Accenture - A Primer in Wireless Broadband
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Transcript of Accenture - A Primer in Wireless Broadband
A Primer in Wireless Broadband
San Francisco, October 2006
Lars Kamp
Licensed under Creative Commons Attribution 3.0 Unported License (http://www.creativecommons.org/licenses/by/3.0)You are free to Share or Remix any part of this work as long as you attribute this work to Accenture (accenture.com)
Lars Kamp
Management Consulting
© 2006 Accenture. All rights reserved. 2
Suite 1200560 Mission StreetSan Francisco, CA [email protected]
Before we start – a quick contemporary wireless knowledge quiz
1. When was the first U.S. cellular system activated?
2. What was actress Hedy Lamarr’s contribution to the wireless industry back in 1942?
3. How many satellites make up the previously defunct Iridium satellite system?
4. What wireless carrier successfully bid for $4.2 billion for 120 licenses in the September 2006
© 2006 Accenture. All rights reserved. 3
4. What wireless carrier successfully bid for $4.2 billion for 120 licenses in the September 2006 FCC AWS Auction #66?
5. What’s the estimated value of the wireless spectrum in the US?
Contents
• Spectrum Fundamentals
• Wireless Networking
© 2006 Accenture. All rights reserved. 4
• Wireless Broadband Economics
• Future Business Challenges
Contents
• Spectrum fundamentals
• Wireless Networking
© 2006 Accenture. All rights reserved. 5
• Wireless Broadband Economics
• Future Business Challenges
In the beginning: radio signals and frequencies
� Amplitude: Signal strength
� One cycle: one complete wave
� Frequency (f): # of cycles/second (Hertz)
Wavelength (λ)
Amplitude
Time
+
© 2006 Accenture. All rights reserved. 6
Wavelength λ (m) =300
Frequency (MHz)
Source: The Essential Guide to Wireless Communications Applications; Accenture analysis
one cycle
-
� The wavelength λ has an inverse relationship to frequency
� The wavelength is equal to the speed of the wave divided by the frequency of the wave
� For electromagnetic waves this speed is the speed of light (≅ 3x108m/s) and therefore constant
Basic properties of radio signals
Propagation and range
• Higher frequency waves travel less distance per cycle than lower frequency waves: higher frequencies oscillate more often per second and therefore the wavelengths become shorter
• The lower the frequency, the longer the wavelength
T = 1s
1
1s
Sig
nal 1
low
er
frequency
λ=40 cm
Capacity and bandwidth
• One cycle presents 2 bits: positive and negative peak can carry each 1 bit
• As higher frequencies oscillate more often per second, they can carry more bits
• The higher the frequency, the higher the channel capacity
Signal speed = 3 x 108 m/s (const.)
low
er
frequency
© 2006 Accenture. All rights reserved. 7
f = 1/1 = 1 Hertz
Data rate: 2 bit/s
T = 1s
f = 4/1 = 4 Hertz
Data rate: 8 bit/s
Lower frequencies propagate farer and are less sensible to obstruction
Higher frequencies have a higher channel capacity and offer more bandwidth
Sig
nal 1
low
er
frequency
Sig
nal 2
hig
her
frequency
Source: Accenture analysis
0
1 1 1 1
0 0 0 0
f = 750 MHz = 7.5 x 108 cycles/s
λ = 3 / 7.5 = 0.4 m per cycle
λ=14 cm
Sig
nal 1
low
er
frequency
Sig
nal 2
hig
her
frequency
Signal speed = 3 x 108 m/s (const.)
f = 2,100 MHz = 2.1 x 109 cycles/s
λ = 3 / 21 = 0.14 m per cycle
The Radio Spectrum
3G
Radio SpectrumRadio Spectrum
“Sweetspot”
ElectricWaves
Radio Waves
Infra-redVisible Light
Ultra Violet
X-RaysGamma
RaysCosmic Rays
• Frequencies are high enough for there to be large total bandwidth
• Frequencies are low enough to allow fairly good propagation characteristics
© 2006 Accenture. All rights reserved. 8
Medium Wave Radio
30300
Long Wave Radio
FM Radio
GSM
3G
Microwave Radio LinksTV
kHz MHz GHz
330 300
DECT WiFiBluetooth
TETRALMDS
Decreasing RangeIncreasing Bandwidth
Increasing RangeDecreasing Bandwidth
30 33003
Source: Ofcom, "The Spectrum Framework Review“, November 23, 2004; “The Essential Guide to Wireless Communications”, 2002; Accenture analysis
VLF LF MF HF VLF UHF SHF EHF
10-100km 1-10km 0.1-1km 10-100m 1-10m 0.1-1m 10-100mm 1-10mmWavelength
In the US, the radio frequencies are regulated and allocated by the Federal Communications Commission
© 2006 Accenture. All rights reserved. 9
Source: U.S. Department of Commerce, October 2003.
