Memorandum submitted by Intel Corporation
Broadband Speed
Introduction
Intel Corporation (Intel) welcomes
the opportunity to comment on the "Business & Enterprise Committee to
inquire into Broadband Speed".
Intel's
response has been developed under our corporate technology neutral position
which we have maintained consistently at National, European (CEPT and EC) and
Global (ITU) level and as such we believe our value to Governments and Decision
Makers is as follows -
• Global Reach and Experience: Intel has
an understanding of effective public policy development gained from helping
governments worldwide on digital inclusion, education, health and other
programmes
• Industry Leadership: Intel works with
the entire ICT eco-system and has invested significant time and resources in the
development of so called 4G wireless technologies, generating innovation and
value for money for consumers
• Technology Development: Intel is at
the leading edge of new technology developments and we continue to drive and
shape the market in provision of 'more for less' in PCs and new devices like
netbooks, mobile internet devices and smartphones
Our response is not confidential
and maybe used by the Business & Enterprise Committee without restriction.
Background
Intel generally remains
supportive of the objectives contained in the "Digital Britain (DB) Report"
published June 2009 which outlined the Government's plans to "maximise the benefits from the digital
revolution" but we remain concerned that the broadband speeds
suggested in this, and other, reports are not exactly visionary. We are also
concerned that the DB report and those from the Independent Spectrum Broker
have an apparent bias towards existing technologies, i.e. HSPA and its'
"evolution" to LTE, rather than fully embracing the possibilities enabled
through a more technology neutral approach encompassing more than one
technology solution (LTE) which is several years away from initial commercial
deployment. Other innovative solutions exist today and the WiMAX technology is one
example.
Intel is pleased to see that the Business
& Enterprise Committee are seeking input on the following areas since these
are important areas that Intel believes need more in-depth investigation.
• Whether the target for universal access to
broadband at a speed of 2Mb/s by 2012 is ambitious enough?
• Is the Government right to propose a levy on
copper lines to fund next generation access?
• Will the Government's plans for next
generation access work?
• If companies are providing the speed of
access which they promise to consumers?
• The extent to which current regulation
strikes the right balance between ensuring fair competition and encouraging
investment in next generation networks?
In this response Intel proposes
to take each point separately to be able to address these important topics
adequately. The headers are as follows -
• Universal Access 2Mb/s Broadband by 2012
• Government Levy on Copper Lines to Fund
Next Generation Access (NGA)
• Government's Plans for Next Generation
Access (NGA)
• Broadband Speeds Today; are they meeting
Consumers Expectations?
• The Balance between Competition and
Encouraging Investment
Universal Access 2Mb/s Broadband by 2012
A key assumption that is being
made is that today's technologies and their "evolution" are capable of providing
mobile broadband services to a mass-market. Intel does not necessarily agree
with this position and the move to OFDM-based technology (WiMAX or LTE)
is essential to quality of service once demand for these services grows beyond
initial market penetration. It is unclear to Intel when LTE will actually be
commercially available and deployed in support of the DB objectives.
It is clear from the litigation
action taken by two of the incumbent Mobile Network Operators (MNOs) that
investment in additional spectrum capable of delivering true mobile broadband
is not a priority. The focus for the MNOs is to invest in network
infrastructure that maximises voice-centric technology coverage (through GSM re-farming
and acquisition of the Digital Dividend spectrum) to the detriment of capacity.
It is therefore highly unlikely that those UK citizens, who will depend on a
wireless solution as part of a Universal Service Commitment (USC), will enjoy
data rates comparable to current ADSL speeds and in many instances will receive
no broadband at all.
In fact the MNO public
pronouncements state that their existing 3G networks are more than capable of
providing mobile broadband and associated services. These statements make false
assumptions about the additional load that PCs are placing on their networks. A
single 3G cell is incapable of even delivering a service once there are more
than 2-3 PCs trying to access the BBC iPlayer service simultaneously. This problem
will be exacerbated once mobile devices with PC-like capabilities are available
from 2010. A recent comprehensive study[1] carried out by Arc Chart
which looked into the performance of 268 wireless carriers in 103 Countries
worldwide concluded that the average download speed was just 1Mbit/s. The
report also went on to say that In the UK, networks show poor overall
download speed for such an advanced market, while across the Channel, French
networks have 3G download speeds amongst the best in the world."
