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Verizon Running Short of LTE Capacity in Large Cities like New York

OpenSignal’s State of American Wireless Networks – Aug. 2017

Verizon Wireless customers are seeing declining wireless internet speeds and the greater potential for congestion because Verizon Wireless is experiencing the impact of some overburdened cell sites in some of its largest markets.

Walter Piecyk from BTIG Research reports over the last few weeks, Verizon has begun using the last 10MHz of PCS spectrum left in its inventory in New York City, nine months earlier than expected.

Verizon’s reserve spectrum in PCS Band 2 near 1900MHz is not as ideal as lower frequency spectrum better able to manage inside buildings in a city as densely packed as New York, but if that is all the company has left for immediate use, that is what it will use. The newly activated frequencies, first uncovered by Milan Milanovic, are not yet operational across all of Verizon’s extensive cell network in the Big Apple. Verizon’s need to activate its last remaining PCS frequencies suggests former chief financial officer Fran Shammo may have been overly optimistic when he claimed Verizon was only using 40% of its spectrum inventory. That may be true in smaller cities, but is no longer the case in large metropolitan areas.

“This latest action also means that the only spectrum Verizon has left to convert to LTE in NYC is the 25MHz of 800MHz spectrum that the FCC gave it for free in 1984,” wrote Piecyk. “Unfortunately, that 800MHz spectrum is being used to support CDMA voice traffic and legacy 3G data for enterprise/IoT applications. Meanwhile, Dish sits on 125MHz of vacant spectrum in NYC.”

BTIG Research has been carefully tracking Verizon’s deployment of its spectrum for years. In New York, LTE expansion has depended heavily on spectrum acquisitions and enabling LTE+, which bonds frequencies together to increase speed and capacity.

BTIG Research Tracks Verizon Wireless’ LTE Deployment in NYC

  • 20 MHz: December 2010 – launched LTE on the 20MHz of 700MHz spectrum it bought in the 2008 700MHz auction for $0.46/MHz/POP for the Northeast regional license and $0.77/MHz/POP nationwide.
  • 40 MHz: December of 2013 – XLTE-branded rollout of AWS spectrum, which mainly included the spectrum it bought from Cable in 2011 for $0.69/MHz/POP, but also the spectrum it acquired in the 2006 AWS-1 auction, where it spent $1.33/MHz/POP for the Northeast regional license and $0.73/MHz/POP overall.
  • 20 MHz: December of 2014 – LTE conversion begins on PCS spectrum. Verizon purchased 10MHz from Northcoast as part of a larger transaction valued at $1.58/MHz/POP in 2003, 10MHz covering NYC from NextWave for $4.63/MHz/POP in 2004, and 20MHz from NextWave in 2005 as part of a larger transaction valued at $2.85/MHz/POP. (Link)
  • 10 MHz: Q1 of 2016 – This enabled Verizon to deliver 15MHz x 15MHz connections on Band 2, thereby improving speeds. When this happened we predicted the remaining PCS spectrum would be used in early 2018. (Link)
  • 10 MHz: Q3 of 2017 – Once again, this was spotted by Milanovic (Link), who notes that it has not been deployed on all sites. This effectively expands the Band 2 deployment to a 20MHz x 20MHz deployment.

The company has also attempted to increase capacity with network densification, which adds more cell sites to divide up the traffic load. But activating a new cell site can take years, especially if Verizon encounters zoning and permitting problems or public opposition. Small cells can ease congestion in particularly dense traffic areas, but are not enough alone to deal with increasing network traffic.

Verizon’s own business practices have also complicated things for the wireless company. Ditching two-year contracts and subsidized phones in favor of customers acquiring devices at retail prices financed through wireless carriers like Verizon have led to a slowdown in subscriber upgrades as consumers hold on to their devices for longer.