Access schemes enable the shared use of a limited medium
FDMA
Fre
qu
en
cy f3
f2
f1
Time
TDMA
• Frequency Division Multiple Access (FDMA) divides spectrum into frequencies (“channels”) which then are assigned to users.
• With FDMA, only one subscriber at any given time is assigned to a channel. The channel therefore is closed to other users’ voice or data calls.
• Time Division Multiple Access (TDMA) splits each frequency into time slots and
© 2006 Accenture. All rights reserved. 10
TDMAf2f1 f3 f2f1 f3
Fre
qu
en
cy
Time
CDMA
32
Spread Code 1
Fre
qu
en
cy
Time
Source: ITU, "About mobile technology and IMT-2000", December 1, 2005
• Time Division Multiple Access (TDMA) splits each frequency into time slots and allows each user to access the entire radio frequency channel for a short period.
• Other users share this same frequency channel at different time slots. The base station continually switches from user to user on the channel.
• Code Division Multiple Access (CDMA) allows all users to occupy all channels at the same time.
• Transmissions are spread over the whole radio band, and users occupying the same spectrum are distinguished from each other by a unique spreading code.
Code domain
Managing downlink and uplink of a wireless connection
Downlink
D D D D D D D D
U UU U
Uplink
• A duplexing technique used in licensed solutions that uses a pair of spectrum channels, one for the uplink and another for the downlink.
• Proven technology for voice, designed for symmetrical traffic, does not require guard time.
• Cannot be deployed where spectrum is unpaired
• With asymmetric loads, portions of the
Cell site SubscriberRadio link
FDD: Frequency Division Duplex
© 2006 Accenture. All rights reserved. 11
Downlink
Up- and downlink
D U U D D U U D
• With asymmetric loads, portions of the spectrum are occupied but not used
• A duplexing technique used in license-exempt solutions, which uses a single channel for uplink and downlink.
• Enhanced flexibility, easier to pair with smart antenna technologies, asymmetrical
• Cannot transmit and receive at the same time.
Radio resource units
Cell site SubscriberRadio link
TDD: Time Division Duplex
“Spectral efficiency” is a measure of a technology’s efficacy at exploiting its allocated spectrum
• Spectral efficiency is a good proxy for the relative cost of wireless network equipment and sites in a radio network.
• Spectral efficiency (bits/s/Hz) is a measure of the performance of encoding methods that code information as variations in an analog signal.
© 2006 Accenture. All rights reserved. 12
sites in a radio network.
• Direct comparison is often tricky, as figures tend to be exaggerated due to test in different lab environments.
• Spectral efficiency kicks in with rising subscriber numbers and usage: the number of sites required by less spectrally efficient technologies can grow dramatically.
analog signal.
• An encoding using a 1 kHz of bandwidth to transmit a thousand bits every second has a spectral efficiency of 1 bit/s/Hz.
• Rule of thumb: the actual capacity in a multi-cell environment for any wireless technology is about 20%-30% of the peak theoretical data rate due to self-interference.
Source: Industry interviews, ArrayComm, Accenture analysis.
Modulation: applying Moore’s Law to radio
1 0 1
t
Amplitude Modulation
Analog Modulation Digital Modulation
12
25
37
10
20
30
40
The modulation scheme impacts the available throughput
Ra
w T
hro
ug
hp
ut
(Mb
ps
) p
er
10
MH
z
Ch
an
ne
l
© 2006 Accenture. All rights reserved. 13
• Digital modulation - also referred to as shift keying - is a modulation in which the modified parameter of the carrier signal can take only discrete values (on/off).
• Amplitude Shift Keying (ASK)
• Frequency Shift Keying (FSK)
• Phase Shift Keying (PSK)
• The higher modulation rate is reached through compressing a signal to the fewest number of bits necessary while maintaining fidelilty.
• Higher-rate and more robust modulation schemes enable higher bandwidth, farer reach and better QoS.
