hands but also with aging parents to worry about. The older segment is retiring but has the active lifestyle of those ten years younger a generation ago. They are worrying more about health issues and costs.

So, what does this mean for the tech sector? I think there are some really interesting opportunities here. A few particular areas:

Kids Going to College. One thing boomers will miss about their teens is the in-house tech support. An opportunity for a fresher, more contemporized version of Geek Squad. Maybe even house calls?
Downsizing/moving back to the city. Zillow is a great one-size-fits-all web site/app but there could be a better resource to help those 55-70 years old optimize where to live, type of dwelling, and lifestyle for their next life stage
Mid-life crisis stuff. All of a sudden, boomers have more time and disposable income. They want to do new things, have different experiences, meet people again, re-engage with their community. There could be some interesting products and apps that help them do these things. Facebook could do more for them here. Or is there an opportunity for a boomer-centric social network?
Travel. Related to the above point. Travel sites/apps are monolithic and have become a virtual monopoly. They’re adequate for finding the cheapest airfare/hotel/car. But there are some great opportunities that fuse the old (i.e. travel agents) with the new. A guy who seems to understand this is Paul English, founder of Kayak and now founder of Lola, which is a new kind of travel company that provides on-demand, personal travel service through a smartphone app. And boomers are willing to spend. Just look at the success of high-end active travel company Back Roads, which has morphed from bike tours to walking/hiking/intergenerational (and does great in the boomer segment).
Health Care. There are lots of health care sites, apps, and a growing number of ‘connected’ health devices. But other than fitness trackers, there aren’t as many breakout products or services here. Boomers are an important segment in the connected/digital health care space. It was telling that Apple recently bought Gliimpse, a three-year-old startup that helps patients make sense of their medical records. Health Kit has huge potential but has been a disappointment so far.

Finally, as some of the large boomer segment ages, there are lots of little things that could be done to make products easier to use. This is not ‘products for old people’, but minor features and UI elements like bigger buttons, larger fonts, better guidance out of the box, and more hand-holding. Thinking about boomers will certainly be important in the burgeoning IoT segments if companies want to sell connected home and connected car products or services to anyone over the age of 50.

My Love-Hate Relationship With Medium

By day, I am a wireless industry analyst and consultant. By night and on weekends, besides being an exercise and outdoors enthusiast, I write running guides. A few years ago, I self-published three books on running the Boston area. In late 2015, I started a new project called Great Runs, which is a guide to the best places to go running in the world’s major cities and destinations. It’s geared toward travelers who run and runners who travel. This time, I decided to develop the content online, but I wanted more than a traditional blogging platform. A colleague recommended Medium, the online publishing platform started in 2013 by Twitter co-founder Evan Williams.

This has been a love-hate relationship from the get-go. By turns, liberating but also maddening. I decided to focus a column on Medium because of its potential as a next generation instrument for writers and readers: ease of use, democratization, and social journalism. But Medium also embodies a lot of what’s wrong with the Web, as well.

So here’s what’s fantastic. Medium is essentially a Version 2.0 blogging platform, allowing anyone from amateurs to professionals to corporations to post a story. Within five minutes, I was signed up and writing. The site is easy to use and visually elegant. Medium has kept things very simple, with limited formatting options. It’s easy to insert images and they align and look beautiful. Content is auto-saved nearly constantly. I’ve hired some freelancers to develop content and it’s easy to add them to Medium and edit their work. Write a piece, press ‘publish’, and ba-bang, it’s out there for everyone to see. Social media sharing tools are well integrated.

Authors are also interested in community, so the main Medium site has a list of tabs including Editor’s Picks, topics of the day, and “For You”, which seems to choose articles based primarily on folks I follow on Twitter, LinkedIn contacts, and perhaps some relationship to tags in my stories (running, fitness, travel, etc.).

So, in many ways, Medium has been great. I’ve got more than 50 city guides up on the platform and the responsive Great Runs ‘site’ looks great on PsC, tablets, and phones. I didn’t have to get a publisher or hire a Web/WordPress/App developer.

And now for the downside. First beef: discovery. With what I think is some pretty good content and a well-defined target market, getting my stuff discovered on Medium is hard. Really hard. The whole idea of a blog or ‘social journalism’ as I think Ev calls it, is to build an audience. Yes, your Medium content is easily shared with your Twitter followers or your Facebook friends. So, it’s great for Lululemon, which already has a huge social media presence. They now have 10,000+ ‘followers’ on Medium, and tons of folks recommending their content. For brands, established authors, and the companies who are seemingly flocking to Medium, it’s great. Because they already have an audience.

Medium offers very little in the way of guidance or tutorials to help one get discovered. There is nobody one can talk to, unless you’re an established brand or company who wants Medium to host your content. I’d bet many writers would be willing to pay a modest fee, or sign up for a premium membership with Medium, for some help building an audience/following and getting their content discovered.

