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Cablecos set to become dangerous rivals to Verizon as 5G emerges

The final point made by AT&T CEO Randall Stephenson at the Goldman Sachs event (see above) was that he has to deliver 1Gbps in both fixed and mobile wireless to support the telco’s full vision for converged services, content and media. His presentation seemed to signify a more rounded strategy for 5G+content/media than Verizon’s. AT&T has better assets, both in the network and the multiplay, and it looks tough for its rival to beat that without a really barn-storming content deal (and there aren’t many candidates in the US), or a reversion to its traditional approach, that of investing in having the highest quality network experience.

That, however, would need to go beyond being narrowly first to launch 5G services (in the limited user bases which want fixed wireless broadband). It would be better served by an accelerated build-out of fiber to support true fixed/mobile services and a far wider, deeper 5G reach, which would carry the media assets into new subscriber bases.

The much-touted cableco deal would help achieve that, and also prevent an enlarged cable group becoming a more dangerous competitor to Verizon than AT&T. Over the summer, the favorite rumor was that French cable group Altice, which has already acquired Cablevision and SuddenLink, would make a bid for Charter, which has itself swallowed up BrightHouse and Time Warner Cable. To make the finances work, it was speculated, Altice might bring Softbank/Sprint and/or T-Mobile USA on board.

This kind of deal, whatever the final permutations might be, would achieve what is really needed to shake up the US telecoms market – further fixed/mobile consolidation. Currently, for all the disruptiveness of TMO, the third and fourth operators are increasingly feeling the disadvantages of being mobile-centric. The point will come when each new goodie that TMO CEO John Legere throws into the subscription mix, will come with fewer returns. New subscriber adds are already slowing, and only those justify tactics which will tend to weigh on margins once growth slows.

And the logic of a Sprint/cable alliance has been there for years, even if previous attempts, such as the ill-starred Pivot deal, have been poorly executed. Sprint has no fixed broadband reach or content partnerships of note, and its Japanese parent is increasingly casting round for deals which will improve the return on its 4G and 5G investments.

If Verizon did its own deal, it could nip a fixed/mobile challenge from TMO or Sprint (or a combination of the two, in some scenarios), by making itself the main mobile partner for Comcast or Charter (or, again, a combination of the two, according to some soothsayers). In a regulatory environment which is currently expected to be kind to consolidation, Verizon might have its chance to hold the balance of power in the cable/wireless intersection – whereas in a few years’ time, if its business continues on its current trajectory, it would likely be the junior partner, as Faultline has argued.

If it does indeed turn its back on cable, it will find Charter and Comcast to be dangerous rivals. Even if they do not do an MNO deal, they are armed with their mutual mobile developments (enabled by their MVNO agreements with Verizon itself); and their significant combined wireline reach, supplemented by the huge Cable WiFi network of hotspots and homespots. Like Iliad’s Free in France, existing broadband lines and WiFi access points can be leveraged to deliver mobile services at very low cost in a WiFi-first way, giving the flexibility to invest in content or to cut retail prices.

Comcast has already announced its Xfinity Mobile services, which could undercut the MNOs in many target subscriber bases, harnessing its residential lines and extensive WiFi to reduce its overall data delivery costs.

Charter had not planned to launch its own mobile service until 2018, but that might now be brought forward in light of the deal with Comcast (announced in May and exclusive for one year) to “accelerate and enhance each company’s ability to participate in the national wireless marketplace”.

They agreed to cooperate on common platforms and device procurement to accelerate their entry into the cellular market. Building on existing technology and roaming deals in the CableWiFi initiative, the two operators said they will now focus on creating common operating platforms for wireless; technical standards development and harmonization; device logistics; and emerging wireless technology platforms.

“By working with the team at Comcast, we can not only speed Charter’s entry into the marketplace, it will also enable us to provide more competition and drive costs down for consumers at a similar national scale as current wireless operators,” said Charter CEO Tom Rutledge at the time.

