Recent talk about opening up the designated 4.9 GHz ‘public safety band’ for commercial use may be premature.
Recall that in 2002, the FCC allocated 50 megahertz (MHz) of spectrum in the 4940-4990 MHz band (4.9 GHz band) for fixed and mobile services, designated for public safety support. The FCC also allowed non-traditional public safety entities such as utilities and the Federal Government to negotiate 4.9 GHz band sharing agreements with eligible public safety entities. Restricting usage to public safety entities was intended to enhance 4.9 GHz transmission reliability and avoid potential interference experienced in other unlicensed and heavily-used bands, such as 5 GHz or 900 MHz.
First Responder Network Authority (FirstNet), with AT&T as its network builder and operator, promises first responders across the country with exclusive, interoperable wireless broadband communications (mobile voice, data and video) using 4G LTE in 10 MHz channels in Band 14. (D/L: 758-768 MHz; U/L: 788-798 MHz).
With AT&T now rolling out FirstNet, the FCC is revisiting whether it is still worthwhile to maintain the designation of such a large block of unlicensed spectrum for exclusive public safety use.
The ‘against-argument’ is that 4.9 GHz band usage has not developed as was originally envisaged and still is underutilized. More important, with growing demand for commercial mobile broadband services, service providers need more spectrum and could better use the 50 MHz of the 4.9 GHz band.
A ‘for-argument’ is that because of FirstNet, a designated band like 4.9 GHz is needed more than ever for complementary services that the Band 14 LTE network cannot, or should not, handle.
Three use cases make compelling points for retaining 4.9 GHz for exclusive public safety use albeit as a complement to FirstNet: point-to-multipoint (PMP) fixed, wide-area video surveillance; nomadic terminals; and, point-to-point (PTP) microwave for public safety backhaul.
Note that similar uses were identified when the FCC originally designated the 4.9 GHz band. These applications take on more significance with the rise of FirstNet. Here’s why.
Video surveillance is not a good use of LTE
Video surveillance is a low-volume, high-density fixed wireless application. With bullet-type and pan-tilt-zoom (PTZ) Internet protocol (IP) cameras, video surveillance involves lots of bandwidth in the upstream direction from a number of cameras throughout a coverage area to a monitoring center, but much less downstream bandwidth to the cameras. Low latency, measured in milliseconds (ms), is also important for high-quality video resolution. With 50 MHz of spectrum, the 4.9 GHz band is well-suited for high-bandwidth video transport. Several radio manufacturers have products that work in 4.9 GHz frequencies.
By contrast, LTE is a high-volume, low-density protocol. LTE is a mobility technology better suited to serve large numbers of active mobile user equipment (UE) such as smartphones, laptops and tablets. Typically, more traffic is downloaded than uploaded to low-bandwidth UEs. It is inadvisable download high-value 10 megahertz Band 14 LTE two-way channels with large chunks of fixed bandwidth for video surveillance.
“We’re Going to Need a Bigger Boat!”
Second, nomadic applications involve transportable terminals that can be deployed at an emergency scene on a temporary basis. AT&T refers to these terminals as cell sites-on-wheels (COWs) or cell sites-on-light trucks (COLTs). FirstNet COWs have a LTE eNodeB base station installed on an extendable tower with omnidirectional or sector antennas to serve first responders on scene. Since the COW is moveable and often is located at some distance from the FirstNet backbone network, an over-the-air connection is needed to connect the COW. A 4.9 GHz PTP microwave hop provides high-throughput, secure communications to make that connection no matter where the COW is located.
RF alignment is required, however, between the COW and the far-end radio on the backbone network. Making such a connection can be simplified by equipping the COW with a self-aligning radio. First responders simply position the COW at the scene, extend the tower and turn on the radios. Several types of RF alignment products on the market use either mechanical alignment gear or an electronic-only solution with no moving parts.
AT&T is supplying Band 14 COWs but that number is very low, less than 100 at last count, to serve the whole country. But with nearly 66,000 police, fire and emergency medical services (EMS) departments in the United States, you could expect large numbers of these agencies use a COW in many more situations than currently anticipated. To paraphrase that famous line from the movie ‘Jaws’: “We’re going to need a bigger fleet!” Meaning, a lot of 4.9 GHz PTP hops.