There have been a number of events
that have further compounded delay to the release of the 2.6 GHz band via an auction
in the UK.
Ofcom's original timetable for the auction of 2.6 GHz spectrum was late 2008
and now is likely to be second half of 2010 at the earliest. The UK has had one
of the more progressive regulatory administrations in the world. The constant
delay in the release of spectrum (2.6 GHz) is seriously endangering the UK's International reputation and will see the UK losing its status as the leading European
Country capable of delivering new innovative technology and services which
would maximise the benefit for the UK consumer.
Now, more
than any time in recent memory, there is an immediate need for economic
stimulus as evidenced by the extraordinary actions taken by Administrations in
this regard across the world. The cost of delay in the release of the 2.6 GHz
band could be enormous. Economists Thomas Hazlett and Roberto Munoz estimate
that the net present value to consumer from making additional wireless spectrum
available is 10 to 20 times the revenues generated by auctioning that spectrum.[2]
Thus, the benefit to consumers from auctioning the 2.6 GHz band could be
billions of dollars.
The cost of
delaying these benefits for years, as regrettably has happened in this case,
should not be exacerbated by additional delay.
The UK has one of
the highest internet usage rates in the world yet its mobile broadband
capabilities fall well short compared to other comparable Countries. The DB
vision does not appear to address these shortcomings.
Government Levy on
Copper Lines to Fund Next Generation Access (NGA)
The Next Generation Fund (NGF) for NGA appears to impose higher costs
on fixed line operators only. Intel notes that the existing MNOs claim to offer
mobile broadband services today yet they are not included as a source for the
NGF. According to these MNOs 3G mobile services are expected to play a
significant part in delivering the USC and therefore it would seem right and
justified to include 3G mobile connections in the revenue generation of the
NGF. There needs to be balance across
the Industry in this effort to deliver the USC.
Government's Plans
for Next Generation Access (NGA)
A key policy
objective of the Independent Spectrum Broker, as stated by the Government in
its interim report had been the "Successful
deployment of next generation mobile networks."[3]
Throughout the Independent Spectrum Broker Report it highlighted NGN and next
generation mobile technologies. Indeed in justifying his preferred solutions
the Independent Spectrum Broker stated:
"The rationale for an
integrated approach derives largely from the fact that NGM technologies require
large blocks of spectrum (either operated by a single party or multiple parties
working collectively with contiguous spectrum) for their potential to be fully
realised - blocks of 2 x 10 or (preferably) 2 x 20MHz - and that truly national
high capacity networks require spectrum at both low and high frequencies. Addressing these requirements in an
integrated way, if that can be achieved quickly, should give operators greater
certainty over their future spectrum holdings whilst continuing to support a
competitive market outcome. Consequently
UK citizens and consumers
could be amongst the first in Europe to
benefit from the services offered over nationwide NGM networks."[4]
Therefore the original Independent Spectrum Broker
sought to promote the deployment of NGM technologies:
"... by imposing regional coverage and access
obligations on all three 2 x 10MHz blocks of the 800MHz. Each block would carry a basic national
coverage obligation at a specified speed (say 2 Mbps) to be achieved by a
specific date. Furthermore, each of the
licences would carry greater coverage obligations, of perhaps 99% population
coverage - as well as access obligations - at a specified speed in a specific
geographic area of the UK to achieve near-universal coverage of NGM."