My second major beef is monetization. As a side note, I am curious how Medium itself plans to make money. But as an author on Medium, there is presently no way to make any money from content. Blog sites, WordPress sites, and so on, all have some opportunity to run ads, host sponsors, or sell content. But on Medium, nothing. Not even the ability to direct one’s Medium audience to a site where content could potentially be monetized in some way.

I’d even welcome some communication from Medium, a roadmap of sorts, indicating, like so many other Internet-based businesses, they are ‘building their audience’, with plans to monetize that audience in the future. Admittedly, not every writer wants to monetize their content on Medium — some just want an outlet to easily post content, or want additional exposure for their brand. But I can’t see how this is sustainable long term for Medium itself as a business, or for ‘amateur’ authors.

Third, Medium is awful as a content management system. In fact, it’s not a CMS at all. There are practically no tools or options for organizing your content. Suppose you have 25 stories on your Medium page. There’s no way to list them alphabetically, by date, or any of the ways one thinks about organizing content. For those visiting your Medium page, it’s just one long scroll of stories, listed in seemingly random fashion. Medium did recently introduce tabs, for homepage navigation, but there’s no way to organize content within a tab. Maddening.

Fourth, Medium’s lack of help and support options is frustrating. I realize they are a startup (albeit well-funded), this is the Web, and this is the way of Google, Facebook, LinkedIn, WordPress, and the like. One can send Medium an email with a question or a problem, but one senses their customer support operation is a boiler room staffed with folks who mainly deal with FAQs and technical issues. Really, there’s no ability to speak with a professional who can help you make Medium an effective platform or, for that matter, how you can help make Medium more effective as well. ​

Given all these shortcomings and the lack of any real knowledge or roadmap on where Medium is going, I’m starting to give up on Medium. I’ve hired a WordPress developer and am starting to migrate content to that site. I’m feeling very 2005.

In the end, some of Medium’s greatest benefits are also its biggest liabilities. Anyone can write on Medium. Which means anyone can write on Medium. There needs to be some delineation between the individual who wants to just post the occasional story on Medium and the individual/brand who want to use Medium for at least semi-professional or business purposes.

5G Reality Check

To use an oft-cited term from our election season, last week was Huge…YUGE…for 5G in the United States. Two important things happened. First, the FCC announced its ‘Spectrum Frontiers’ plan to make 3.85 GHz of licensed and 7 GHz of unlicensed spectrum available for 5G in the 28, 37, and 39 GHz millimeter wave bands. There’s a provision for even more spectrum to be released down the line. A day later, and in conjunction with the FCC’s announcement, the White House announced the Advanced Wireless Research Initiative, a plan to spend up to $400 million over the next seven years to research and develop next-generation wireless technologies. I guess there’s been a truce since President Obama strong-armed Tom Wheeler into network neutrality two years ago.

With lots of negativity in the air during this political season, here’s an opportunity to feel positive about something. Although the United States falls into the middle of the pack on broadband, it has been a leader in wireless: the only country with four national LTE networks and in the upper quartile on many other mobile-related metrics, such as usage, average speeds, level of competition, and so on. Much of the innovation in wireless comes from U.S.-based companies and venture capital, from chips to phone OS’ and apps, and many network related elements and technologies. With the 5G related announcements last week, the United States is again poised to be a leader in the development and deployment of next-generation wireless technology.

Importantly, the FCC has put a stake in the ground by making the real estate available for 5G. There’s still much to be ironed out in terms of how that spectrum will actually be allocated and auctioned, and its availability for widespread commercial use is still several years away. For now, the idea of using millimeter wave spectrum amounts to a giant, NASA-like R&D project, requiring still to be developed advances in smart antennas, beam forming capabilities, and other areas.

So, what might 5G look like? First, it will be very, very different than the evolution to the previous “Gs” in wireless. 2G was the move from analog to digital; 3G showed us cellular networks could be used for data in addition to voice and text; and 4G signaled that wireless networks could get into the neighborhood of broadband, albeit at fundamentally different economics.

5G is going to be different. It is not “Citius, Altius, Fortius”, as the in the 2G-3G-4G evolution. First, 5G is going to represent a mix of licensed and unlicensed spectrum and some of that spectrum is going to be shared. The FCC has been on a mission to foster the development of spectrum sharing technologies, going back to the National Broadband Plan and TV White Spaces, and more recently with the 3.5 GHz ruling (see my July 8 Techpinions piece on 3.5G). Having unlicensed as part of the Spectrum Frontiers proposal continues us down the path of the narrowing delta between Wi-Fi and cellular networks and provides, for many configurations of IoT devices to be connected to the networks and a new group of service providers in addition to the current Big Four cellular incumbents.