Every FirstNet eNodeB needs a 4.9 GHz backhaul link
Last, FirstNet should utilize a dedicated 4.9 GHz PTP link between each eNodeB on a tower and the FirstNet Evolved Packet Core (EPC) where fiber cable is not available. In practice, various licensed or unlicensed PTP systems could do the job. But radios operating in the designated 4.9 GHz band offer high data throughput, low latency and security that FirstNet needs for a high-performance, end-to-end public safety network.
Let’s not forget land mobile radio (LMR). Almost every first responder carries a LMR radio. A 4.9 GHz PTP system is a better choice for secure, exclusive connections from countless towers with LMR base stations to command centers. Even with the FirstNet, LMR with remain in service – it is entrenched as first responders’ primary communications. Many public safety jurisdictions have stated they will continue relying on LMR, especially in remote areas where FirstNet will not reach for some time.
In the end, combined Band 14 LTE/4.9 GHz solutions in specific applications can provide first responders with the highest quality, dedicated wireless broadband communications where Band 14 LTE-only deployments cannot do it all. More important, 4.9 GHz utilization likely will increase dramatically.
If the FCC removes the 4.9 GHz public safety designation now, there will be no going back.
John Celentano is an independent marketing and sales consultant with years of experience in telecommunications. He regularly writes and speaks on telecom issues and trends, and advises investor groups on telecom M&A. He assists suppliers in developing and executing custom print and digital marketing campaigns with customer-focused content. For short-term engagements, or temp-to-permanent positions, John can be reached at [email protected]
November 17, 2017 —
Capital expenditures (capex) vary widely from carrier to carrier making it difficult for equipment suppliers and professional service providers to count on consistent business.
Verizon Wireless, the big spender, now claims that it has the premier wireless network in the United States, both in population covered and 4G LTE penetration.
AT&T Mobility’s 2016e capex is 30 percent of the total; that is down from 35 percent in 2013. Though much of the scale-back is related to network completion, AT&T is conserving capital to support its acquisitions of DirecTV and Time Warner, as the company remakes itself into an integrated communications powerhouse, serving around 130 million subscribers.
T-Mobile US (TMUS) maintained a steady capex program for the past several years, in the $4.5-$5.0 billion range. Like Sprint, TMUS claims that its network coverage and performance is within 1 percent of Verizon’s, utilizing multiple frequency bands.
Regional cellular carriers, led by US Cellular, collectively account for 3-4 percent of aggregate capex every year. The Regionals’ sustained network modernization supports latest device usage and maintains roaming integrity with the Tier 1 carriers.
Quarterly spending in 2014 was an anomaly. The carriers, led by AT&T Mobility, spent more than half the total budget through the first six months. Then AT&T slammed on the brakes, and capex nosedived through yearend. For the year, capex averaged $7.9 billion per quarter.
QtQ capex in 2015 resumed the historic pattern, that is, a slow 1Q start, a ramp-up in 2Q, a moderate slowdown in 3Q, then an uptick in 4Q. Overall spending for that year was down 2 percent YtY, averaging $7.7 billion per quarter.
2016e quarterly capex levels started low in 1Q, grew somewhat in 2Q and stayed level through 3Q. Given the current guidance, expect a modest uptick in 4Q, but not enough to bring spending back to 2015 levels. Capex for 2016e is averaging just under $7 billion a quarter.
What to expect for 2017e and beyond?
A number of factors are impinging future wireless capex – next-gen technology adoption rates, uncertain regulatory environment and shifts in customer demand. In sum, the network investment outlook for 2017e and beyond is very fuzzy.
A ‘best case’ scenario might be that aggregate capex is flat with 2016e. A ‘worst case’ scenario could see another YtY decline, in high single- or low double-digit rates.
Much of the spending slide is tied to 4G LTE build-out completions. From a peak in 2013, aggregate wireless capex declined at a 4 percent compounded annual growth rate (CAGR) through 2016e.
But that is not the whole story. Advances in semiconductors, availability of new spectrum, and next generation wireless data technology, all are creating structural changes in wireless infrastructure builds. The trend is towards smaller, less costly, cells and access points resulting in lower overall capex even as the number of small cells grows significantly. Greater software-defined operations and decentralized cloud computing is also driving down capital expenses.
Going forward, lower capex levels likely are the norm, not the exception.
John Celentano is a tech marketing consultant and a wireless infrastructure expert. He can be reached at [email protected].