The cooperation will create something more influential than just a deployment partnership. It may increase the likelihood of a purchase of, or strong alliance with, Sprint and/or TMO. But beyond M&A, this looks more like CableLabs, the cable industry’s standards and R&D organization, in wireless. Think of it as WirelessLabs. It may end up creating a new powerhouse in US 5G.

The companies have both been involved in testing technologies in 5G high frequency spectrum and they could conceivably pool their efforts, and even their joint holdings of 214,000 fiber route miles, which “could provide a critical backbone that would enable the densification anticipated for 5G services”, as Walter Piecyk of analyst firm BTIG put it to the Wall Street Journal.

Even in the 4G era, the cablecos are getting far more active in driving wireless technologies and regulations. The two major cablecos are very interested in enhancing the WiFi-first model by using small cells in shared spectrum (the 3.5 GHz CBRS band in particular). This could enable them to build out their own localized cellular sub-nets, harnessing the performance advantages of 4G and 5G without investing in spectrum. They could use MEC (Multi-access Edge Computing) to deliver advanced services over CBRS-enabled zones, for enterprises, cities or even homes, and just resort to the MNO network and mobile core for long distance connectivity and roaming.

Comcast CEO Brian Roberts has previously said that a mixture of WiFi hotspots and homespots, the cableco’s MVNO deal with Verizon, and its own cellular roll-out, would allow Comcast to launch mobile services without the “kind of investment” that would normally be involved.

Last month, Nokia filed an application with the FCC to be able to demonstrate its small cell products for an unnamed customer located at 1701 John F. Kennedy Boulevard in Philadelphia (the address of Comcast headquarters in the city). Nokia said it wanted to “enhance its efforts to design and develop equipment to meet the communications needs of our customers”. The tests would use its Flex small cell and six mobile units operating in the CBRS band from 3.55 GHz to 3.7 GHz. The trial are due to take place between September 15 2017, and March 15 2018.

Charter has also filed comments with the FCC, as part of the regulator’s consultation on CBRS auction rules, saying it is actively exploring the use of the band, not just in the general access portion, but possibly acquiring one of the Priority Access Licences. It recently received two experimental licenses in Charlotte, North Carolina, and Tampa, Florida, to begin testing in the band, with a focus on multiplay services for rural areas.

Last week, Charter’s SVP of wireless technology, Craig Cowden, gave attendees at Mobile World Congress Americas an outline of the company’s wide-ranging wireless strategy. This includes plans to adopt the next iteration of the WiFi standards, 802.11ax, at an early stage as well as the CBRS tests in multiple markets and business cases.

“Charter already is a wireless company,” he said, claiming that the cableco’s network carries as much as 80% of wireless traffic in customers’ homes or offices. “Although we do not monetize that. We are not a mobility provider,” he said – yet. Charter will change that when it launches its MVNO service, slated for next June.

“We’ll do that using an MVNO as an umbrella coverage layer, and then we’ll start using our WiFi infrastructure to offload that MVNO,” Cowden said. “And then eventually, as licensed and unlicensed small cells develop, we would further introduce that small cell infrastructure to further offload, and other use cases that licensed small cells can provide … We want to make sure most of that traffic goes over WiFi and not the MVNO.”

He also indicated that the use of small cells would enable Charter to evolve from having a ‘light MVNO’ agreement with Verizon – using the host company’s core network and essentially just reselling access – towards a ‘full MVNO’ model which would give the cableco far greater control over its own services, differentiation and quality.

He elaborated: “There’s a whole continuum of MVNOs. There’s a light or reseller MVNO on one end of the continuum and there’s really a full model on the other end, and with Verizon we have a light or reseller model, where we’re using their evolved packet core, we’re using their IMS infrastructure, their SIM cards, their roaming relationships. The timing of when we would roll that into a fully MVNO model, that’s not as much of a technology issue, though there are certainly a lot of technology issues to overcome, but it’s really more of a business and strategic issue between us and Verizon.”