1 0 1
t
Frequency Modulation
1 0 1
t
Phase Modulation
Source: Lehman Brothers, Accenture analysis.
0
10
QPSK 16QAM 64QAM
Modulation scheme
Ra
w T
hro
ug
hp
ut
(Mb
ps
) p
er
10
MH
z
The distance-bandwidth trade-off: adaptive modulation means that speed will vary with range
A B C D E F
Data speed and range of WIMAX at 3.5 GHz
Modulation & Code Rate
Channel Bandwidth
QPSK
1/2
QPSK
3/4
16QAM
1/2
16QAM
3/4
64QAM
1/2
64QAM
2/3
64QAM
3/4
1.25 MHz 1.04 1.56 2.08 3.12 3.12 4.16 4.68
© 2006 Accenture. All rights reserved. 14
r
Source: Motorola; system metrics refer to Motorola Canopy Solution
17.1 13.6 7.6 6.1 3.8 3.0
5.8 8.7 11.6 17.5 23.3 26.2
A B C D E F
1/2 3/4 1/2 3/4 2/3 3/4
QPSK 16QAM 64QAM
1.75 MHz 1.45 2.18 2.91 4.36 4.36 5.82 6.55
3.5 MHz 2.91 4.36 5.82 8.73 8.73 11.64 13.09
5.0 MHz 4.16 6.23 8.32 12.47 12.47 16.62 18.70
7.0 MHz 5.82 8.73 11.64 17.45 17.45 23.27 26.18
10.0 MHz 8.31 12.47 16.62 24.94 24.94 33.25 37.40
20.0 MHz 16.62 24.94 33.25 49.87 49.87 66.49 74.81Range (km)
Throughput (Mbps)
Zone
Code Rate
Modulation
Contents
• Spectrum fundamentals
• Wireless Networking
© 2006 Accenture. All rights reserved. 15
• Wireless Broadband Economics
• Future Business Challenges
Wireless architectures and networks
Sensor Networks
WPAN WLAN WMAN WRAN
Point-to-Point
Point-to-Multipoint
Wireless Network Types Wireless Network Architectures
• Used for backhaul purposes with directional antennae
• Speeds up to the Gigabit/s range
© 2006 Accenture. All rights reserved. 16
IEEE Standards
Commercial Standards/
Names
Typical Cell Reach ~2m ~10m ~30m ~4km ~40km
agnostic 802.15 802.11802.16802.20 802.22
RFIDRuBee
BluetoothZigBee Wi-Fi
WiMAXFlash-OFDM
cdma2000UMTS
+-Distance from cell
Point-to-Multipoint
Mesh
• One point serves multiple points around it, with omni-directional or multiple sector antennae
• Speeds depend on technology and user load
• Every device can communicate with any other device within range
• “Self-healing”: network can still operate even when a node breaks
100 Watts1,000,000
1GMacrocellular
Systems(~8 mi)
10,000 sqm
700 sqm
280,000 sqm
2 G Cellular Expanded
Cell-based coverage: the trend to low-powered low-reach networks
Maritime Mobile HF
Radio(~ 300 mi)
© 2006 Accenture. All rights reserved. 17
The 4G“Sweet Spot”
1950 1960 1970
10 Watts
1 Watt
100 mW
Year
100
1,000
10,000
100,000
CellRadius(ft)
30 mW
.01 sqm
1980 1990 2000 2010
The 2G“Sweet Spot”
The 3G/Wi-Max “Sweet Spot”
700 sqm
Mobile/ Portable Maximum Power Output
Source: IEEE
200 sqm
50 sqm
12 sqm
Expanded Service(~ 4 mi)
0.75 sqm
MU-MKMobile
Telephone(~ 60 mi)
MetrolinerTrain
Telephone(~ 15 mi)
2.5 GMicrocells(~ 2 mi)
PCSMicrocells
(up to 2 mi)WLNAN/LAN
Nanocels(up to 0.2 mi)
Cellular architecture: sectorization of a coverage area for the re-use of the same frequency
G
FA
C
DE
B
G CB
G
FA
C
DE
B
B
B
Cell area
Cell tower A-F
Air interface
Frequencies
© 2006 Accenture. All rights reserved. 18
• A cellular radio has limited range
• The area served by a tower is a “cell”
• As a user moves out of range, the connection transfers to a different tower (a ‘handoff” that is often the source of dropped connections)
E
G
FA
C
DE
B
G
FA
C
DEG
FA
C
DE
BE
G
FA
C
DE
B
A
C
• Cells are laid out in a honeycomb pattern and can be subdivided into new cells as traffic increases
• Adjacent cells use unique frequencies to avoid interference requiring the phone to change channels
• Cells can also be “sectorized” to increase capacity
• Sectorizing ensures sufficient capacity, while overlay cells ensure seamless coverage
Generic wireless broadband infrastructure architecture
G
FA
C
D
B Ethernet Switch
Cell tower, antennae and base station
MobilityManager
3rd-Party email, Content & other
ApplicationServers
AAAServer
Network ElementManager
Connectivity Service Network
3GPP
PSTNMulti-stack
Routers
Cellular Infrastructure Interworking
Outdoor Antenna
Subscriber Modules
© 2006 Accenture. All rights reserved. 19
F DE
G
FA
C
DE
B
IP Router
3-5 km typical cell radius
Accounting,Billing &
Customer Care
UserRepository
DHCPServer
DNSServer
Core IP Network
Internet
3GPP2
3GPP
IP Router
Indoor Antenna
PCMCIA Card
3rd-Party Embedded Subscriber Module
Source: Cisco, Intel, Siemens, Motorola, Accenture analysis.