Most phones acquired in the last year or two now support Voice over LTE (VoLTE), which means phone calls travel over Verizon’s LTE network, not the legacy CDMA network Verizon has used for well over a decade. Verizon has to dedicate a significant amount of prime spectrum in the 850MHz band for its CDMA network. Although Verizon claims it has migrated “more than 50%” of its voice traffic to the newer, more efficient VoLTE standard, that is below analysts’ expectations.

Piecyk thinks it may be possible Verizon has been slow to convert because of the record low phone upgrade rate of its customers. As a result, it cannot repurpose its CDMA spectrum for LTE use. Discussions with Verizon engineers suggest the company may eventually cut back CDMA spectrum, but will likely still keep 5 x 5MHz reserved for CDMA voice calling for at least the next four years to support its customers with older devices.

As part of its network densification effort, Verizon is once again relying on fiber optic buildouts, some of which it may take on itself in areas where it does not provide landline service. Verizon will be placing cables with 1,700 strands of fiber, so it is obviously thinking about future network demands.

Before it can deploy additional upgrades or acquire more spectrum, customers can anticipate more “network management” techniques, suspects Piecyk, especially now that unlimited data plans are for sale again. Verizon already limits its “unlimited” plan to 22GB of usage per month, before wireless data speeds are throttled. OpenSignal believes Verizon’s recent speed drops are a result of its unlimited plans putting more pressure on its network.

“We suspect management will now follow T-Mobile’s lead and suppress video quality like BingeOn to help with the rise in network traffic,” Piecyk wrote. “They might also discuss control of overall peak data speeds. However, if no mobile applications require more than 10Mbps service, would it make any sense to suppress the speeds on your customers’ phone? What’s the benefit other than offering a convenient excuse on why your speed tests are slower than the competition?”

Charter Turns Down Offer to Merge With Sprint, Now Softbank May Acquire Charter Itself

Masayoshi Son, chairman of SoftBank Group

Charter Communications is a prime target for a takeover by Japanese giant SoftBank Group Corp., and chairman Masayoshi Son appears not to be willing to take no for an answer.

Last week, Charter executives rejected a bid by Son to combine Spectrum with Sprint, the nation’s number four wireless carrier controlled by SoftBank. Now Son is attempting to put together an offer Charter’s shareholders can’t refuse.

Son could make an announcement as early as this week, according to Bloomberg News.

SoftBank would be acquiring America’s second largest cable operator estimated to have a market value of $101 billion. SoftBank itself is worth approximately $89 billion. The Japanese conglomerate already carries $135 billion in debt, the second most indebted non-financial company in Japan, outdone only by Toyota.

For most Charter customers, a merger would make the second transition in two years, after Charter acquired Time Warner Cable and Bright House Networks.

Son originally planned to combine Charter and Sprint into a new public company. Something similar would likely happen if SoftBank attempts a direct takeover of Charter Communications. Son’s investment in Sprint has not paid off. The wireless carrier has lost billions since SoftBank took control of Sprint in 2013.

“We understand why a deal is attractive for SoftBank, but Charter has no interest in acquiring Sprint,” Charter said in a statement over the weekend before Bloomberg reported Son’s latest plans. “We have a very good MVNO relationship with Verizon and intend to launch wireless services to cable customers next year.”

But Charter’s largest shareholder, Liberty Broadband Corp., controlled by Dr. John Malone, is interested in a deal bringing Charter together with a wireless carrier. But there is no word if Malone approves of a tie-up with Charter and SoftBank.

“Overall our view is that Charter likely does not want to sell, but that SoftBank is one of the few companies that could put a bid in big enough to take control,” analysts at JPMorgan Chase & Co., led by Philip Cusick, said in a note. “While we don’t see a deal as very likely, especially given later headlines that Charter is cool to the idea, Masa is never to be counted out as a buyer.”

Son’s urgency to do a deal may be related to Sprint’s ongoing losses and the bonds used to finance that acquisition near maturity.

