The GSMA reported in August there are now 4 million new HSPA (High Speed Packet Access) subscribers a month.  The total number of HSPA users has passed the 50 million mark globally from 11 million a year ago.  Mobile Broadband is definitely taking off, as discussed in this previous weblog article. 

When I was in the UK in July, I was chatting with a UK Operator's sales person as I installed a pay-as-you-go mobile broadband card in my laptop in their store.  I was asking about the types of customers using the service, how long they'd been sold-out of the ZTE modems, and what returns they see.  An interesting comment was the only returns are when the 3G service does not work at the customer's home, it shows there's a strong fixed to mobile substitution taking place for broadband.

But will mobile broadband provide the same experience as DSL broadband?  Taking a typical 3G roll-out architecture of 3 E1s from a cellsite, which given the recent upgrades in HSDPA to 14.4 Mbit/s means the capacity problem isn't over the air, its on the backhaul, as I've discussed in this previous weblog article.  Given the ATM cell tax, and other framing overheads, the maximum capacity available for the customers' broadband data is about 4.6 Mbit/s.  

Now looking at the figure from a simple MB (megabyte) per month perspective, that gives 1.5 TB (terabytes) available over the month.  Given an urban macro-cell covers between 1200 to 2000 connected customers, assuming 1500 customers means an average 1GB limit.  Which at first glance would appear to provide adequate capacity even if 100% of the customer base were using mobile broadband. 

However, the term I used in the title was customer experience.  The key experience is the many customers watching YouTube or BBC iplayer.  The video you see in the BBC iplayer today is encoded using the On2 VP6 codec at a bitrate of 500Kbps, though they've recently announced encoding using H.264 at 800 kbit/s.  YouTube is a little more sedate 300 kbit/s.

So this means that one cell-site can only support 9 simultaneous On2 VP6 BBC iplayer streams, or 5 simultaneous H.264 streams, or 15 streams of the more sedate YouTube streams.  And that's ignoring all the other browsing traffic (which increasingly includes annoying streaming video adverts rather than easy to ignore banner adverts) and P2P (peer to peer) traffic.  Remember when Tiscali launched in the UK and struggled through inadequate backhaul, even today Tiscali still struggles with customer service.

A critical issue is what are the chances of within a cell-site 10 customers (0.66% penetration) watching a streaming video at the same time during that critical 6PM-11PM period?  Unfortunately the statistics coming from the DSL ISPs (Internet Service Providers) appear to show that chance as significant today.
  
Some ISPs use GE (Gigabit Ethernet) from their DSLAMs into their metro/core networks today.  Compare this to the 3E1s in the example above, which is 0.45% of the capacity of a GE.  To maintain the same experience mobile operators are going to require lots of capacity deep in their network fast, and become more sophisticated than the DSL ISPs in managing the traffic over their 'longer access networks.'  Especially in managing the highly visible streaming video traffic which customers will likely use as a yard-stick to compare ISPs performance in the near future.

A mobile broadband Tipping Point has been reached: HSPA (High Speed Packet Access) is 'good enough' for customers and prices have fallen by a factor of 16 in less than two years.  Three UK (H3G UK) now offers mobile broadband prepay, 10 GBP ($20) buys up to either 1GB or 1 month of access, and its prepay so for regular travelers are no longer subjected to the extortionate 15 GBP ($30) per night internet access charges at UK hotels.  Specifically on the 'factor of 16' data point using Three UK as an example, in '06 the price per MB was 8p/MB, it is now 0.5p/MB (contract package 15 GBP per month for 3GB).  Mobile broadband is growing faster than any previous service, including voice.  Operators are talking about annual subscriber growth rates of over 400%, in one case 100% per month!  It reminds me of the good old 'mobile-gold-rush' days in the '90s, and aren't we supposed to be in a recession?  Mobile Broadband is generally a USB HSPA modem connected to a laptop.