Four criteria to evaluate a wireless technology
Capacity Mbps
Coverage km2
• Total capacity (Mbps) able to be served by each cell (capacity limit)• Depends on spectral efficiency of underlying technology and channelization• Capacity is key efficiency factor in mature markets with high penetration rates
• Total reach of wireless signal (radius) and resulting coverage per cell (coverage limit)• Depends on frequency/spectral region and modulation capabilities• Coverage is key to determining initial system and service delivery cost• Determines the coverage-driven base station density for initial deployment
© 2006 Accenture. All rights reserved. 20
Capacity Mbps
Spectrum MHz
System Cost $
• Capacity is key efficiency factor in mature markets with high penetration rates• Determines the capacity-driven base station density
• Total available spectrum (MHz) and quality of spectrum (frequency and licensing regime)• Depends on regulation: licensed vs. unlicensed, paired vs. unpaired spectrum, spectral region• Determines cost: licensed (expensive, but protection against interference) vs. unlicensed (free,
but risk of interference); paired (expensive) vs. unpaired (less costly); propagation characteristics
• Spectrum, base station, infrastructure and device/subscriber module costs• Depends on $/MHz/Pop for licensed spectrum and degree of commercialization of technology• $/MHz/Pop mainly driven by household income, business density and penetration rates• Degree of commercialization depends on standardization efforts and vendor support
The US is divided into 734 cellular market areas which are governed by the FCC
Popu-lation
% of total
Area (SqMi) % of Total
Pop/ SqMi
Total US 293.7 100% 3,536, 604 100% 83
Urban Areas 196.0 66.7% 73,675 2,1% 2,660
Rural Areas 97.7 33.3% 3,462,929 97,9% 28
260,000300,000
Number of cell towers in the US, 2006 & 2010
© 2006 Accenture. All rights reserved. 21
� 734 cellular market areas, composed of:
� 305 Metropolitan Statistical Areas (MSA’s)
� 428 Rural Service Areas (RSA’s)
� a market for the Gulf of Mexico
� Licenses are granted through spectrum auctions
Source: FCC, US Census Bureau, CTIA, Lehman Brothers, Cell Tower Info Blog
175,000
0
100,000
200,000
2006 2010Estimates for number of cell towers per operator in the US, in thousands, 2005
2025
44
22 24
8
0
10
20
30
40
50
Nextel Sprint Cingular Verizon T-Mobile Alltel
Network standard convergence: the trend to non-proprietary all-IP 4G networks
Japan
Europe,
PDCTD-WCDMA
2G(10 kbps)
2.5G(64-144 kbps)
2.75 G(144-384 kbps)
3G(384k-2 Mbps)
4G(> 2Mbps)
OFDM Based Air GSM Association, ETSI* 3GPP*
© 2006 Accenture. All rights reserved. 22Source: ITU, ATS Network Consortium, Gartner Research 2005, EURESCOM, Accenture analysis
Migration Path *Regulatory bodies
Europe, China
US
US, Japan
China
GSM
TDMA
CDMA
GSM
HSCSD
GPRS
EDGE
CDMA 20001xRTT
CDMA 20003xRTT
SD-WCDMA(TDD)
OFDM Based Air Interfaces
3GP Future
Evolvement of 802.11802.16802.20
802.21 Seamless Mobility
GSM Association, ETSI*
UWCC, T1*
CDG, TIA*
3GPP2*
3GPP*
1998 2005 > 20102000 2002 2006
Contents
• Spectrum Fundamentals
• Wireless Networking
© 2006 Accenture. All rights reserved. 23
• Wireless Broadband Economics
• Future Business Challenges
Wireless broadband’s problem: for similar price points, the average wireless broadband customer uses 10x the bandwidth compared to voice…
Cellular Voice Wireless Broadband
Subscriber price
ESTIMATE