Second, 5G is going to look more like Super Wi-Fi than a traditional mobile cellular network. At these high spectrum bands, a vast density of small cells will be required – somewhere around one small cell per 12 homes in relatively dense areas, according to an excellent recent report from the folks at New Street Research. From the standpoint of how we currently use cellular, this means 4G LTE will probably still be the foundation network, especially for mobility, with ‘pockets’ of 5G in cities or for fixed/pedestrian-centric type use. Early 5G, or ‘pre-5G’ networks will largely be for fixed wireless use. 5G has the potential to deliver vastly faster speeds and dramatically lower latency, exceeding today’s fixed broadband networks in some instances. But 5G, and this type of performance, will not be ubiquitous and mobility-centric in the way 4G is today.

Third, and this is an area where we still don’t have a lot of insight, is the economics of 5G will have to be fundamentally different. There’s been a lot of focus on 5G’s potential for gigabyte speeds and 1 millisecond latency. But today’s 4G networks still cost the carriers about $1 to deliver a GB of data. So the augmented reality or 4K video discussion stops right there unless we get orders of magnitude improvements in wireless economics. Given that vast numbers of small cells will be required for 5G, we will need to harness advances in network virtualization, cloud RAN, and a ‘network as a service’ framework in order to improve on the costs.

Finally, as has been written about, 5G will be heavily focused on IoT. It is interesting that the SoftBank acquisition of ARM occurred within days of the 5G news in the United States. Much of the justification of the lofty acquisition price was a bet on the future of IoT. While many believe in the broad promise and potential of IoT, the market itself is nascent and nobody (no matter how many analyst reports you read) has a really good idea yet of which IoT segments will take off.

What is most interesting is that the public sector is taking a far more active role in the evolution of wireless than it historically has. Dare I say industrial policy? The FCC has committed to making the ‘real estate’ available for 5G. The technology for commercial wireless at high spectrum bands is within our sights but there is still years of development work to do. The framework for public-private and intra/inter-industry investment and cooperation is there. In a tumultuous summer geopolitically and an angst-ridden season politically, this is something to be excited about.

3.5 GHz Spectrum: An Opportunity for the U.S. to Lead in Wireless Innovation

On April 28, 2016, the FCC released its Second Report and Order to create the Citizens Broadband Radio Service (CBRS) in the 3550-3700 MHZ (3.5 GHz) band, making available 150 MHz of spectrum for mobile broadband and other commercial users. The spectrum sharing structure advocated for CBRS is an opportunity for the U.S. to showcase a novel approach to using spectrum. Pulling it off will require innovation on a number of fronts: technology, business models, and intra- and inter- industry cooperation.

The 3.5 GHz band, held by the Department of Defense and fixed satellite service providers, has been underutilized in recent years. There has been a movement to open up the band and make it available for shared use between government and commercial interests, provided the incumbents are given the proper protection. 3.5 GHz services will be primarily unlicensed or ‘lightly licensed’ services, in that an operator will not be required to buy and permanently own spectrum. The spectrum sharing scheme will feature three-tiered access system: Incumbents (existing DOD & satellite users); Priority Access Layer (acquire spectrum for up to three years through an auction process); and General Authorized Access (any user with an authorized 3.5 GHz device). The Spectrum Access System (SAS) will be a database operated by anywhere from two to four private companies.

CBRS is exciting because it makes available a substantial amount of spectrum without the need for expensive auctions and not tied to a particular operator. A leading use case for CBRS is for improved in-building coverage and capacity augmentation using LTE, with the advantage of a more WiFi-like business model and economics. More relaxed power requirements in the recent FCC Order also make CBRS use possible outdoors.

I am excited about CBRS because it represents an opportunity for the U.S. to demonstrate technology, business model, and regulatory/industry innovation. Spectrum, the scarcest resource in mobile computing, would be used in a much more efficient way. Developing and deploying an effective spectrum sharing mechanism would be an important achievement. Another area of technology innovation will be the ‘sensor networks, operated by Environmental Sensing Capability (ESC) operators, to make sure incumbents and others utilizing the spectrum are protected from interference.

CBRS also presents an opportunity to figure out the right business model for in-building wireless solutions. A major inhibitor to better indoor coverage has been that current small cell systems are generally tied to a particular operator, making them expensive and difficult to scale. CBRS offers the potential for ‘neutral host’ solutions at an enterprise level. This could lead to creative cost-sharing structures between companies/building owners and mobile operators or other entities. The ability to acquire ‘temporary’ licenses also provides for some new use cases. For example, event-driven capacity and coverage augmentation.

