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Bill St. Arnaud is a R&E Network and Green IT consultant who works with clients on a variety of subjects such as the next generation research and education and Internet networks. He also works with clients to develop practical solutions to reduce GHG emissions such as free broadband and dynamiccharging of eVehicles (See http://green-broadband.blogspot.com/) . View my complete profile

Tuesday, August 16, 2011

Apple's strategy to bypass carriers - opportunity for R&E networks to build their own national wireless broadband networks

[Telcos and cablecos are probably the most conservative and least innovative companies in the world.
Their continued existence largely depends on historical government granted monopolies. Yet surprisingly many governments see telcos/cabelco as the vanguards of IT innovation, especially in smaller jurisdictions. Countries that have telcos and cablecos protected from foreign competition and the benefit of captive regulators as in Canada have seen the rapid demise of innovative companies outside of the telco sphere. Their high profitability and traditional “bell uber alles” view of the world makes it difficult for other business models to emerge. Governments never seem to learn the lesson that protectionism hurts the domestic economy far more than it benefits the few targeted companies. For a good analysis of protectionism and national productivity please see Canadian Council of Academies report - INNOVATION AND BUSINESS STRATEGY Why Canada Falls Short. ( http://goo.gl/zFPXk) . In countries with more open competitive markets like the US where there is large IT counter balance to the telco/cable in companies like Apple, Google, etc we see considerable innovation in new network business models and architectures (however the US may soon follow the Canadian route given the significant market consolidation with the recent Comcast/NBC merger and upcoming AT&T/Tmobile merger). On the other hand countries like Australia and Netherlands are becoming hubs of IT innovation because of their decision to impose structural separation and break the monopoly power of the telco/cableco. R&E networks I think can also play an important role in creating disruptive innovation with new business models and architectures such as the deployment of customer owned dark fiber, open lightpath exchanges and the recently announced Gig.U initiative in the US. Several R&E networks like AARnet in Australia, JANET in the UK and SURFnet in the Netherlands also have announced plans to deploy national broadband wireless networks for their researchers and students. This latest technology development from Apple may further propel the development of new business models and architectures for national broadband wireless R&E networks. As well, the Towerstream business model in deploying and managing a national “shared” Wifi network to be used by several different wireless carriers is a business model that is already use in many R&E networks using Eduroam. Partnering with companies like Towerstream may allow R&E networks to quickly extend the reach of their national networks. Some excerpts from GigaOM articles – BSA]

http://gigaom.com/apple/should-apple-buy-a-carrier-or-just-go-around-them/?utm_source=social&utm_medium=twitter&utm_campaign=gigaom

Apple is famous for its “own and control” philosophy where it controls the operating system and hardware of its devices, and more recently, its heavily guarded gates to its app stores, both iOS and Mac. When it comes to the iPhone, the main element that’s still much beyond Apple’s reach is the carriers… the company is continuing to rack up patents on methods that could allow it to do an end-run around carriers.
A few days ago, AppleInsider spotted a patent filing from Apple that proposed a way for a smartphone to store multiple wireless carrier configurations on a single phone that would allow the owner to switch between them at will:
Apple could help users find the carrier that is best for them by ranking the features and prices of service providers based on personal preferences. For example, some users may be interested primarily in voice plans, while others may need features like unlimited text messaging.
Based on a user’s needs, Apple’s system could assign a priority ranking to carriers and their respective configuration profiles, allowing users to easily find a plan and provider that are right for them.
That follows a similar patent published in February. In October, Stacey Higginbotham reported here that Apple is working on a SIM card with Gemalto that would allow consumers in Europe to buy an iPhone and choose a carrier online or through the App Store without having to buy from a specific provider.
[…]
If Apple pushes ahead with this offering, it will essentially sell devices at unsubsidized prices through their retail channel. This would completely sidestep the carriers. Consumers will pay full price up front and then possibly chose the service provider through Apple’s cloud services. Carriers will then be forced to offer subsidies to entice users to sign on to their plans. The final hardware acquisition cost for the user may not end up being materially different with this model. This turns on its head the current sequence of buyers first choosing the carrier and then the device. In essence, it reflects the rising power of Apple.
[..]
For example, if Enterprise A subscribes to the service, when employees see a free Wi-Fi hot spot, or a cheaper cell provider, their device might automatically elect to use that to connect as opposed to a more expensive cellular company. Plus, as consumers bring their own devices into the workplace, it’s possible that such a service could be implemented to push people over to the carrier that the enterprise already has a relationship with, when employees use their phones during work hours. This would allow people to divide their personal phone time and their work phone time more easily and still have work pay for part of the usage.
It also could allow Apple to sell one model of its phone around the world, depending on the radios it crams into the handset. So maybe it would be about letting the consumer choose, and thus take out the carriers, but it might also be a way for Apple to build one version of its phone and then let the company that activates it toggle it to the appropriate setting. Of course, once the capability is on the device, it would become a popular target for folks trying to disintermediate the carriers even without Apple forcing the issue.