� Consumers’ willingness to pay for 1 MB of airtime is approximately 10x higher for
Consumer willingness to pay for wide area mobile services
© 2006 Accenture. All rights reserved. 24
Subscriber price $29.99/Month1 $24.98/Month2
Package / Plan 300 Minutes1 1.5 Mbit/s upstream &
256 kbit/s downstream2
Typical consumption 30 MB/month3 300 MB/month4
Implied revenue per MB
$1.00 $0.08
[1] T-Mobile Plan “Basic Plus”, excludes activation fee.[2] Clearwire Plan ClearPremiumTM for the first year, excludes activation fee.[3] Calculated based on GSM codec of 13.2 kbit/s (bandwidth usage).[4] Calculated based on estimated daily traffic of 10MB upstream and 20MB downstream.
approximately 10x higher for mobile voice than for for wireless broadband
� For given price points, wireless broadband operations require an approximately 10x lower cost structure than cellular networks to yield the same profitability
… and it doesn’t stop there: business is expected to become more difficult
Demand side Supply side
© 2006 Accenture. All rights reserved. 25
• Low subscriber switching costs
• High sensitivity to service quality
• Extreme price pressure
• Exploding capex and opex requirements to support rising tide of subscriber usage
Source: ArrayComm
What it costs to roll-out a network: 70% of general capital expenditure components of today’s mobile networks are driven by the number of cell sites
Network Components as% of Capital Expenditure
Switching
Software/Billing
Microwave Links
Backhaul
15%
15%
5%
5%
75%
90%
95%
100% UL (Kbps)
DL (Kbps)
Subs. UL Capacity
DL Capacity
Platinum 512 1,024 10 10*512 10*1,024
Gold 256 512 30 30*256 30*512
Silver 128 256 60 30*128 30*256
Total 100 20,480 40,960
Acme ISP, Inc.WiMAX Offering Capacity Planning
61,44 Mbps
© 2006 Accenture. All rights reserved. 26
Radio
Site Costs
Switching
40%
20%
15%
40%
60%
Source: Lehman Brothers, Accenture analysis.
Airtime for all users: 50%Percentage of active users:
Residential 20% of users
SME / SOHO 40% of users
Enterprise 80% of users
Usage can be calculated as the product of:1. % of active users2. % avg. air time usage by active users
Oversubscription factor (OSF): 1 / (%usage) = 1 / ( (% active users) * (% avg. air time) )
OSF = 5Total data transmitted over long periods of accumulated peak-times will roughly be equal to12 Mbps ( = 61.44 Mbps / OSF)
• Clearwire is estimated to have approximately 840 subscribers per tower
• Unwired Tower’s in Australia each serve 600-900 customers
Grows proportionally tonumber of cell sites
Propagation characteristics of spectrum impact roll-out costs
Cost of wireless network deployment based on range and frequency1
15
25,000
30,000
Cell radius, km
Benchmark wireless network cost, US$ per km2
Rural range
Weighted average cost
(US$)
ESTIMATE
© 2006 Accenture. All rights reserved. 27
[1] Propagation calculations based on Okumura-Hata model; base scenario input data:$100,000 per cell site, morphology mix of 25% urban, 50% suburban, 25% rural, 600 kbit/s peak data rate, coverage-limited scenarioSource: ArrayCom, Accenture analysis.
0
5
10
0
20,000
15,000
10,000
5,000
500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000
Frequency, MHz
Urban range
Suburban range700 MHz
2,100 MHz
~ 3 x higher cost for roll-out in 2,100 MHz band
A simple cash flow model for operations and underlying drivers: what are the best KPIs to measure cost efficiency and where are the biggest levers to obtain it?