However the new draft ISB proposal abandons this push
for NGM by adopting the lesser, existing 3G performance requirements of "downlink speed in excess of 768kbps in
outdoor locations in a lightly loaded cell" and "downlink
speed in excess of 1.5Mbps in outdoor locations in a lightly loaded cell"
stating "3G HSDPA
services have already brought mobile broadband services to a large part of the
country. These obligations will enhance and extend this coverage."[5]
It also
ignores any complementarities among bands in the provision of NGM when it fails
to impose the reduced 3G service requirements on the 800 MHz
spectrum. As stated in the draft proposal regarding Retail Service
Obligations "The
licensee may provide this service using any spectrum band available to them
including arrangements made under spectrum or network share agreements." Therefore the use of the
Digital Dividend spectrum, heralded as a key component to deliver broadband to
the masses, is not even considered as necessary or relevant in the new proposal
in pursuit of this important DB objective.
While we believe the original Independent Spectrum
Broker report overstated the complementaries among bands,[6]
with this puzzling flip-flop, the new proposal both delays the deployment of
current NGM technologies by delaying the 2.6 GHz auction and abandons its
complementarity rationale which provided its primary justification for the
delay. It is hard not to conclude that the one consistent effect of both the original
Independent Spectrum Broker "preferred solutions" and the still worse new draft
proposal is to simply benefit existing incumbent operators to the detriment of UK consumers.
Intel also notes with interest some recent articles in
the press which confirm our view "don't expect LTE any time soon". The
following examples of publicly available quotes are contained in the following
article entitle "Ericsson:
HSPA Key to LTE Transitions[7]"
• HSPA is not only an evolutionary step to LTE;
it is also a long-term interim technology that will allow Telstra to postpone
large-scale LTE deployments.
• Thanks to the capabilities of HSPA, Telstra
plans to use LTE only in high-traffic zones and plans to stick with HSPA for
the foreseeable future in lower-capacity areas, according to Telstra's
executive director of wireless engineering and operations, Mike Wright.
• Ultimately, Ericsson finds itself both
touting the virtues of 4G mobile broadband while pointing out that HSPA can
allow carriers to take their sweet time transitioning to it.
Broadband Speeds Today; are they meeting Consumers
Expectations?
Intel is aware of an increasing
number of press articles complaining about the user experience on today's
mobile broadband networks where the user expectations are not realised by the
apparent promises given by the MNOs.
The way in which consumers are using more and more date-centric devices
which require large broadband capacities is changing the fundamental dynamics
of the network and stretching existing networks capabilities to the limit. A
great example of this is the iPhone where the average iPhone owner can also use
10 times the network capacity used by the average smartphone user. The average
smartphone user is using network capacity already significantly higher than
that of a normal voice user. Owners of the iPhone 3GS (the
newest model) "have
probably increased their usage by about 100 percent[8]".
AT&T
(who have exclusive rights at the moment for iPhone) in the US acknowledge this
"It's been a challenging year for us,
overnight we're seeing a radical shift in how people are using their phones,
there's just no parallel for the demand[9]".
Intel understands that the majority of the ~$18 billion that AT&T will
spend this year on its networks will be diverted into upgrades and expansions to
meet the surging demands for data capacity.
The company has also delayed bandwidth rich features like multimedia
messaging, or text messages containing pictures, audio or video. It is also
postponing "tethering," which allows the iPhone to share its Internet
connection with a computer, a standard feature on many rival smartphones.
AT&T says however it has no intention of capping how much data iPhone
owners use.
What is important to realise is that the MNOs receive their greatest
revenue stream (the "cash cow" as T-Mobile put it in a recent article) from
voice and this exponential increase in data demand is questioning the business
model and therefore sucking capacity from the network which is needed for
high-value voice. The result is dropped
calls, poor irregular service, delayed text and voice messages and glacial download
speeds as cellular networks strain to meet the demand ultimately resulting in
outraged customers. See "Customers Angered as iPhones Overload
AT&T" [10] in New York Times published 2nd
September 2009.
Globally, mobile data traffic is expected to double every year
through 2013, according to Cisco Systems "Whether
an iPhone, a Storm or a Gphone, the world is changing. We're just starting to
scratch the surface of these issues that AT&T is facing[11]".
The reality to actual broadband speeds is startling as a recent
article published this week "Vodafone rebrands, but UK mobile
broadband claims disappoint[12]"
states -
• A new survey indicates that UK mobile
broadband providers are delivering, on average, just 24% of the speeds they
advertise.
