Copyright © 2004, Technology Futures, Inc. 1 Assessment of Wireless Broadband as a Competitor to Wireline Broadband Ray Hodges Technology Futures,

Copyright © 2004, Technology Futures, Inc.

1

Assessment of Wireless Broadband as a Competitor to Wireline Broadband

Ray Hodges

www.tfi.com

Technology Futures, Inc.

[email protected]

June, 2011

The Georgia Telephone Association


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Technology Futures, Inc. (TFI)

• Founded in 1978

• We provide technology management, strategy, and forecasting services

• Strong futures focus.

• We assist with forward-looking market, financial, strategic, technology, research, and science plans

• Each of our consultants has 20 years or more of professional experience.

• We use a wide range of practical, proven technology forecasting, ideation, and management methods, e.g. Five Views of the Future™

• Our customers include:

International Startups Emerging Companies Established High-tech Firms

Major Telecom Providers Regional Development Organizations

Academic Institutions Key Government Agencies

Consulting Groups and Contractors.


3

Telecommunications Technology Forecasting Group (TTFG) TTFG Members

• AT&T • Bell Canada • Qwest • Verizon• Founded 1985

• Promotes the use of formal methods for forecasting the evolution of the telecommunications network.

• Supports forward-looking financial, regulatory, and planning activities.

• Instrumental in the industry’s movement toward realistic depreciation schedules for regulation, valuation, financial reporting, planning, etc.

• Sponsors research for independent assessment of the rapid changes in telecommunications technology and competition.

www.tfi.com


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• Short Review and Update of My 2005 Presentation

• Take a Quick look at Wireless’ Role in POTS Decline

• TFI’s 2011 Wireless Forecast

• 4G Capabilities

• Assessment of 4G’s Ability to Replace Wireline Broadband (DSL & FTTH) Including Rural Areas


5

Forecast Narrow Band Access lines by Carrier Type (2005 View)

0

50

100

150

200

250

1995 2000 2005 2010 2015 2020Year

Mill

ion

s o

f A

cc

es

s L

ine

s

ILEC RetailAccess Lines

Source: Technology Futures, Inc.

Access C

ompetition S

umm

aryary 2005

CLECFacilities-Based

WirelineTotal

Resale/UNE

ILECTotal

Displaced byWireless or Broadband

Potential NB LinesALL CUSTOMER TYPESNARROWBAND


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Narrowband Access Lines

Data Source: FCCNote: Approx 1.8M ILEC and 2.1 CLECAccess Lines were added to the sample at YE 2005

0

20

40

60

80

100

120

140

160

1995 2000 2005 2010 2015 2020Year

Mill

ion

s o

f A

cc

es

s L

ine

s

ILEC RetailAccess Lines


Residential N

arrowband

CableTelephony

WirelineTotalResale

& UNE ILECTotal

Displaced byWireless, Broadband,or Non-Carrier VoIP

Potential NB LinesRESIDENTIALNARROWBAND

2010

InCon VoIPAdded

Est.


7

Access Lines Per Household

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1985 1990 1995 2000 2005 2010 2015 2020Year

Ac

ce

ss

Lin

es

pe

r H

ou

se

ho

ld


RESIDENTIALNARROWBAND

Wireline Access Linesper Household

Peak = 1.2 AL per HH

Residential N

arrowband

2010

Access Lines Displaced by

Wireless, Broadband, or

Non-Carrier VoIP


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Wireline Access Line Displacement

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1995 2000 2005 2010 2015 2020 2025Year

Pc

t o

f P

ea

k A

cc

es

s L

ine

s p

er

HH


Access Lines Displaced by

Wireless, Broadband, or

Non-Carrier VoIP

RESIDENTIALNARROWBAND

Residential N

arrowband

2010


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U.S. Wireless Only Households

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2000 2005 2010 2015 2020 2025Year

Pc

t o

f H

ou

se

ho

lds


Wireless Only,Percentage of Households

Wireless O

nly2010

Data Source: National Health Interview Survey


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Adults in Wireless Only Households