Market
• Geographic size• Population density• Pops/HH ratio• Broadband penetration• Number of SMEs in market• PC penetration
Deployment
• Sectors/cell• Spectrum available• Spectrum re-use• Antennae per sector• Spectrum operating point• Oversubscription factor
Business case variables and assumptions
Capacity &
Cash flow model
© 2006 Accenture. All rights reserved. 28
• Range: The range of the technology dictates the number of base stations required to reach initial coverage objectives, driving the peak negative cash flow point.
• Capacity: The capacity of the technology determines how many subscribers an operator can support and therefore how much revenue will be received per unit of capital expenditures.
• Coverage: The coverage quality of the system will affect marketing costs through its influence on unit subscriber acquisition expense and churn rates.
• PC penetration• Notebook share of PCs• Mobile phone penetration• Morphology mix
• Oversubscription factor• Coverage for fixed service• Coverage for mobile service• Backhaul approach
Customer Behavior
• Usage per average subscriber in busy hour by service segment
• Aggregate consumption as function of busy-hour usage
• Retail ARPU segment• Subscriber device price (paid by
subscriber vs. subsidized)• Subscriber adoption• Modem type mix
Operating Parameters
• Site acquisition/installation cost• Base station cost/sector• NOC cost per data subscriber unit
of capacity• Backbone connectivity per sub• Subscriber acquisition cost• Subscriber churn• Spectrum unit cost• Spectrum depreciation period
Range
Capacity & Coverage
Contents
• Spectrum Fundamentals
• Wireless Networking
© 2006 Accenture. All rights reserved. 29
• Wireless Broadband Economics
• Future Business Challenges
There are four drivers that will determine the future wireless industry structure
Customer demand
•Consumers increasingly demanding “anywhere, any time” access to voice and data services
•Examples• High and still rising mobile penetration• Projected adoption of wireless data and home
networking
Regulation
•Congress and FCC clearing previously licensed spectrum, licensing additional spectrum, and opening more
Competition
•New players besides CellCos and RBOCs entering wireless market with offerings ranging from wireless data only to quad-play
© 2006 Accenture. All rights reserved. 30
Wireless increasingly becoming important part of integrated
communication services
opening more unlicensed/nonexclusive spectrum
•Examples• DTV
transition/FCC ATC order
• 700 MHz/AWS auctions
• 2.4/5.7 MHz unlicensed spectrum
Technology evolution• New network architectures blurring distinction
between wireless and wireline services • Examples
• IMS/SIP – seamless mobility• IP-enabled 3G/4G networks• Smart devices
data only to quad-play bundles
•Examples• Municipal Wireless
in unlicensed spectrum
• Clearwire largest owner besides Nextel of 2.5GHz spectrum
• CableCos bidding for spectrum in AWS auction
13%9%
22%
16%
Customers seem to want access to all services anytime, anywhere
Home networks grew by 80% in 2005; Wireless is in two-thirds of all home networks
40.7
32.9
19.5Mio. US
U.S. households are poised for convergence of cellular and wireless broadbandU.S. 2005, Millions
“Online” households All households
U.S. households with a home
network 2005
2006
© 2006 Accenture. All rights reserved. 31
Analysts predict significant adoption of Wi-Fi enabled phones in the U.S. Millions of wireless users, embedded base
26 50
197 204193
177
19.5`
Broadband households
Broadband households
with cell subscription
Broadband households
with cell subscription and Wi-Fi
access point
Mio. US households
Wi-Fi enabled phones <1
Non-Wi-Fi enabled phones
6
2006 2007 2008 2009
• Consumers’ familiarity with wireless broadband and cellular is growing• Wi-Fi functionality to be included in 40% of new phones by 2009
Source: Boingo Wireless, InStat, Forrester, FCC
There is a significant amount of new spectrum available to competitors
240
79160
80
50
976
700 MHz
Nextel
2.4 GHz band
5.7 GHz band
3.6 GHz band
Spectrum band classification
Megahertz
20
370
170
Results AWS Auction #66 Sep ‘06• T-Mobile• Verizon Wireless• SpectrumCo• MetroPCS• Cingular• Cricket• Denali Spectrum• Barat Wireless• AWS Wireless• Atlantic Wireless
$4.2 billion$2.8 billion$2.4 billion$1.4 billion$1.3 billion$710 million$365 million$127 million$116 million$81 million
© 2006 Accenture. All rights reserved. 32
185 185120
194
90
421
50
28
60
Licensed spectrum in use by wireless operators
Allocate licensed spectrum slated for auction
Total spectrum potentially available for non-incumbent wireless operators
Unlicensed/ nonexclusive-use spectrum potentially us-able with new technology
“New” spectrum coming available
Licensed spectrum not usable for mobile services
PCS
CellularSMR
BRS/EBS
MSV700 MHzCCI
AWS
700 MHz
Total spectrum available for wireless operators
524
15
185
251
• Atlantic Wireless…
1,087 licenses
$81 million….