However, the problem is this has happened at the same time as two other trends:

• The internet has gone 'video,' so data traffic is growing exponentially on these broadband ISPs; and
• Computing has gone personal; laptop penetration in some countries is close to 40%.  As data points: the Asus Eee laptop costs between $300-$400, and there will be roughly 40 million laptops sold this year in both the US and Western Europe.

In the UK, the BBC iPlayer is causing fixed broadband ISPs (Internet Service Provider) to complain, customers are now regularly consuming multiple GB per month through their ISP, most of it watching video.  Also new internet-connected HD (High Definition) devices such as the Sony PS3 provide access to games demos and video trailers (all available for free to the customer) where one demo often requires >1GB of data.  The fixed broadband ISPs are now revisiting their network economics.  

For Mobile Operators they the advantage at the moment that customers do not yet expect 'unlimited' mobile broadband access, so the 1, 3 and 7GB limits are not yet a significant deterrent.  However, even with such limits and customers now more readily filling those limits, hence mobile operators must change their network economics from 1c per MB to 0.1 c per MB.  Note, a typical smart phone uses about only 10MB of data per month on average, so laptop access has the potential to increase usage per device by a factor of 100!   The average mobile data bit rate per subscriber was about 10 kbit/s per session, a fixed broadband ISP's average was 25 kbit/s ('07).  Fixed broadand ISPs are estimating their average rate will grow to 70 kbit/s by (2010 or 2011).  The driver as mentioned before is video consumption over HTTP, iPlayer (P2P video), P2P (Peer to Peer protocol) sharing, Sony PS3 downloads, etc.

This tipping point creates a number of opportunities.

On the services side:

• The Mobile web is not just about smart-phones; it's about mobile laptops.  The web is not just about desktop PC access, it's about mobile laptop access.  The use cases are different, hence the opportunities.
  
• With Bluetooth coming as standard in most laptops sold in Western Europe the opportunities for VoIP bypass are significant.  But it will be interesting to see what substitution really takes place.  It can not replace my mobile phone, but it could help save me a few dollars for expensive international calls when I'm settled at a coffee shop.
• Those places where people sit and wait: train stations and trains, coffee shops, airports, in the back of the car, etc. will be far more likely to have sophisticated internet devices connected.  Presenting opportunities in customer service, customer retention, marketing, ways of selling and doing business.
• For enterprises this also changes the mobile office, enabling greater transparency and security of enterprise applications.
• And as discussed at length in other articles on this weblog, provides new opportunities for the Telco API to enhance the web experience of those mobile laptops.

On the network side:

• The core network of mobile operators is going to need to flatten, and do so quite rapidly.
• The backhaul network in mobile operators is already a well covered topic, announcements between O2 and BT show the solutions being adopted.
• HSPA+ is required not for speed, but for the capacity it offers to meet demand in high traffic zones.  HSPA+ was discussed in my Mobile World Congress Summary.
  
• The usual device delays that 3G and HSPA has suffered, may not impact LTE (Long Term Evolution) as greatly as its first application may not be a smart-phone, rather a USB mobile broadband modem powered from the laptop.

Back in September I did an entry on the IDA's IN2015 (Intelligent Nation 2015) initiative.  Quoting from their website:  "The Next Generation National Infocomm Infrastructure (Next Gen NII) is Singapore's new digital super-highway. Next Gen NII comprises complementary wired and wireless networks to ensure Singaporeans enjoy seamless connectivity.  The wired broadband network or Next Generation National Broadband Network (Next Gen NBN) will deliver ultra-high broadband symmetric speeds of 1Gbps and above, to all homes, offices and schools, while the Wireless Broadband Network (WBN) will offer pervasive connectivity around Singapore." 