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

18-24 25-29 30-44 45-64 65 & Over

Age Group

Per

cen

tag

e


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

18-24 25-29 30-44 45-64 65 & Over

Age Group

Per

cen

tag

e


(July/Dec 2008)

(Jan/Jun 2010)


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2011 US Wireless Forecast

0%

20%

40%

60%

80%

100%

120%

1990 1995 2000 2005 2010 2015 2020

Year

Per

centa

ge

of P

opula

tion

HistoricalData

Source: Technology Futures, Inc.Historical Data Source: CTIA

2011


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Subscriber Penetration RatesSubscriber Subscriber

Rank Country Penetration Growth Rate1Q 2010 4Q 09 - 1Q 10

1 Greece 161% -6.3%2 Singapore 154% 0.5%3 Finland 151% 3.1%4 Russia 151% 1.4%5 Luxembourg 149% 0.2%6 Pourgal 146% 0.6%7 Italy 140% 0.6%8 Romania 139% 0.7%9 Austria 137% 2.9%

10 Czech Republic 135% 0.4%11 Denmark 134% 0.6%12 Sweden 132% 0.1%13 UK 127% -0.2%14 Germany 125% 0.3%15 Australia 123% 2.5%16 Norway 122% 0.7%17 Switzerland 120% 0.6%18 Spain 119% -0.1%19 Poland 118% -0.5%20 Ireland 118% -1.1%34 USA 93% 1.6%

Source: Netsize Guide 2010


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2011 Wireless Subscriber Forecast

0

50

100

150

200

250

300

350

400

1990 1995 2000 2005 2010 2015 2020

Year

Mill

ion

s o

f Su

bsc

rib

ers


Fo

recast 2011

Historical Data Source:CTIA


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2011 Subscriber Forecast

U.S. Cellular/PCS Subscribers Tabulated

Population SubscribersYear millions %Subscribersmillions

1990 250.8 2.1% 5.3 Historical1991 253.6 3.0% 7.61992 256.4 4.3% 11.01993 259.1 6.2% 16.01994 261.9 9.2% 24.11995 264.7 12.8% 33.81996 267.3 16.5% 44.01997 269.0 20.6% 55.31998 271.2 25.5% 69.21999 273.4 31.5% 86.02000 282.2 38.8% 109.52001 285.1 45.0% 128.42002 288.0 48.9% 140.82003 290.9 54.6% 158.72004 293.7 61.7% 181.12005 296.4 67.9% 201.42006 299.1 76.7% 229.52007 301.7 82.6% 249.12008 304.4 88.8% 270.32009 307.0 93.0% 285.62010 309.7 96.9% 300.02011 312.3 100.8% 314.8 Forecast2012 315.0 103.8% 327.12013 317.6 106.4% 338.12014 320.3 108.6% 347.92015 323.0 110.5% 356.92016 325.7 112.1% 364.92017 328.4 113.4% 372.32018 331.1 114.5% 379.02019 333.8 115.4% 385.12020 336.5 116.2% 390.9


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2011 US Wireless Forecast

0

50

100

150

200

250

300

350

400

1990 1995 2000 2005 2010 2015 2020

Year

Mill

ion

s o

f Su

bsc

rib

ers


Wireless F

orecast 2011

Historical Data Source:CTIA & ITU

Total

Analog

Digital

2.5G

3G4G


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U.S. Broadband Households by Nominal Data Rate


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Broadband Wireless

• Unlike current 3G technology, which is nominally classified as broadband but lacks the capacity to deliver true broadband service on a large scale, 4G wireless is a contender