November 8, 2016 —
Wireless infrastructure vendors will see less work from T-Mobile US (TMUS) for the rest of the year. The company’s 4Q16 capital expenditures (capex) likely will nosedive, even as it reported positive results in its October 24 3Q16 earnings call.
TMUS’ capex for the quarter came in at $1.16 billion, down 14 percent from 2Q16 and up 3 percent on a year-to-year basis. Aggregate spending through the first nine months totaled $3.8 billion or 84 percent of the projected $4.5-4.7 billion for full-year 2016.
Given the guidance, expect TMUS’ 4Q16 capex to come in around $760 million, a decline of 35 percent on a sequential basis and down 47 percent from a year ago. This means capital efficiency, i.e., capex/service revenues, drops below 15 percent into maintenance mode in 4Q16 after two years of aggressive network expansion.
This sustained capital investment has paid off, nonetheless. Service revenues and total customers have grown at a steady 3.5 percent per quarter rate since 1Q15, reaching $7.1 billion and 69.4 million, respectively, at the end of 3Q16.
TMUS claims it now runs the nation’s densest, highest-capacity LTE network, with more spectrum and cell sites per customer than its biggest competitors. Its 4G LTE service now is available to 312 million people, up from zero coverage just over three years ago, and effectively on par with Verizon.
TMUS accomplished this by incorporating new wireless technologies into its large spectrum holdings. At the end of 3Q16, the company owns, or has agreements to use, an average of 86 MHz of spectrum in the 700 MHz, Advanced Wireless Services (AWS) 1700/2100 MHz and Personal Communications Service (PCS) 1900 MHz frequency bands across the top 25 markets in the United States.
TMUS now offers Wideband LTE to 231 million people in 535 cities, which expands its network capacity through carrier aggregation. The result is faster speeds and capacity in congested areas. More bandwidth means faster data download speeds that TMUS touts at an industry-leading 22.8 megabits per second (Mbps). The company achieved this by layering its own AWS spectrum with AWS spectrum acquired from MetroPCS.
Coverage enhancement comes with what TMUS calls Extended Range LTE (ER-LTE) using owned or leased low-band 700 MHz A-Block spectrum in 366 market areas. ER-LTE travels up to twice as far as mid-band spectrum and works up to four times better in buildings. TMUS has 700 MHz spectrum coverage in all of the top 10 market areas and 29 of the top 30 market areas in the United States. TMUS will be aggressive in rolling out new 700 MHz sites through year-end 2016.
The company relies on other advanced wireless technologies to give its customers an enhanced mobile experience:
All in, there is still a lot of field work for wireless infrastructure vendors, in both hardware and software upgrades, at thousands of TMUS’ cell sites. More important, this new infrastructure must be tested regularly to ensure that coverage and capacity goals are being met. With the new multi-frequency antenna deployments, the company must demonstrate compliance with FCC specifications for electromagnetic energy (EME) radiation, especially on rooftops.
John Celentano is a tech marketing consultant and a wireless infrastructure expert. He can be reached at jcelentano1 (At) gmail.com.
What can wireless infrastructure vendors expect from Verizon Wireless for the rest of the year?
Verizon confirmed in its 3Q16 earnings call on October 20 that its overall capital expenditures (capex) for the year will come in at the low end of its original guidance range of $17.2 to $17.7 billion.
What does that mean for wireless equipment vendors and contractors? Consider where Verizon has invested in its capital through 3Q16.
To date, the company has spent a total of $11.4 billion or 66 percent of the projected $17.2 billion. Of that total, $7.8 billion or roughly 68 percent has been applied to its wireless network, $2.9 billion or 25 percent has gone into its wireline network with the 7 percent balance applied towards corporate and other capital investments.
If these proportions hold through year-end, as we might expect, then this means that Verizon will invest about $11.7 billion in wireless, roughly flat on a year-to-year (YtY) basis with the $11.7 billion spent in 2015.
In quarter-to-quarter (QtQ) spending, Verizon Wireless’ capex through the first nine months has been running 5 to 10 percent below the comparable levels in 2015. By the end of 3Q16, Verizon Wireless spent 66 percent of its full-year wireless capex projection compared to 72 percent over the same period in 2015.
To close the gap and meet its projected 2016 budget, we estimate that Verizon Wireless will invest about $3.92 billion in 4Q16, up 41 percent QtQ from $2.77 billion in 3Q16, and up 20 percent over the $3.26 billion spent in 4Q15.