The Next Generation National Broadband Network (Next Gen NBN) RFP was released on 11th Dec.  Of note is the clear separation of the passive infrastructure (NetCo) from the OpCo that runs the active components.  RSPs (Retail Service Providers) buy wholesale services from the OpCo, and the OpCo rents passive connectivity (fibre) from the NetCo.  It's similar to the UK model where BT Openreach provides the copper, BT Wholesale puts DSL modems on either end and then sells wholesale services to the broadband ISPs (Internet Service Providers).  However, there are two critical differences:

• The copper infrastructure is already there, most home-owners are already connected so there is little build requirement on BT Openreach rather maintenance; and
• The fibre infrastructure may not be point to point, rather use a passive splitter (point to multi-point) to mitigate the financial burden of the fibre access (about 80% of the total network build cost).

The need to build a new infrastructure and the potential complexity of the fibre access is going to require the NetCo and OpCo to work very closely.  It's going to take sophisticated regulation, unless the NetCo builds out a fibre infrastructure with virtually 100% coverage.  Given Starhub (already providing 100 Mbps to customers) and SingTel (will depend on its role, but lets assume its competitive) are not going away anytime soon, this makes the majority of the infrastructure redundant in a perfect competition model.  Even with a S$750m grant, a quick back of the envelope calculation shows that the NetCo will need to wait a long time for payback (>10 years) and is wholly dependent on the performance of the NetCo which does not shoulder any of this financial risk.

Of note in the UK, BT has launched a wholesale product called GEA (Generic Ethernet Access) with rates up to 25 Mbps, definitely enough to provide HDTV and high speed internet access.  So the OpCo and NetCo are bundled together which mitigates some of the operational challenges in rolling-out GPON infrastructure.

In my experience Singapore has a vibrant and extremely competitive mobile market with just 3 competitors.  A simple option could be to license a 3rd broadband service provider to compete with Starhub and SingTel to replicate the success achieved in mobile communications.

Singapore is running an interesting experiment with its IN2015 (Intelligent Nation 2015) initiative.  Quoting from their website:  "The Next Generation National Infocomm Infrastructure (Next Gen NII) is Singapore's new digital super-highway. Next Gen NII comprises complementary wired and wireless networks to ensure Singaporeans enjoy seamless connectivity.  The wired broadband network or Next Generation National Broadband Network (Next Gen NBN) will deliver ultra-high broadband symmetric speeds of 1Gbps and above, to all homes, offices and schools, while the Wireless Broadband Network (WBN) will offer pervasive connectivity around Singapore." 

The plan appears to be creating an 'optical aether' to enable a separation of services from connectivity.  Simply, a service provider doesn't need to worry about the mechanics of reliably streaming a 2 hour HD movie at 16Mbit/s to a customer, because the complete movie is delivered within a few seconds.  In reality the core network is the choke point, as router capacity is not there yet....

On the business structure, the Next Gen NII is an attempt to make broadband access a utility like electricity, gas and water.  Their plan is to have a Consortium (under a PPP, Public Private Partnership) run the network and offer a flat rate connection model for customers, at a similar price to current DSL.  The consortium will NOT act as a service provider over that network.  Of course this is where the business model becomes interesting; to offer a completely new fibre infrastructure throughout Singapore, most probably based upon GPON (Gigabit Passive Optical Network), and make money at a price-point of DSL requires significant innovation.

In Singapore's favour, is an attractive business market, which is still dominated by SingTel, i.e. there's 'margin' available in the business telecom segment.  It has extensive modern utility infrastructure which can in-part be re-used.  And its population density is ideal for just-in-time deployment architectures and technologies. 

A number of business models have been discussed, the chosen one appears to be the Consortium acts as a wholesale provider and retail service providers rent access for their customers (wholesale model).  The analogy I draw is to LLU (Local Loop Unbundling), which has worked very well in Europe, and in particular France where triple-play prices are one third of the US.

However, another option is where the Consortium provides broadband access to customers, and then customers choose their service providers independent of their access provider (retail access model).  Using a utility analogy, as the electricity provider to your TV does not provide the services you watch on that TV, nor should the 'utility' broadband connectivity provider to that TV have a monopoly over those services.

Either way it will be an interesting experiment, and possibly worth testing both business models, where one Singapore region uses the wholesale model, while another uses the retail access model.