Also innovative is the potential for intra-industry cooperation. A fairly broad ecosystem of support is building for CBRS. This includes both RAN equipment leaders (Ericsson, Nokia), and also key WiFi suppliers (Cisco, Ruckus Wireless), major internet players such as Google, and startups such as Federated Wireless, who are developing the spectrum sharing databases and sensor networks.

Successfully implementing CBRS will also require a unique level of public-private cooperation. The FCC and the industry will have to work closely to ensure proper development and implementation of the spectrum sharing scheme. Incumbent users of 3.5 GHz channels will have to get comfortable with the idea of sharing the spectrum with private sector entities. One issue that remains controversial is the requirement for ‘exclusion zones’, which protect the incumbents within a certain radius, and near coastal areas. The current proposal for these exclusion zones would make it hard to implement CBRS in certain cities. Clearly, this needs to be resolved.

The next year or so will be fairly critical in determining whether this ambitious proposal will become reality and when services might become available. Google is running a test in Kansas City this summer and is also one of the SAS candidates. The FCC must review and determine who will operate the SASs. Business cases need to be refined. The technology for the sensor networks must be vetted and issues pertaining to the exclusion zones must be resolved.

This is leading-edge stuff. With CBRS, U.S. companies, industry, and regulators could provide a showcase for how wireless’ scarcest and most valuable resource — spectrum — can be more effectively utilized in the future.

Network Neutrality: Wireless should Be Looked at Through a Different Lens

With the U.S. Federal Appeals Court ruling last week, it looks like Network Neutrality is here to stay, at least for now. Much ink has been spilled on both sides of this debate but I’d like to weigh in on the wireless angle.

Part of what was affirmed in the ruling is that wireless broadband fits under the same rules as fixed broadband and wireless users ”don’t see the difference”. In fact, the practice of ‘zero rating’ is coming under fire and might end up being the first test case of the FCC applying NN rules to wireless. This tells me that as NN heads toward even more appeals and potentially to the Supreme Court, we need to urge wireless be looked at through a different lens.

What has changed since the NN discussions started in earnest in 2009, is that wireless network performance is broadband-esque. A good LTE connection with all cylinders firing — wide channel, carrier aggregation, advanced MIMO — offers an experience comparable to middle-of-the-road fixed broadband service. But the economics are fundamentally different. Even though wireless data prices have dropped by 40-50% over the past several years, the average price paid by consumers still averages in the $8 per GB range (it’s $3-4 per GB at the low end), which is 10-20x that of broadband (where usage caps apply). It still costs a wireless operator in the $1 per GB range to deliver data to a consumer. Put another way, if wireless got anywhere near average broadband usage patterns that are now approaching 100 GB per month, every major operator’s wireless network would fall and not be able to get up.

Now, I realize network neutrality is more aimed at preventing bad behavior between corporate internet actors. The poster child example is the possibility that Comcast would provide differentiated access or pricing to Netflix or speed up its own apps or content. There’s not much evidence of this practice and in fact, services such as Netflix, HBO Go, and even ‘cord cutting’ are incenting users to buy higher-end broadband plans. 4k and Ultra HD will push that still further. Despite Netflix comprising some 40% of internet traffic at peak times, the cable industry’s broadband business has never been better. In fact, it’s looking much more attractive, long-term, than their pay TV business. And if the FCC really wanted competition in broadband, it should have required broadband firms such as the cablecos to open up their networks when it wrote the 1996 Telecom Act (a prevalent practice in many European countries, who have far more robust broadband competition and lower prices).

So now we get to the poster child for how the wireless industry might get its hand slapped by the NN crowd: T-Mobile’s BingeOn service and the general practice of ‘zero rating’. BingeOn basically zero rates video from certain video streaming providers, such as YouTube, Netflix, and HBO, which means using these services does not count against a customer’s usage in their data bucket plan. Video in BingeOn is slowed down to 480p, using a special adaptive bit rate coding technique that also reduces consumption on T-Mobile’s network. The quality difference is noticeable but still tolerable. T-Mobile does provide users with the option to turn video back up to full throttle, in which case it’s counted against data usage per normal. This is viewed as a win-win for both the consumer and for T-Mobile: BingeOn customers are spending more time watching video on T-Mobile’s network in a way that’s less consumptive of TMO’s network resources.

With the incredible growth of video consumption on mobile networks, expect more of these situational schemes. I could easily see wireless customers being charged extra for ‘premium data services’ in markets where advanced techniques are used to provide faster speeds or a capacity boost. Want to watch a Netflix movie in 4K on your tablet? It might cost more. An operator might even charge a content provider differentiated pricing. A strict interpretation of NN rules would say this is a violation of equal access principles –- the creation of ‘fast’ and ‘slow’ lanes. But how is this any different than how iTunes has historically charged more to download an HD version of a movie compared to a standard version? Another example: what if live video services such as Facebook Live are really successful and end up choking wireless networks? One option is for wireless operators to say, “all right, you can only do it over Wi-Fi”, which is what AT&T did initially with FaceTime over iPhones. They could raise data prices or charge a premium for these types of services. They could try to pass on some of these costs to Facebook or work out some cost- sharing scheme. The bottom line is wireless operators execs are scared &*$#@-less about the impact of video on their networks. BingeOn is T-Mobile’s technique. Higher data pricing is AT&T and Verizon’s technique, for now.