AT&T Using $9.7 Million in Public Dollars to Bolster its Cell Towers in South Carolina

AT&T will spend $9.7 million in annual public subsidies to bolster its cell tower network in South Carolina in part to expand its rural wireless broadband program.

The Federal Communications Commission approved the funding, which is expected to cost Americans nearly $10 million annually until 2020 to boost wireless coverage in 20 mostly rural counties in South Carolina to reach an estimated 12,000 new homes and businesses by the end of this year. Nationwide, the company is getting almost $428 million a year to extend access to 1.1 million customers in 18 states, the FCC says.

AT&T plans to spend the money to improve cell towers it already has in place for its mobile phone customers. The company admitted it will rely on existing infrastructure and won’t lay a single new strand of fiber optics. Instead, wireless broadband customers will share space with AT&T’s existing mobile customers on AT&T’s backhaul network.

“Because of the wireless aspect of it and the greater ability to deliver that last-mile connection, it does help to overcome any obstacles that may be in the cost equation,” Hayes said. “This initial build, with it being infrastructure that we have in place with these towers, that comes from years of investment.”

AT&T will also be able to promote its own products and offer customers discounts and free installation when they agree to sign up for other AT&T services. Hayes said the service will cost $60 a month for everyone else, along with a one-time installation fee of $99.

“Because of the wireless aspect of it and the greater ability to deliver that last-mile connection, it does help to overcome any obstacles that may be in the cost equation,” spokesman Daniel Hayes told The Post and Courier. “This initial build, with it being infrastructure that we have in place with these towers, that comes from years of investment.”

AT&T is treating the fixed wireless program, which offers up to 10Mbps service, as an alternative to wiring fiber optics in outer suburban and rural areas.

With taxpayer/ratepayer dollars financing a significant part of the cost, AT&T will have a de facto monopoly in its rural service areas where it has traditionally declined to offer or maintain DSL service or consider fiber optic upgrades, leaving these areas without broadband service until the subsidy program began.

Crown Castle Buys Lightower Fiber for $7.1 Billion; Sets Stage for 5G in Northeast

Phillip Dampier July 20, 2017 Consumer News, Wireless Broadband No Comments

Antenna tower operator Crown Castle International has announced it will buy privately held Lightower Fiber Networks for about $7.1 billion in cash to acquire the company’s extensive fiber assets across the northeastern United States that will be used to connect small cell 5G networks.

The acquisition will allow Crown Castle to market an extensive fiber backhaul network in large cities like New York, Boston, Washington, Chicago, Detroit and Philadelphia, as well as smaller cities particularly in upstate New York, Ohio, Virginia, Pennsylvania, Massachusetts and northern New England. Crown Castle, which already owns many of the cell towers where AT&T and Verizon place their equipment, will now be able to market fiber backhaul connectivity for AT&T and Verizon’s forthcoming 5G networks.

LIghtower’s fiber footprint.

Lightower’s fiber network was originally focused on major markets like Boston, New York City, the District of Columbia, and Chicago. Its partner, Fibertech — acquired by Lightower in 2015, focused on 30 mid-sized cities from Indiana to the west to Maine in the east. The network’s customers are large companies and independent ISPs. In Rochester, where Lightower maintains a Network Operations Center, Greenlight Networks relies on a fiber backhaul network originally built by Fibertech to connect its fiber-to-the-home broadband service. That fiber is likely to soon be shared with AT&T, Verizon, and potentially T-Mobile and Sprint to power any 5G buildouts in the region.

“Lightower’s dense fiber footprint is well-located in top metro markets in the northeast and is well-positioned to facilitate small cell deployments by our customers,” said Crown Castle CEO Jay Brown in a statement. “Following the transaction, we will have approximately 60,000 route miles of fiber with a presence in all of the top 10 and 23 of the top 25 metro markets.”

This acquisition marks Crown Castle’s first major diversion outside of its core market — leasing out the cell towers it owns or acquires.

