RCR Wireless – 2015 is winding down and the Vertix team is focusing the lens on what’s to come. Small cell deployments are starting to take off and carriers are seeing potential for strategic use cases. Wi-Fi calling is still proving itself in the industry and we expect many frustrations (for both consumer and carrier) lie ahead. Finally, the bidding wars are set to begin on the 600 MHz spectrum auction. Only time will tell how much money can be raised and which companies will actively participate.
Let’s take a deeper dive into what we consider the technology conversation drivers for 2016:
An expanded use for small cells
Over the past five years, carriers have tried to combat customers’ poor coverage by deploying femtocells. However, it’s been found that customer experience with these devices leaves much to be desired. As a result, carriers have not aggressively pushed this option to their enterprise (or consumer) sales teams. Now, with voice-over-LTE penetration increasing, the customer experience will undoubtedly improve as handoffs between small cells, Wi-Fi and the macro network become – more or less – seamless.
Carriers are also beginning to educate themselves on optimal deployment practices and learning how to quickly integrate small cells into the broader network.
Finally, vendors are continuing to improve units for swift and simple deployment and integration, all while driving down costs and meeting a broader array of use cases (e.g., coverage footprints, capacity, spectrum bands, physical footprint).
With these improvements underway, carriers will find that cheap, effective and easy-to-install devices can be used strategically in their sales force arsenal. Sales teams will start to analyze their current and prospective customers and begin to develop the business cases for utilizing such tools. We won’t see how it manifests on the outside until 2017 and beyond; still, the foundation will continue to be established in 2016.
Wi-Fi calling and inevitable frustrations
While we believe there will still be significant testing and discussion around this in the months to come, Wi-Fi’s own technology characteristics will continue to make it a limited alternative to reliable cellular voice service. We do not expect meaningful traction for Wi-Fi-first offerings for voice. These will remain on the periphery as options for consumers, but the lack of a meaningful footprint and the uncertain performance will prevent any significant voice traffic offloading.
Wi-Fi operates on unlicensed spectrum and there is virtually no control – interference is probable and carriers are unable to properly assign wireless resources to users and network elements. Put simply, the more people using Wi-Fi, the more unreliable connectivity becomes. So, in places like the airport or a sports arena where there are multiple users trying to get on to the same network (we’ve all been there), consumer frustration is bound to arise.
Intelligent network selection presents another issue. Often times devices are presented with a scenario where both cellular and Wi-Fi connections are active and strong, yet the apps themselves don’t refresh appropriately (notifications/emails do not come through; messages don’t go out; etc.). Operators don’t want their customers to experience this. Interestingly, those who have tested Google Fi have seen most times both Wi-Fi and cellular connections are available, the device decides to place the call over a cellular connection.
As carriers slowly move to heterogeneous network solutions, the lack of consistent network selection implementation and poor user experience across platforms will continue to make intelligent network connectivity an ongoing challenge. Also, while Hotspot 2.0 deployments have proliferated considerably over the last couple of years (see CableWiFi Alliance), there’s still a long way to seeing pervasive Wi-Fi coverage supporting this technology.
We believe Wi-Fi calling will continue to be tested as a “fall-back” option, but until hetnet solutions are fully adopted across the entire technology ecosystem, we don’t expect it to become a meaningful voice traffic offload strategy for carriers.
Going once, going twice …
The 600 MHz spectrum auction is the first attempt by the Federal Communications Commission to create a marketplace to match buyers and sellers, theoretically allowing higher prices to drive up supply. Although more than 150 megahertz of spectrum could be sold if the prices go above $1 per megahertz/per-potential customer covered, it’s not clear this auction will see the same level of activity as the recent AWS-3 auction.
Also, this auction will be the first incentive auction, matching wireless carrier’s demand for spectrum with the economics of television broadcasters. Although some smaller television broadcasters may voluntarily go off the air, most are likely to share their spectrum or move channels in exchange for receiving a portion of the proceeds.
Verizon Communications and AT&T have already spent record amounts on the AWS-3 auction, with the government raising a record $41 billion. We do not anticipate this auction will generate anywhere near the same level of activity. The lower proceeds may present broadcasters with more difficult decisions than they had planned.
We also believe Dish Network will finally make a deal for its spectrum assets. So while T-Mobile US, Verizon and AT&T are all candidates to purchase the spectrum, it’s not clear any of them desire to acquire the broader DishTV offering with the spectrum – although 40 megahertz of AWS-4 spectrum could be just enticing enough to surprise everyone.