The economics don’t change markedly with advances in LTE, which is why operators are excited about services such as LTE Unlicensed and the FCC’s recent ruling to open up the 150 MHz of spectrum in the 3.5 GHz band using a unique and innovative spectrum sharing and prioritization scheme. 5G might offer significantly faster speeds and low latency – but it will be very expensive to build. A recently published, well-researched report by New Street Research says that, due to the low propagation characteristics of the 5 GHz and higher spectrum bands being considered for 5G, it will take one million small cells to reach 10% of U.S. homes in relatively dense areas with 5G. Yikes.

I think FCC Chairman Tom Wheeler, who understands wireless economics as well as anyone, realizes that wireless is indeed different. He has basically looked the other way at BingeOn and other zero rating schemes so far. But, in the several years since NN became a more serious possibility, regulators have edged closer to treating wireless as part of the NN equation. This is ironic because we’ve seen a larger step improvement in average broadband speeds than in wireless speeds during this period but built for a comparatively lower cost. I’d rather see a constructive conversation of how we handle this incredible traffic growth in wireless than see an onerous set of antiquated rules apply to an industry where services such as Periscope and Facebook Live Video didn’t even exist three years ago.

If network neutrality heads to further appeals, as appears likely, I believe the idea of treating wireless differently should be rekindled.

What a Real Wireless Loyalty Program Might Look Like

Over the past year, Verizon, AT&T, and T-Mobile have each launched rewards programs. The most recent entry is T-Mobile Tuesdays, an app where T-Mobile customers are given freebies every week, such as a Domino’s Pizza or a Wendy’s Frosty (John, how about some lower-cal options?) and customers can enter to win more substantial prizes. Verizon offers Smart Rewards — customers earn points that can be redeemed for savings on merchandise. AT&T joined an existing rewards program called Plenti, where customers can accumulate points for savings at Plenti partners such as Exxon, Macy’s and Rite Aid. AT&T also introduced AT&T Thanks last week (curious timing), which offers discounts on movie tickets, Live Nation Priority Pre-sale seats, and some unique content for DirecTV customers.

The wireless industry has never had a successful loyalty program. I would argue the current offerings are largely rewards programs and giveaways, not loyalty programs. Smart Rewards and Plenti are basically discount programs where customers have to buy something in order to save, say, 10% on a gift card or a gallon of gas. Of course, this is what T-Mobile CEO John Legere poked at when he introduced T-Mobile Tuesdays, which is more of a giveaway program than a rewards program. In typical ‘Uncarrier’ fashion, TMO Tuesdays is more innovative, edgy, and fun (and a tad gimmicky) than the Verizon and AT&T programs.

Let’s be honest: how many of you Verizon and AT&T customers really use Plenti or Smart Rewards, much less know about them? And do these programs make you loyal in any way to your carrier? T-Mobile’s program might have a bit of an edge in that customers might enjoy entering the weekly sweepstakes for what look like some really fun prizes and trips. I see this as more part of a package of items that make T-Mobile distinct, such as free international roaming and BingeOn, than a loyalty program in and of itself.

It is interesting to me that wireless carriers have never had a true loyalty program, in the vein of airlines, hotels, and some retailers. The average wireless customer spends some $600-800 annually on wireless services and a household can easily spend $2,000 per year. This is a competitive industry, where the name of the game is taking customers from another operator. Reducing churn (or, keeping customers) is a huge priority for the operators. Lowering churn by 10 or 20 basis points has billions of dollars in impact to a large operator. Isn’t it curious operators rarely proactively reward customers for their loyalty or tenure — “thank you for being a customer for five years – we’d like to offer you some free data or a discount on your next device purchase”?

In order to attract or keep customers in this highly competitive industry, I think the operators should consider offering a real loyalty program. What might this look like? It would be more focused on incentives to stay and expand a relationship with a service provider. Points could be accumulated for any of the following:

• Tenure (years of service) with the carrier
• Spend
• Number of devices attached to plan – good incentives to add a tablet, car, etc.
• Adding a family member to a group plan
• Referring a friend

Points, or rewards, could be used for things such as:

• free data
• a discount off a monthly plan
• dollars toward a new device or accessory purchase
• free apps and content

Importantly, this would be a reward for loyalty and spending. For example, how about one GB per month added to your plan for every year of service? The other aspect of this is the program creates positive additional touch points with the customer, whether in the store, online, or through an app. This type of plan is much closer to what airlines, hotels, credit cards, and some retailers offer: “You’re going to fly or stay in a hotel and we would like you to do it with us”.