Microsoft’s TV White Space Rural Broadband Solution Expands in America

Microsoft is indirectly getting into the internet access business with its support for white-space wireless internet access for two million rural Americans by 2022.

The project will involve a partnership putting Microsoft’s financing together with rural telecommunications companies that want a rural broadband solution for their customers.

Microsoft has spent at least a decade promoting “white space” wireless broadband, which works over unused UHF TV channels. An internet provider markets the service as a next generation Wi-Fi network, capable of serving customers over a much larger distance than traditional in-home or business Wi-Fi. The service transmits from strategically placed antenna towers that are capable of delivering internet access to dozens of families in an immediate area.

Pilot projects not associated with Microsoft are already up and running in selected rural areas with mixed results. None of the projects have lived up to their pre-launch hype, but most have been a significant improvement over satellite internet access. Speed variability and capacity has proven difficult technical challenges, and finding ongoing financial resources to maintain the wireless network once constructed has also been a challenge.

Rural community politics is never too far away. Thurman, N.Y.’s white space broadband project Stop the Cap! wrote about two years ago has turned into a political football. Only about three dozen residents subscribe to the white space internet service and vocal opponents of the project and controversy over other spending initiatives caused the town’s CEO and one board member to resign. Town meetings have deteriorated into shouting matches as recriminations are fired back and forth. One of the project designers resigned after the town refused to honor an invoice for a cost overrun. The white space project was funded with a grant that required local matching funds. With only a few dozen customers using the service, some taxpayers object to underwriting its expenses.

The technology has not been a runaway success in the U.S., but Microsoft has had better luck funding internet access to 185,000 people in 20 wireless projects, many in the developing world.

Microsoft president and chief legal officer Brad Smith today introduced Microsoft’s plan to expand white space internet in the U.S., pointing to a white paper laying out Microsoft’s rural broadband strategy, which will leverage several wireless technologies.

A combination of technologies can substantially reduce the total cost of extending broadband coverage. Specifically, a technology model that uses a combination of the TV white spaces spectrum, fixed wireless, and satellite coverage can reduce the initial capital and operating costs by roughly 80 percent compared with the cost of using fiber cables alone, and by approximately 50 percent compared with the cost of current LTE fixed wireless technology.

One key to deploying this strategy successfully is to use the right technology in the right places. TV white spaces is expected to provide the best approach to reach approximately 80 percent of this underserved rural population, particularly in areas with a population density between two and 200 people per square mile. […] Satellite coverage is expected to be the most cost-effective solution for most areas with a population density of less than two people per square mile, and LTE fixed wireless for most areas with a density greater than 200 people per square mile. This mixed model for expanding broadband coverage will likely bring the total national cost of closing the rural broadband gap to roughly $10 billion.

To cover the costs, Microsoft has agreed to front its own money and recover it later. The Mid-Atlantic Broadband Communities Corp. received $250,000 from Microsoft. Another $500,000 originated with the Virginia Tobacco Region Revitalization Commission and another $250,000 came from the telecom company. Mid-Atlantic hopes to expand white space internet access to 1,000 local customers by the end of the year.

Mid-Atlantic today offers residents in Charlotte and Halifax counties, two rural regions in southern Virginia, free internet access to a limited number of education-related sites with speeds of 3-4Mbps. Customers can pay to access the entire web at those speeds for about $10 a month. A premium tier raises speeds to 8-10Mbps for $40 a month. About 90% of subscribers have chosen the free service, an alarming percentage for any company trying to sell internet access and recoup its investment. It currently costs around $1,000 to hook up each customer, a number local officials hope to reduce to $100 eventually.

Microsoft argues the technology is still cheaper than the alternatives – 80 percent less costly than fiber to the home service and half the price of 4G LTE wireless.

To guarantee the technology will work, Microsoft wants to preserve unlicensed frequencies not currently in use by licensed television stations for “white space” broadband.