http://www.fiercebroadbandwireless.com/story/paolini-wi-fi-offloading-build-your-own-wi-fi-network-or-share-it/2011-08-02?utm_source=feedburner&utm_medium=twitter&utm_campaign=Feed%3A+volweb%2FWRsA+%28News+from+openspectrum.info%29&utm_content=Twitter

Wi-Fi offloading - build your own Wi-Fi network or share it?
For mobile operators fighting network congestion, Wi-Fi offloading has been an unqualified success. In some high-traffic locations in Hong Kong, up to 80 percent of the cellular data traffic is offloaded. In South Korea, KT Telecom has 62,000 hotspots which are actively used for Wi-Fi offload of cellular traffic. The operator plans to add 45,000 more locations during 2011.
[..]
An increasing number of mobile operators are looking at Wi-Fi offload to relieve network congestion, keep costs under control, and improve the subscriber experience. As in many public locations Wi-Fi access is free and most households and office locations with smartphone users have Wi-Fi, offloading cellular traffic to these networks is a low-hanging fruit. The marginal cost to both operator and subscriber is
[..]
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The inherent lack of control over Wi-Fi networks and the fact that they are not developed or operated as an integral part of the cellular networks makes Wi-Fi offloading an ideal candidate for a wholesale or infrastructure-sharing model, in which one mobile operator or third-party operator builds and operates a Wi-Fi network that can be shared among operators, or in which one Wi-Fi operator builds and runs the networks for a mobile operator.
Although mobile operators cannot use the Wi-Fi network as a differentiator from other operators if they share the same network, they gain access to a much wider network with higher capacity than they could if they built one on their own at a comparable investment level, and do not have to risk to get distracted by the Wi-Fi network as they try to upgrade 3G or deploy LTE.

To date, the success of infrastructure-sharing initiatives has been very limited in the U.S., where operators do not seem to be under sufficient pressure to relinquish total control over their networks (although Sprint Nextel's (NYSE:S) plans to develop 4G network in partnership with LightSquared and Clearwire (NASDAQ:CLWR) seem to indicate a more welcoming attitude towards infrastructure sharing). This makes a third-party network for Wi-Fi offload a risky proposition, but nevertheless one that may gain acceptance because the need of operators to act quickly to increase network capacity in high traffic locations as their resources are more effectively aimed at their 4G networks.
Towerstream has launched an ambitious project to build a near-carrier-grade Wi-Fi network (to the extent that this is possible using license-exempt spectrum) that mobile operators can use for traffic offload. They decided to build the first network in Manhattan (San Francisco is next), where they have 1,000 Wi-Fi locations, with a plan to grow to 1,500. The next 500 locations will be chosen on the basis of "heat maps" generated by social networking traffic, which is expected to be correlated with mobile data traffic. The Manhattan network is currently in a trial stage, but we should expect tenants in a few months' time.
[..]
Towerstream approach and core advantages are distinctively different. The Towerstream network is optimized for offload and covers mostly outdoor locations, which pose a very different set of challenges than indoor locations such as Starbucks. Not only equipment has to be protected differently if installed outdoors, but power and backhaul connectivity may not be available or too expensive. Here Towerstream advantage is that it has access to backhaul connectivity (Towerstream is an enterprise wireless service provider in 12 cities in the U.S.) and has the experience in gaining access to a wide-range of outdoor mounting assets.
[..]
The success of a third-party business model can greatly expand the potential for Wi-Fi offload to address congestion in cellular networks. But intriguingly it can also offer a very good model for small cell deployments, where very similar real estate and backhaul challenges exist and are tempering mobile operators' enthusiasm for emerging heterogeneous topologies.
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Green Internet Consultant. Practical solutions to reducing GHG emissions such as free broadband and electric highways. http://green-broadband.blogspot.com/
email: Bill.St.Arnaud@gmail.com
twitter: BillStArnaud
blog: http://billstarnaud.blogspot.com/
skype: Pocketpro

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Green Internet Consultant. Practical solutions to reducing GHG emissions such as free broadband and electric highways. http://green-broadband.blogspot.com/
email: Bill.St.Arnaud@gmail.com
twitter: BillStArnaud
blog: http://billstarnaud.blogspot.com/
skype: Pocketpro