This could also be an opportunity to offer something differentiated in the small business segment. None of the operators has really nailed an effective small business program. This would be a nice incentive for a business of, say, 5-20 lines to incentivize its employees to select a particular service provider.

I think an effective loyalty program could make a difference in customer retention. It would be interesting to see one of the carriers try it.

Time for Google to have Consumer-Facing Customer Service

One of the themes coming out of the Google I/O conference last week was Google plans to make a more aggressive push into the consumer hardware business. The company announced the Home product, an AI-oriented service to compete with Amazon Echo; a VR headset; and a new smartphone division that will build and ship its modular Ara phones. Former Motorola CEO Rick Osterloh will lead the new hardware division. In a good Recode post earlier this week, Mark Bergen argued that one of the key unanswered questions coming out of I/O is how these exciting new products are going to be distributed. Getting products such as Nexus and Chromecast into consumers’ hands is something Google has “never done well”, Bergen said, further suggesting that, if Google wants to more directly compete with Apple, the company will also need to think about its retail strategy.

I agree with Bergen’s points and would like to take his argument a step further. If Google wants to play more seriously in the consumer realm, the company needs a better consumer-facing customer service infrastructure. If you are a consumer of Google products or services, such as Gmail, Maps, or Office-like products such as Docs or Sheets, it is nearly impossible to contact Google for help. No direct email. No phone support. Not even chat. You are basically on your own (there are some exceptions, such as the Google Play Store and Nest). Basically, you are left to search help forums, bulletin boards, and answers to FAQs Google has posted on its site.

Now, I know this is sort of the way of the Web. It’s not easy to contact a human being at Mint, Uber, LinkedIn, or Facebook, either. However, if consumer hardware is a big part of Google’s future and it wants to compete more directly with the likes of Apple and Amazon, the company needs to think seriously about how it will provide help and support to its customers.

The customer segment for Android devices, for example, has always tilted toward the younger, geekier, do-it-yourself crowd. By contrast, Apple’s year of free phone support, Genius Bar, and Apple Care are significant market differentiators, which many consumers cite in justifying the “Apple Premium”. Amazon customers also cite customer service as one of the company’s hallmarks. All the major service providers, and most consumer tech hardware manufacturers, provide some level of phone support plus other direct contact options such as email and chat. I’m not saying it’s always good and many companies make you jump through all sorts of hoops before you can get direct support but at least it’s there. For the companies who do a good job of it, it’s a market differentiator.

As a side-note, if you are an enterprise customer, Google provides excellent product and tech support, via phone and other channels, for enterprise customers—even small businesses. The minimum ante here is about $100 per year for a small business.

Why is there a greater imperative for Google to consider direct consumer support, since the company has certainly done fine up till now without it? There are three reasons in my view. First, Google is making a bigger push into the consumer hardware segment, so it needs to start thinking differently about the consumer experience, including distribution and support. Second, Google has focused on making its myriad services work more harmoniously in an integrated fashion. It’s a big focus of Google Now, forthcoming AI and intelligent assistant related products, and some of its current and announced physical products. I suspect many users ‘underutilize’ the rich features and capabilities of Google products and services because there is so little in the way of initial hand-holding and ongoing support. Third, if Google is going to be serious about the consumer business, it needs to broaden its base beyond the younger, more tech-savvy crowd, who are a little more accustomed to being “on their own” in the digital world. As an illustration, Android’s share in the U.S. among those over the age of 30 under-indexes its share among younger users and it’s not just about price.

The breadth of products and services Google offers and has in the pipeline is impressive. Though monetization will continue to be heavily dependent on search and advertising, Google is clearly delving deeper into the consumer realm. But even though Google is a huge part of consumers’ daily lives, consumers don’t have much of a ‘relationship’ with Google. Given some previous missteps in the consumer hardware business, Google needs to rethink distribution and customer support if it hopes to become an important consumer brand on the scale of an Apple or Amazon.

Intelligent/digital/AI assistants are great but consumers occasionally need an analog assistant.

The Biggest Rip-offs and Best Bargains in Consumer Tech

I’ve been thinking about pricing for various consumer tech products and services and there are some aspects that are incongruous. For example, how is it you can host a conference call for 150 colleagues for free using FreeConference, yet the minute you leave the U.S. with your cell phone, pricing leaps to the stratosphere? So, here’s my admittedly subjective list of the biggest rip-offs and best bargains in consumer technology.