1818

Radio Interface Progression

2005 2006 2007 2008 2009 2010

LTE 1.25-20 MHz 100/50 Mbps

HSPA+ 2x 5 MHz FDD 40/10 Mbps 850/1900 MHz

HSUPA 2x 5 MHz FDD 14.4/5.8 Mbps 850/1900 MHz

WiM

AX

HSDPA 2x 5 MHz FDD 14.4/2.0 Mbps 850/1900 MHz

WCDMA 2x 5 MHz FDD 0.384/0.384 Mbps 850/1900 MHz

EV-DO Rev 0 2x 1.25 MHz FDD 2.4/0.15 Mbps (DL/UL) 850/1900 MHz

EV-DO Rev A 2x 1.25 MHz FDD 3.1/1.8 Mbps 850/1900 MHz

EV-DO Rev B 1.25-20 MHz FDD 4.9/1.8 Mbps 850/1900 MHz

EV-DO Rev C(UMB) (“DBA”) 1.25-20 MHz FDD 70+/30+ Mbps 850/1900 MHz

Fixed WiMAX 1x 10 MHz TDD 15/5.3 Mbps 2.5/5.8 GHz

Mobile WiMAX 1x 10 MHz TDD 14/5.3 Mbps 2.5 GHz

Mobile WiMAX 1x 10 MHz TDD 32/7 Mbps 2.5 GHz

Cellu

lar

VZ Current

VZ TargetRadio Interface

Note: All speeds are theoretical maximums. Device and deployment configurations will constrain attainable throughput capabilities.


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LTE Transforms Wireless Access and Core Networks

to All-IP

ee

19 |


2020

Technology

Throughput

012345678

Today LTE

MbpsLatency

01020304050607080

Today LTE

msec

Cost Efficiency

0

Cost per MB

Today LTE


2121

Expected Performance

Bandwidth

=10MHz

Peak

(Mbps)

Average Sector (Mbps)

Average User (Mbps)

Antenna Configuration

Downlink 86 12-15 7-12 2x2 MIMO

Uplink 28 5-6 3-5 1x2 SIMO

Throughput

Latency (Round trip airlink)

EVDO ~ 50-70 msecLTE ~ 30-40 msec


2222

LTE-SpeedDependent on how much spectrum

Average Throughput

0

1

2

3

4

5

6

7

8

5 x 5 10 x 10

Mbps


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Important developments since 2005

• The acquisition of additional spectrum by the wireless broadband industry, especially in the 700 MHz band.

• The potential of much more spectrum being made available in the next several years as envisioned in the National Broadband Plan[1].

• The explosion in demand for wireless Internet access (and wireless data applications in general) epitomized by the iPhone and Android phones.

• The clash between the user’s expectation that wireless data throughput be like wireline’s and the reality that 3G capacity is severely limited, even if advertised peak data rates are similar. This has led to tiered pricing for 3G and it may for 4G as well.

•[1] FCC, Connecting America: The National Broadband Plan, Chapter 5.


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Most Significant New Threat Is Broadband Wireless (4G)


Lawrence K. Vanston, Ph.D.

Ray L. Hodges

SECOND EDITION


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Our findings, which follow, are neither simple or without qualifications.

Radio technology is not simple and there are unresolved issues.

• Finding #1: 4G wireless broadband has the potential to universally replace wireline broadband at DSL speeds

• Finding #2: In urban and suburban areas, 4G wireless broadband has the potential to be competitive with wireline broadband at VHS broadband speeds and a significant number of households may abandon wireline VHS broadband in favor of wireless. However, wireless is unlikely to completely replace wireline VHS broadband in these areas.

• Finding #3: In rural areas, 4G wireless broadband has the potential to be competitive with wireline broadband at VHS broadband speeds and a significant number of households that have access to wireline VHS broadband may abandon it in favor of wireless. Also, wireless broadband may delay the deployment of VHS broadband, especially by ILECs, to rural areas.

• Finding #4: Wireless broadband at higher data rates (50 Mb/s and above) will likely have to wait for 5G (or 4.5 G) to be competitive on any reasonable scale with wireline.


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Radio spectrum is the lifeblood of wireless broadband

• Currently 534 Megahertz (MHz) of spectrum are licensed to wireless carriers at the frequencies most useful for wireless broadband. Of this, 120 MHz (50 MHz of spectrum assigned to the original cellular carriers in the 1980s and 70 MHz from former UHF television channels auctioned in 2008) are in frequency bands below 1000 MHz which have the most ideal radio characteristics regarding range and building penetration. The other 414 MHZ (including 120 MHz of PCS licenses auctioned to cellular carriers in the 1990s and almost 200 MHz acquired by the Clearwire/Sprint-Nextel partnership) are at frequency bands between 1500 and 2700 MHz which have shorter range for cellular applications.