“The Incentive Auction reduced the number of available channels that can be used for TV white spaces technologies,” Microsoft noted in its white paper. The company is referring to the FCC’s auction of UHF TV licenses, freeing up channels to be repurposed for wireless data expansion by the country’s mobile phone operators. “To make the significant investments necessary to reach economies of scale, potential TV white spaces network operators and device and chip manufacturers have converged on the need for a minimum of three usable TV white spaces channels in every market, with additional TV white spaces available in smaller markets.”

In other words, Microsoft wants the FCC to ensure at least three unused UHF channels in each city in the country are kept available for unlicensed spectrum users, like white space internet. That brought a scathing response from the National Association of Broadcasters (NAB) who called Microsoft’s request “nonsense on its face”:

The proposal is either unnecessary, because there will be plenty of spectrum, or it is harmful, because there will not be enough. If you were playing musical chairs with someone and he told you, “you must reserve that chair for me, but don’t worry, there are plenty of chairs for everyone,” you would rightly be suspicious. The post-auction repack is essentially a game of musical chairs for displaced low power stations. Microsoft is telling the Commission: (1) it needs to have a chair reserved for unlicensed use, but that (2) there will be no effect from that reservation on anyone else. One of those assertions is untrue.

Microsoft also claims that only the reservation of spectrum can provide the regulatory certainty that Microsoft needs to increase investment in white space technology. But the truth is the Commission just held a lengthy auction of the very spectrum Microsoft claims it so urgently desires. If Microsoft were interested in increasing investment, it had an unprecedented opportunity to get guaranteed access to 600MHz spectrum with a nationwide footprint. Instead, Microsoft is trying to convince the Commission to give Microsoft a backdoor frequency allocation with exclusive access to that spectrum for free, and on better terms than winning auction bidders received.

Certain parts of the northeastern U.S. are signal-crowded, with no available white space channels.

The NAB objects to Microsoft requesting spectrum without directly paying for it, but Microsoft’s actual request is that those frequencies be reserved for unlicensed users of all kinds, not just for white space internet. The NAB accuses Microsoft of potentially increasing interference for licensed TV stations on a newly crowded, repacked UHF dial, a theory that seems unlikely in the most rural parts of the country where over the air television reception is problematic or non-existent. There are urban areas of the country, particularly in the Boston-New York-Washington corridor where open channel space is either not available or severely limited, but white space internet was designed to resolve rural broadband problems, not urban ones.

To find out what is true and what is theoretical Microsoft announced 12 new white space pilot projects in 12 U.S. states, including Arizona, Georgia, Kansas, Maine, Michigan, New York, North Dakota, South Dakota, Texas, Virginia, Washington, and Wisconsin that will be up and running over the next year. Few details are available about the specific communities involved or the types of access to be offered. Microsoft only said if it gets its way, it could be providing internet access to two million more Americans by July 4, 2022.

Most customers are likely not going to get the FCC’s definition of broadband (25Mbps) from the current generation of white space broadband technology. Speeds are often comparable to DSL and just as variable, depending on reception conditions. The NAB questions whether this technology will really make much difference.

“Microsoft has been making promises about white spaces technology for well over a decade,” the NAB wrote on a blog post, noting it estimates fewer than 300 customers are getting white space internet access in the U.S. “There remain few tangible consumer benefits associated with white spaces deployments across the U.S.”

For states like New York, embarked on their own efforts to achieve 100% broadband penetration, Microsoft’s project may be too little, too late. Governor Andrew M. Cuomo launched the final phase of the New NY Broadband Program in March, seeking to deliver a final round of funding to secure access to high-speed internet for all New Yorkers by the end of 2018, four years sooner than Microsoft’s target date for its project. New York’s rural broadband expansion program relies primarily on incumbent providers and helps subsidize expansion of their networks to reach customers deemed too expensive to serve without supplemental funding.

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