1. International Cellular Roaming. This is the last bastion of 1970s era telecom pricing. Voice calls can average $1.00 per minute or more and data pricing can be 10x what it costs in the U.S. T-Mobile offers more favorable international roaming rates, especially within North America but exorbitant international roaming rates are one of the most common consumer frustrations in tech.

2. Apple Storage. There’s storage. Then there’s Apple device storage. Apple charges $100 more for an iPhone 6s with 64GB of storage compared to the 16GB model. By contrast, a 32GB microSD card for Android costs $15 or so. To really put things in perspective, $60 buys a 1TB external hard drive for a PC.

3. Cable Box Rental. If you are a cable TV subscriber, you’re likely paying some $200 or more per year for the privilege of renting a set-top box. And there’s no choice in the matter. This is a bonanza for the cable companies, sort of like the $4 billion in baggage fees collected by the airlines every year. The FCC is onto this, with its recent proposals to unlock the set-top box and promote competition.

4. Most extended warranties. Much ink has been spilled (what’s the digital equivalent of that term?) advising consumers not to buy the extended warranty on most consumer electronics products. But the extended warranty is still a part of the pitch, especially when purchasing at a retail location. Usually it’s not worth the price, although Apple Care and some of the cellular ‘insurance’ programs are worth it if you’re a serial phone dropper or need a lot of tech support.

5. Printer Ink. This is the consumer tech’s best ‘razors and blades’ product. HP might well be out of business were it not for high margin ink sales over the years. There are some workarounds and the occasional bargain if you look hard enough, but nobody who buys printer ink is happy about the price.

6. Cable Unbundling. A significant percentage of cable subscribers are paying for a bundle of broadband, pay TV, and phone services. Most consumers believe they’re paying too much for that bundle. But try taking that bundle apart and the picture gets even worse. Ask for a broadband only plan from your provider and that cable part of your bill starts looking more attractive.

7. Wi-Fi Access Points. For the important role that Wi-Fi plays in our daily lives, dropping $100 for a decent Wi-Fi AP seems like a reasonable expenditure. My beef, however, is it’s very difficult for the average consumer to determine the right mix of quality and value in this product category. Many Wi-Fi APs have similar specs (generally undecipherable to the average consumer) but prices are all over the map. There are some clearly superior APs, but they come at a significant price premium.

8. Fees on Most Telecom and Cable Bills. Telcos and cable providers are great at turning that $99 plan into $140, once taxes and fees are included. My latest cable bill has 10 separate “taxes, surcharges, and fees” on it. Call to complain and they largely blame it on the government and the FCC. But I am sure there are certain fees that are not all going into that specific regulatory coffer. An example of fee creep: RCN, which offers a competitive cable and broadband service in some markets, has separate ‘surcharges’ for broadcast TV, sports, and entertainment. Sort of like a ‘movie surcharge’ if you go to a movie. Hmm…

9. International Voice Calling. It is still easy to fall into the trap of paying some exorbitant price for the occasional international call. You see it on the phone bill and say Whoaaa! For those who make a lot of international calls or who hunt around, there are tons of inexpensive options – Skype, FaceTime, some specific international calling plans offered by the telcos – but for the casual caller there’s bound to be the occasional gotcha.


1. Music Streaming Services. Compared to the physical or digital download world, paying $10-15 per month for access to a vast library of music content is one of the best values available in the digital world. In reality, these services should cost a lot more because I’d like to see more money go to the artists.

2. Netflix and HBO. I separate these folks out because they are spending billions on creating fantastic original content. Paying $10-20 per month for access to their entire library, on demand, on any device, is great value for money.

3. Amazon Prime. Even though the price went from $79 to $99, the vast majority of Prime subscribers believe they are getting a great bargain, even if they just use it for the free shipping benefit. There are, of course, several other features of Amazon Prime that make it an even better value. This will be one for the business case history books.

4. A mid-priced Android phone. Many people believe that, even though smartphones are good products, they’re expensive. That’s certainly true of the high-end, flagship phones, such as the latest iPhone or Samsung Galaxy device. But there’s an increasingly impressive array of very good Android phones in the $300-400 range that offer nearly the same capabilities as top of the line products. This is not a huge outlay considering the range of things one can do from a smartphone today.

5. Free Conference Calls. This is one I have never been able to figure out. How do services such as, which allow you to host a call for up to 100 people, for free, make money? Yes, I know – it’s a freemium model. But you have to admit to wondering, “how can this be free?”

6. Web site domain names. It’s $10 a year or so to own a domain name. That’s one of the best bargains in digital real estate. It’s a bit incongruous given the many smarty pants who bought a domain like on the cheap and sold it for a gazillion dollars. But the domain name party has been the digital version of the 1860s Homestead Act.

