Some things don’t change: Tier 2/3 providers keep scrambling to stay alive with limited resources.
Tier 2 and Tier 3 service providers remain squeezed by circumstances. Some are scraping up the wherewithal to build infrastructure supporting new services – everything from TV Everywhere to cellular and wireless broadband. Meanwhile, equipment vendors continue to devise solutions sized and priced appropriately for the market.
In other words, the more things change, the more they stay the same.
At the TelcoTV conference in Las Vegas in November, communications technology vendors introduced and/or demonstrated new support for hosted multi-screen, hosted TV Everywhere, hosted network DVR or some combination of the three.
A partial list of companies that provide hosted services includes ActiveVideo, Alcatel-Lucent, Arris, Concurrent, Ericsson, Motorola, Minerva, Nagra, the NCTC (which is allowed to propagate a TV Everywhere solution crafted by Massillon Cable), Synacor and Skitter, which presented at TelcoTV its approach in which it installs the necessary equipment and then gets paid back as the service provider starts receiving revenue.
Arris and Ericsson were two companies looking a bit down the line, showing the ability to insert advertising in a multi-screen environment.
Arris introduced a bundled multicast IPTV advertising solution for the delivery of national, regional, zoned and targeted ads. The system puts together ad storage, streaming, insertion and splicing in a single device: the Arris Media Services Platform (MSP).
But can it work for a small operator? Arris vice president of product strategy John Reister said it can. A small operator could outsource ad sales, “pop in the equipment, and it’s possible to make $15,000 a month with 5,000 subscribers,” he said.
David Price, head of business development at Ericsson, said his company is also able to provide zone targeting. He believes one advantage will be the ability to provide location-based services. If you can identify that a customer is on the road at a conference in Las Vegas, it makes no sense to push an ad for a restaurant in that customer’s hometown, but it could be very valuable to serve an ad for a restaurant in Vegas.
Both agree, though, that there aren’t enough advertisers ready to take full advantage of the capabilities their companies make possible.
Griff Griffin, technical operations manager at West Central Wireless, was invited to the conference to talk about his company’s experience developing a wireless service. He said his company just installed an LTE core from Alcatel-Lucent.
That may have been ambitious for a company his size – West Central Wireless has about 40,000 subscribers in 26 counties (just under half of the total live in a single town). Others at TelcoTV advised strongly against small companies trying to offer wireless broadband.
Griffin argued that the alternative is losing broadband customers. If that’s the choice, then no company really has a choice, especially small service providers.
“There is cord-cutting. And once you lose a customer, it’ll probably cost you four times as much to get them back, if you can get them back,” he said.
And West Central’s customers “want services from us instead of AT&T and Verizon. We go to church with our customers, we buy groceries with our customers, we care about our customers. All due respect to our Verizon and AT&T friends, [but] they don’t care about our customers. They want our customers, but they don’t care about them.”
West Central intends to share its LTE network resources with nearby providers looking to provide similar services. Think of it as something like a commercial co-op.
Rick Overman is chief development officer of the NetAmerica Alliance, a group of rural carriers that operate in the unlicensed 700 MHz band. The NAA acts like more of a traditional cooperative, providing marketing services and pooling purchasing to gain better prices.
Overman shared the view that wireless broadband is something every service provider will need to offer.
“People desire broadband, but they also desire mobility. If we can offer broadband at 6 to 10 Mbps, people will leave wireline broadband the same way people left wireline telephone,” he said. “If you have to make a choice, which one will you go to? Wireless, because you can take it anywhere.”
There’s always the question of whether to jump right into the market or to wait.
Griffin said: “Maybe you don’t want to be there first, but we need to be a fast follower. You can’t wait three or four years, though; you have to follow a year later. Being first is scary. Let AT&T and Verizon come in, make the mistakes, then be a fast follower.”
Overman disagreed: “We think you should go to market earlier because it’s hard to win a customer back. It’s not bleeding edge anymore. A rural carrier can and should be first to market.”
He added: “We don’t believe you have to beat AT&T and Verizon. You only need to beat your own business plan. You can succeed with 15 to 20 percent market penetration.”
No cord-cutting for service providers
And don’t forget Wi-Fi, which is rapidly becoming an integral element of wireless broadband services. Chris Koeneman, vice president of Adtran’s Bluesocket Business Division, noted that AT&T and PCCW in Hong Kong are already using Wi-Fi to offload traffic from their networks, and more operators are likely to follow.
Koeneman explained the new Passpoint standard designed to enable roaming between hotspots. Certified devices will be able to roam and authenticate on any Passpoint access point beginning next year.
“You’ll probably get better service, better than 3G, and probably better than 4G,” he said.
Passpoint is likely to lead to various business opportunities. Large cellular network operators are likely to pay other companies to set up access points to offload traffic for them; it will certainly be cheaper and easier than building new towers.
He also expects more of what he called onloading. That’s when a venue operator installs a Wi-Fi network and offers to take care of all of a network operator’s traffic.
“We’ve done this for Wembley for BT,” he noted.
With all of those arguments for offering wireless broadband, one might be forgiven for thinking that the world is going wireless, but Calix President and CEO Carl Russo argued that wireline and wireless will complement each other – they’ll have to.
There are inherent limits in the carrying capacity of wireless spectrum. You can use spectrum more efficiently, and in the short term, you might be able to find some limited amount of additional spectrum to use.
Meanwhile, there are more and more connected devices, and people are assuming that those devices will be always connected.
“Over the next 10 years, give it benefit of doubt: expect four times capacity improvement,” Russo calculated.
Meanwhile, he explained, demand is going up 100x.
“But let’s say it will only go up 10x. Supply is going up only 4x,” he said. “We could ask Apple to stop selling iPhones. …”
The only way the problem gets solved is to take those devices “off the antenna” – off the cellular network. They’ll still be wireless, but they’ll be connected to wireless access points with an operating radius of 50 to 100 feet, and those access points will have to be connected to a fiber-based network.
“We think the answer is that it will be a fiber world. Not all at once,” Russo said. “It’ll be gradual. The only challenge is to figure out how to run a continuous and contiguous call within a wireless LAN. Substitution is not what is going to happen. Wireless and wireline will complement one another.”