$14 billion
• Price in AWS Auction #66: $0.53 per MHz per POP
• Spectrum values have historically ranged from a low of $0.15 per MHz per POP (Auction 22 in 1999) to a high of $4.74 per MHz per POP for the 10 MHZ of spectrum in the New York city BTA that was sold by NextWave to Verizon Wireless
Source: FCC, UBS Research, Accenture analysis.
Internet industry: data-centric
• all-IP fixed networks: processing power at the edge of the network
• Devices designed to provide superior processing power
• Zero marginal cost for service provision
• Consumers are making decisions, not
Technology evolution and convergence blurs the lines between wireline and wireless services
From: stove piped services
Service
Media functions
Subscriber data
Application
Service 1
Service
Media functions
Subscriberdata
Appli-cation
Service 2
Service
Media functions
Subscriberdata
Appli-cation
Service 3
Service
Media functions
Subscriberdata
Appli-cation
Media functions
Subscriber data
Appli-cation
Appli-cation
Appli-cation
To: service-agnostic delivery
© 2006 Accenture. All rights reserved. 33
• Consumers are making decisions, not the industry: highly innovative
Cellular industry: voice-centric
• Circuit-switched networks; processing power at the core of the network
• Devices designed to provide mobility and long battery life
• > 0 marginal cost for service provision
• Industry is making decisions, not the consumer: R&D trial & error
Co
nverg
en
ce
IMS and interim FMC technologies enabling seamless service delivery across multiple networks
Service deliveryService delivery
Service delivery
Service delivery
Wireline access
Wireline access
IP Multimedia Subsystem (IMS) delivery
Wireline access
Wireline access
Wireless access
Wireless access
There are numerous attackers in the market with wireless expertise and different business models
� Aloha Partners currently own 12MHz of spectrum covering 60% of the United States, all of the top 10 markets and 84% of the population in the top 40 markets.
� Aloha Partners have no network operations as of now, but plan to roll-out
� Clearwire has the second largest position of 2.5 GHz spectrum in the US
� Clearwire offers services in 27 markets in the United
Attacker Description
Wireless operations
����
Spectrum licenses
����
����
-Residential wireless broadband access and Mobile TV
Business model
Residential and SME wireless broadband access in underserved
© 2006 Accenture. All rights reserved. 34
� Clearwire offers services in 27 markets in the United States, covering more than 200 municipalities with an estimated 4.8 million people.
Source: Company websites, Yahoo! Finance, SEC filings, Accenture analysis. All figures as of May 17th, 2006.
� Towerstream operates in the license-free 5.8GHz band, with licenses in the 24 GHz band for backhaul
� Towerstream serves the markets in NYC, LA, Chicago, Boston, Providen and Newport, Rhode Island and San Francisco
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� Tropos Networks and Mesh Networks are network gear vendors with focus on unlicensed WiFi mesh networks
� WiFi mesh networks are being deployed by municipalities across the US, usually in collaboration with an ISP, e.g. EarthLink and Google in San Francisco
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access in underserved or Greenfield markets
SME and enterprise wireless broadband access in large metro areas, VoIP
White label network provider with turnkey solution
And then there also is… you!
© 2006 Accenture. All rights reserved. 35
• Meraki Mini: $49 wireless 802.11b/g router that allows users to build a wireless mesh network or extend the range of a municipal network.
• Meraki also has mesh routing software and hosted billing/user management tools “operators” need to run a production network.
• An “operator” can set pricing and also brand its service
• “La Fonera”: $5 wireless 802.11b/g router that allows users of the FON community to share their wireless Internet:
• Linus: Share their WiFi hotspot and get free roaming on Fon network
• Bills: Share their WiFi hotspot and get 50% of the revenue generated by aliens but no roaming
• Aliens: Customers that pay for access to the Fon network ($3 for day pass)
The future??
That’s all, folks!
© 2006 Accenture. All rights reserved. 36
May I be excused? My brain is
full!