7. Voice calling. Voice calling has become practically free. It’s included in most cell phone plans and cable/telco ‘triple play’ type services. Even if you’re still dependent on a ‘landline plan’, there are inexpensive VoIP plans, provided you have a decent broadband connection. So, with a few exceptions, if you’re paying more than $10 a month for domestic voice calls, you’re paying too much.

8. Tax Software. Yes, there’s a bit of baiting and switching here with the more popular services such as TurboTax. It’s free! No, wait, if it’s more than 1040 EZ, then it costs. Then there’s the State return, and so on. But even at $50-100, which is what most people spend, it’s a pretty good bargain. And these folks seem to do a pretty good job of keeping up with our increasingly complex tax code.

9. Google Maps. I have kept free, ad-supported services such as Gmail and Facebook off the ‘bargains’ list, but then I started thinking about what app or service would I be glad to pay $100 a year for and came up with Google Maps. First, it’s a valuable product, used frequently, that continues to improve and second, the advertising component of this is a lot less obvious or intrusive than many other apps or services.

I’d welcome your thoughts and ideas on this list!

How Many Wireless Competitors Should There Be?

Earlier this week, the Wall Street Journal reported that the U.K. regulator, Ofcom, is opposing the proposed merger between Three and O2. In France, regulators have put obstacles in front of a proposed merger between state-controlled Orange and Bouygues. In both of these countries, these deals would have reduced the number of facilities-based wireless competitors from four to three. This recalls successful efforts to block similar consolidation in the U.S. (AT&T/T-Mobile and then Sprint/T-Mobile).

Regulators want a healthy level of competition in the wireless business. But at a certain point, this is not working out economically. There is no country where there are four healthy national facilities-based wireless operators. Let’s look at the U.S. market. We’ve seen vigorous competition over the past three years, with data prices that have fallen by 30-40%. Yet Sprint continues to struggle and most financial analysts are very cautious on the prospects for the company. Their network has improved to the extent it is “in the ballpark” competitively. But Sprint is behind where we all thought they would be in leveraging their most significant competitive asset: their 120 MHz of 2.5 GHz spectrum. As they sit on this treasure trove of ‘real estate’ (DISH continues to hoard its spectrum as well), AT&T, Verizon, and T-Mobile are preparing to spend upwards of $30 billion in the 600 MHz auctions in order to contend with continually growing demand for data capacity and the desire to offer greater speed. Facebook’s introduction of its Live video hub at F8 this week has probably sent an additional chill down the spines of operator CTOs.

Meanwhile, on the broadband side, it was front page news in the Boston Globe and the tech press that Verizon will be bringing FiOS to the city of Boston. So, consumers and businesses in the #2 tech epicenter in the world, after Silicon Valley, will have a choice of two – two!! – broadband competitors once FiOS is launched. And still, according to the FCC, some 45% of Americans do not have a choice of more than one broadband provider (defined as offering a minimum 25 Mbps download service). Broadband prices in the U.S. remain high, especially compared to much of western Europe and Asia, where there is more competition and rules in some countries requiring facilities-based providers to open up their networks for resale.

There is something seriously wrong, and lopsided, about this picture. And even with all the growth projected in wireless, with the ‘billions of connected things’ and so on, I think it will be very difficult for any country to support more than three viable facilities-based competitors. Just look at the spending picture ahead. First, it seems de rigueur now in most developed economies that operators have to pay a lot of money for spectrum. And much of the next wave of network investing will be on deploying outdoor and indoor small cells, to both provide more surgical levels of coverage and to increase capacity. It is expensive to deploy small cells. It is also a challenge to deploy them in large numbers because of siting issues and backhaul. Having 4-5 operators each trying to deploy a network increasingly dependent on smaller cells just does not compute. And how will this work indoors? On top of this is the billions of dollars required to deploy some flavor of 5G over the next ten years.

The other factor in all this is that macro cellular, small cells, and Wi-Fi are coming together, over time. With LTE-U (and the standards-based LAA), services will work more harmoniously between licensed and unlicensed spectrum. There are some examples of operators being successful with hybrid fixed and mobile networks, leveraging Wi-Fi hotspots, in some of the more densely populated cities in Europe.

Add to this mix some leading edge work being undertaken by Starry, Facebook’s Terragraph, Google, the incumbent wireless operators as part of the 5G roadmap, and others, to leverage higher frequency spectrum. I believe we could see some new broadband providers, especially in cities, over the next five years, with less of a boundary/distinction between fixed and mobile.

Rather than relying on an older-guard framework, it would be a more effective exercise to think about a 2020 construct, where the breadth of licensed and unlicensed spectrum is more effectively and efficiently utilized and shared, and where the resources of fixed and mobile networks are leveraged. With all of these possibilities, we should be less fearful of consolidation than perhaps we were a couple of years ago.