June 11, 2019 5 months 4 days ago

COMMENTARY: The facilities-based era is over

Telecom Summit only showed more of the same

IF THERE IS ONE COMMON thing about telecom meetings, it’s the inevitable talk about how big someone's first phone was. A large conference room filled with highly paid telecom executives – presidents, vice-presidents and senior vice-presidents – in one room talking about their favourite pastimes. Add the denial, the out of touch examples, feel-good music and you have a full picture.

To be frank, music wasn't that bad at the summit. Thanks, VJ/DJs!

It's true that telecommunications has come a long way, and perspective matters. There is a lot to be learned from how telecom companies used new network technologies to elevate us from the dark ages of connectivity to constant streaming of Facebook videos and almost five hours of daily smartphone use.

There is a lot to be learned from the last decade in Canadian telecom as well – because exactly ten years ago we saw fresh, facilities-based wireless providers launch their plans on new, advanced networks.

The last of its kind

THE LAST INFRASTRUCTURE-BASED wireless companies entered the market in 2009. A decade later, just a few months ago, actually, the last remaining one (Wind, now Freedom under its new owner, Shaw) finally deployed last bits of the public spectrum it was issued back in 2009. They had to. It was absolutely the last month to deploy coverage and keep the valuable licenses.

If it wasn’t clear before, it is now. These were the final facilities-based new-entrants. Three billion dollars of investment only gives you the title of a regional player still not worthy of the parent company’s brand name. Regional providers futures are ever more so dependent on national roaming rates, network sharing and special conditions from the government to gain more spectrum for the reliability/propagation/capacity in their current footprints.

The combination of an efficiently deployed own network, better integrated national roaming, adapting an e-commerce model, deploying digital technologies and becoming more ‘virtual’ is actually the best way to go for these players.

Instead, we see Freedom/Shaw turning away from a differentiated business model and innovation on service by introducing punitive policies which affect the low-end users, (such as ITMPs that further throttle speeds, or large iPhone subsidies) that make everybody’s connectivity more expensive, while renaming out of footprint service as nation-wide coverage, and still keeping service rudimentary, despite the wholesale rates.

For what it’s worth, I do not consider Freedom’s nearly $700 per year (out of pocket, tax included) advertised option for kids or seniors (not counting a phone) to be very innovative pricing, new or exciting, especially only useable in their zones, without data sharing or roll over data.

The Summit lacked on-stage representation from Vidéotron and its sub-brand Fizz, which perhaps would have set a different tone for regional players who seem to be more lost and with fewer prospects to grow in 2019 than in 2009.

Regional players shouldn’t be afraid, they should embrace and support smarter use of existing facilities themselves.

The infrastructure game – and why 5G is just another G for consumers

CONSUMERS DO NOT UNDERSTAND the value of 5G yet, said one presenter after another. We heard it will cost more money, that government is concerned about the security of critical applications which will help interconnect cars and help smart grids. 5G is a different ballgame altogether that needs a different approach not only in spectrum/radio world, but in transmission and core networks.

In reality, even if Huawei, the largest equipment manufacturer in the world, didn’t have the perceived or actual problems we all have heard and read about, it is still going to take at least three years for 5G to be deployed in a meaningful way in the radio network, transmission, core network elements and for mid-range phones to start supporting it.

LTE covers 99% of the population now. LTE Advanced, with speeds up to 1 Gbps, is not far behind at 94%. Sure, the country is big (it needs about 20,000 cell sites to cover the current footprint) so there is still 1% of the population not covered today. However, 51% of Canadians are still on 2 GB data plans or less. And almost none of them, I guarantee, are interested in yet another speed tier.

They want more data, more affordability, and better service. What if we could help half of Canadians use current, still very new, technologies to connect their lives? What are the ways to do it while preserving investments already made? How will we deliver the decrease in price per megabyte that 5G will deliver (projected to be one-tenth of what it is now) to what is available for moderate users?

“If facilities-based network operators are not capable of thinking of one thing to make wireless more affordable, virtual operators will.”

People do not care for towers. In fact, many will say they don't need or want yet another tower or antenna around. Citizens don’t want to see more facilities in their neighbourhoods.

The future of 5G hangs on answering these questions as much as solving technical issues.

Networks of the future will have to be built efficiently, smartly and at the right time so the end result is even better network infrastructure that doesn’t need ‘The Best’ advertising. Actual people, real consumers, not the guy who rowed the Atlantic and then needed to go mountain-climbing (CWTA president Robert Ghiz’s out of touch reference) will tell us that.

Innovation is...

DESPITE WHAT YOU MIGHT think when you walk in to big telecom store, telecoms didn't invent the iPhone. They don't own patents on 5G. Big telecoms sign purchase orders, put bids for spectrum, and hire third-party contractors/telecom infrastructure companies to dig trenches and put up towers and in Canada, the infrastructure game is strong. Even the network trenches guys (like Telecon) are aspiring to be billion-dollar companies. Banks like to finance the infrastructure businesses due to stable return and the CTOs who hold the chequebooks.

During the Summit, and just about any time you ask big telecoms, their executives struggle to answer even a hypothetically posed question about how to make wireless more affordable – or how to make connectivity options for $30 per month (not $130 month) viable.

If facilities-based network operators are not capable of thinking of one thing to make wireless more affordable, virtual operators will. Current players know that a new type of competition is coming: one with differentiated business models; which use new technologies on service, e-commerce, advertising, and SIM distribution (eSIMs do not need stores).

Networks have a lot to gain from this, too, like a healthy return from a wholesale rate, stability, and predictability, while new, smaller MVNO players will stay focused on the niches they can serve with the rate negotiated, by thinking of new ways of serving the underserved (and we are encouraged by the recent remarks of ISED Minister Navdeep Bains. The thresholds, the rate and other conditions, will define the effective range of MVNOs and they can be efficient and fast addressing the lower-end of the market in which no one seems to be interested).

More of the same will not cut it. Innovation doesn’t stop at the network level and one of our messages is: There is nothing to be afraid of, big telecoms. We at dotmobile will not rest until we will see affordable wireless options even on the smallest plan with the fastest connectivity available. Users of affordable plans deserve better options, such as:

  • Use fast LTE+ for connectivity not misleading ‘3G speeds’
  • Work in Canada, U.S. without extra fees (and in, Caribbean vacation destinations and EU in the near future);
  • Provide additional out-of-plan data at reasonable rate. As opposed to exorbitant and ever-increasing rates;
  • Allow data included in your plan to be shared with your own connected devices and wearables without high fees;
  • Roll-over unused data to next month (or forever);
  • Provide a proportional discount when not taking a high-end phone on the contract;
  • Have an online-only option and a proportionate discount to use service that way;
  • Provide real-time cost controls;
  • Not restrict or limit, but encourage Wi-Fi calling, RCS and over the top applications that save on network resources.

See you at the Summit next year, hopefully after 12 months of real change.

Algis Akstinas (pictured) is CEO of dotmobile (Data on Tap Inc.)