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The National Broadband Plan (NBP)

• (NBP) recommends another 300 MHz of spectrum in bands between 470 MHz and 2700 MHz be made available within the next 10 years for wireless broadband. Some of this “new” spectrum is already assigned to broadband and it will be reasonably easy to add to the total. Other spectrum, such as the 120 MHz of premium spectrum below 700 MHz (currently assigned to broadcast television) will not be acquired for wireless broadband without a fight, especially by 2015 as the NBP proposes.


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Planned and Proposed Radio Spectrum for Wireless Broadband - Summary

Frequency Bands Current Proposed TotalBelow 1000 MHz 120 MHz 130 MHz 250 MHzAbove 1500 MHz 414 MHz 170 MHz 584 MHzTotal 534 MHz 300 MHz 834 MHz


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An important element of cellular design is subscriber

density, i.e., the number of subscribers per square mile.

• Subscriber density depends on the household density (households per square mile) and the household take rate. Alternatively, population density and the population take rate can be used. For wireline services, we usually use households, while for wireless services we usually use population. Here, we focus on households because we are considering competiveness with wireline service, but remember that each household subscriber may be generating mobile traffic for one or more parties as well as “fixed” traffic from the household.


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Population and Household Density by Category

Pops / HH /

County Type Terrain mile2 miles2

Dense Urban Urban 50000 20,000

Typical Urban Suburb 5000 2,000 Suburb/Small City Sub/Rur 2500 1,000 Rural, Dense Rural 250 100

Rural, Average Rural 100 40 Rural, Sparse Rural 10 4



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Housing density is actually a continuum

Household Density by Percentage of Households

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1 10 100 1,000 10,000 100,000Households per Sq Mile

Pe

rce

nta

ge

of

Ho

us

eh

old

s


Pop D

ensity

Data Source: U.S. Census Bureau

Man-hattan

Apts

OuterSuburbs

CityNeighbor-hoods

DenseRural

AverageRural

Suburbs / Small Cities

SparseRural

TypicalUrban

DenseUrban

Farmland


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Cost per Subscriber for Capacity Constrained Cells

Very High Traffic 5.0 10 90 $780 - $1894 36 $1945 - $4723

Total280 MHz Assuming Assuming

User Data Rate/ Maximum Efficiency Maximum RangeTraffic Overbook Ratio 20 MHz Max Subs Cost per Max Subs Cost perScenario (Mb/s) Channels per Cell Subscriber per Cell SubscriberLow Traffic 0.1 14 6283 $14 - $30 2519 $36 - $75High Traffic 1.0 14 628 $143 - $302 252 $357 - $754Very High Traffic 5.0 14 126 $716 - $1512 50 $1786 - $3771



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One needs to know the details of total spectrum, frequency, terrain, population density, take rates, data demand, etc. to

tell which of the situations apply

From a cost perspective, a very high-capacity, very high-volume system could compete with:

• Low-end DSL because in all cases the cost is under $200 per subscriber.

• High-end DSL under the low cost scenario especially with cells small enough for maximum efficiency where the cost is under $500 per subscriber.

• Low-end VHS broadband because, in most cases, the cost per subscriber is under $1000.

• Typical VHS broadband under the low cost scenario especially with cells small enough for maximum efficiency where the cost per subscriber is under $1200.


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Conclusion for Rural Areas

• 4G wireless broadband has the potential to be competitive with wireline broadband at VHS broadband speeds and a significant number of households that have access to wireline VHS broadband may abandon it in favor of wireless.

• Also, wireless broadband may delay the deployment of VHS broadband, especially by ILECs, to rural areas.

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Copyright © 2004, Technology Futures, Inc. 1 Assessment of Wireless Broadband as a Competitor to Wireline Broadband Ray Hodges Technology Futures,