He said that Charter had already issued RFPs for its own EPC and was “using virtual EPCs to manage the two mobility trials in Tampa and Charlotte. In terms of our full-scale EPC infrastructure, it will be a virtualized infrastructure I’m sure, but the actual timing of that is really more timed to this migration from a reseller MVNO to a full MVNO.”

As for the trials in the CBRS band, Cowden said there would be three main use cases in the shared access portion of the band (which will also support privileged access for licence holders and federal incumbents). These will be neutral host; point-to-point and point-to-multipoint fixed wireless services; and private LTE networks for Industrial IoT and other applications, he speculated.

The Tampa and Charlotte tests focus on mobile services, mainly with outdoor small cells. He said the company will use four vendors (unnamed) per market, and expects to operate a total of 200 sites. The tests will start later this month, and will focus in particular on mobile hand-off.

The cableco is also testing fixed wireless services in CBRS spectrum in Denver, Colorado with two vendors, using equipment installed on rooftops; and fixed wireless testing will expand later this month to Bakersfield, California; Tampa and Michigan and will include two or three vendors, and include van mounting. Like Verizon’s 5G FWA tests, this is geared to enabling the cableco to expand outside its wireline territory using wireless.

Charter is keeping quiet about its trial partners but one of them, Samsung, was more open, talking about its 5G collaborations with the cableco as it unveiled new small cell products for CBRS and for the LTE-LAA (Licensed Assisted Access) standard, which allows 4G to run in the 5 GHz band usually reserved for WiFi. In addition to CBRS, Charter is exploring fixed wireless use cases in the 28 GHz band with Samsung’s pre-commercial equipment and devices.

Samsung is trialling an outdoor, two-carrier small cell that is CBRS-only and targeted at new entrants into the wireless market which want to use CBRS to offload traffic from other networks or support private LTE capabilities.

“We feel there is real opportunity for the shared spectrum band to help operators and new entrants cope with the market forces” that are driving demand on the network, said Alok Shah, VP of networks strategy, business development and marketing at Samsung Electronics America. “We believe it’s a great time for CBRS to be coming to market.”

Samsung also is preparing to launch its first LAA small cell, which combines one licensed LTE carrier with two unlicensed ones to increase capacity in indoor areas. Trials will start in early 2018.

The company is also launching a cloud management service to simplify deployments which might incorporate a mixture of LTE-LAA, licensed LTE, CBRS and WiFi small cells (and more options in future such as MulteFire or 5G). “We think it’s very important to have a managed core that can actually configure and control all of those disparate networks through one interface and one cloud offering,” Shah said.

One option that is likely to disappear fairly quickly is LTE-Unlicensed (LTE-U), which is already commercially available in the US, but is limited to only a few other markets (those which allow technologies to operate in 5 GHz without supporting Listen Before Talk to avoid interference). Shah said: “We’ve sort of shifted our focus to LAA. LTE-U will continue to have some life, but where our customers are going at this point, there’s more of a push around LAA.”

Samsung recently conducted interoperability testing with the Federated Wireless Spectrum Controller, which allocates frequency blocks within the FCC’s spectrum sharing framework for the 3.5 GHz band. Federated – with Google, one of the operators of a Spectrum Access System for CBRS – said last week that its Controller was fully available and it had secured $42m in second round funding, including strategic investments from Charter itself, as well as American Tower, Arris and GIC, Singapore’s sovereign wealth fund.

“Spectrum sharing will dramatically reduce the cost of delivering wireless services, with our technology serving as the on-ramp,” said Federated CEO Iyad Tarazi. “The commercial availability of our Spectrum Controller and the investment of the wireless industry in the company will enable us to cement our leadership position and capitalize on the rapid industry shift to shared spectrum set to begin this year.”

The Spectrum Controller is an end-to-end solution for shared spectrum access, management and optimization, incorporating the Spectrum Access System (SAS), a standards-based cloud service; and the Environmental Sensing Capability Network, a nationwide redundant network of sensors to identify and protect the federal incumbents in the 3.5 GHz band. It has conditional FCC certification, with full certification expected in January.

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