Where is the money going?
Small cells and DAS account for the largest portion, an estimated 46 percent, of Verizon Wireless’ full-year capex. The company is using small cells and DAS to implement an ambitious network densification program that extends its 3G and 4G LTE coverage and capacity closer to customers for high-speed mobile data applications. Crown Castle, as Verizon Wireless’ main contractor for small cell deployments, is realizing the benefits of this high-level activity. Crown Castle reported gains in its own 3Q16 earnings call on October 21 and signaled a very positive outlook.
The small cell/DAS capex portion includes all products and capitalized services involved in designing and building a new site: surveys, site acquisition, permitting and licensing, site engineering, infrastructure equipment (antennas, radios cable, power, cabinet, mounts), backhaul equipment (fiber cable or microwave radio), installation, testing and commissioning.
To a lesser degree, the company is still adding to its macro network, albeit mainly for site modifications and upgrades that make up 29 percent of the wireless capex. Few new macrocell sites are being added in 2016. Even with site mods, there is still a lot of equipment (antennas, cables, radios, mounts, power, backhaul) that must be engineered, installed and tested.
The remaining 25 percent is applied to the core of the network. This involves deploying enhanced packet core (EPC) with heavy-duty switches and routers that replace legacy circuit switches, software platforms for network function virtualization (NFV) and software-defined network (SDN) operations along with updated customer billing systems.
Fourth quarter capex ramp-ups are not unusual among public wireline and wireless carriers alike. For 2016, Verizon Wireless is back-end loading its network investments and will spend an estimated 34 percent of its full-year guidance in 4Q alone.
It’s been a mediocre year for wireless infrastructure equipment vendors so the 4Q boost in capital spending is a nice year-end bonus.
John Celentano is a technology marketing consultant and a wireless infrastructure expert.
Postpaid net additions grew by 347,000, a 54-percent increase from 62,000 added in FY2Q15. These adds bring the total postpaid subscriber base to 25.7 million, up 1 percent on a year-to-year (YtY) basis. At the same time, customer retention programs are working; postpaid churn came in at 1.37 percent, down from 1.49 percent in FY2Q15. Postpaid average revenue per user (ARPU) keeps sliding, however, to $50.54, down 2 percent from $53.99 in FY2Q15.
Price competition with the other Tier 1 carriers has taken a toll on the top line, however. The net effect is that postpaid service revenues at $4.7 billion were flat to down 1 percent from $4.9 billion a year ago.
In turn, Sprint’s ability to fund its network expansion plans is hampered as it curtails capital expenditures (capex) to conserve cash.
Certainly, the company is reiterating a strategic program to optimize and densify its network. This program involves:
It is this latter point that raises some serious concerns as to how Sprint will achieve its network expansion goals and drive new revenues.
Sprint’s quarterly wireless capital spending has been in a nosedive for the past six quarters, declining at a compounded rate of 26 percent per quarter. From a peak of $1.6 billion in FY1Q15 (calendar 2Q15), Sprint’s wireless spending dropped steadily throughout the year to $577 million in FY4Q15. Wireless capex for the year totaled $4.1 billion, down 16 percent from$4.9 billion in the prior year.
The capital spending slide continued in the current fiscal year. FY1Q16 wireless capex came in at $376 million and dropped further to $358 million in FY2Q16.
It is important to note that capital efficiency (that is, the ratio of capex-to-service revenues) for these periods hit only 6 percent. That is barely in maintenance mode. When networks are expanding, carrier capital efficiency historically is at 15 percent or more. Even with capital cost saving measures, we would expect Sprint’s wireless capital efficiency ratio to be in low double digits, just to be able to meet its plan.
The big question is how much the company will invest through the balance of its current fiscal year.
In its October 25 earnings call, Sprint offered full-year FY2016 guidance for cash capex of “less than $3 billion, excluding devices leased through indirect channels.“
If we drop out the portions for wireline network and corporate capital expenditures, we estimate that Sprint has budgeted around $2.7 billion in wireless capex for FY2016.
Through mid-year, Sprint spent $734 million or just 27 percent of the budgeted total.
If it sticks to its plan, this means that Sprint must spend the nearly $2 billion balance on its wireless network upgrade and expansion over the next two quarters.
Can Sprint do it? How will it do it?
John Celentano is a technology marketing consultant and a wireless infrastructure expert.