• According to comparison site Broadband
Expert, which tested 3,342 mobile broadband connections, the average download
speed was 1.1Mbps compared to the average advertised maximum speed of 4.5Mbps.
In fact, Vodafone delivered the fastest actual speed, averaging 1.3Mbps, but
was also the most over-confident in its advertising, promising 7.2Mbps.
• The real world speeds did not vary greatly
between carriers, although T-Mobile was the lowest at 900Kbps (20% of its
advertised speed, also 7.2Mbps, compared to Vodafone's 18% score). 3UK achieved
the highest percentage of advertised speeds - delivering 1.2Mbps while
advertising just 3.6Mbps.
• Rob Webber, Broadband Expert's commercial
director, said in a statement: "Advertising unrealistic speeds will not
help the long term growth of mobile broadband or the reputation of the
providers if customers feel they are being misled."
This is just the "tip of the iceberg" and Governments need to
understand the limitations of existing networks, embrace / enable innovation,
and implement a truly visionary broadband digital world (wired and wireless).
Splitting out the middle of the 2.6 GHz spectrum for a separate
auction might be a practical way of delivering a wireless broadband network to
market in time to meet the requirements contained in the Digital Britain Report
but that auction needs to be structured in such a way as to encourage new
entrants. One approach, which we understand has been recommended by the
Independent Spectrum Broker, would be for the available spectrum to be
auctioned as a single block. This would encourage a new entrant to the market, while
discouraging blocking by the incumbent mobile operators.
The Balance between Competition and Encouraging
Investment
By assuming a market view driven by incumbent mobile operators (MNOs),
the Digital Britain Report contains proposals which appear anti-competitive since
they give the impression that the existing technologies (3G, HSDPA) deployed
plus their "evolution" ("Long Term Evolution", LTE) will enable broadband
services in the timescales envisioned by the Government (2012) but we believe
that this position will actually delay innovation in the UK market. One
opportunity that could be severely affected are the London Olympics, where the
opportunity for an event to act as a show-case for British innovation and a
visionary worldwide lead could be lost forever if the report's recommendations
are followed which disadvantage truly innovative broadband technologies, i.e.
WiMAX which is commercially available today and deployed in US, Russia, Japan
and S. Korea to name but a few notable deployments.
The 2012 Olympics provides the UK with a once in a lifetime opportunity
to showcase the UK both in terms of sporting achievements as well as the
technology and services we are able to offer the world. By 2012 devices will be
available which will do even more than a PC can do today, combined with
location-awareness to enable many different applications and services for the
consumer. These services and devices will require true mobile broadband (not
3G). The IOC rules state that technical infrastructure must be in place 2 years
before the actual event, which gives us a deadline of summer 2010 to put a 4G
network in place for 2012. WiMAX is the only guaranteed 4G mobile broadband technology
that can deliver against this timeframe. Spectrum will also need to be
auctioned ideally early 2010 in order to have a fighting chance of having a
network in place in time for the IOC deadline. The Russia "Yota" network example below
demonstrates what can be achieved in a short space of time with WiMAX.
LTE is not the only OFDM based (sometimes referred to as 4G) wireless
technology. In fact WiMAX, which is also OFDM based, is deployed already throughout
the world. "Clear" (a 2.6 GHz Operator) in the US is rolling out a WiMAX network
at between 1/10th and 1/20th the cost of a similar 2G/3G network. The
subscribers get super fast internet download speeds of up to 4Mbps and plenty
of capacity all for a standard "all you can eat" price. A similar network is
being built in Russia by
Yota who will have provided full coverage in the cities of Moscow
and St. Petersburg
in less than 18 months. The average
traffic per user is >10GB per month which is about 100 times higher than an
average 3G subscriber.
WiMAX is not only years ahead of LTE it has a lower cost structure (LTE
has embedded Intellectual Property costs) which means that the cost to the
consumer will be lower and therefore it fosters faster adoption of 4G by the
population. The Independent Spectrum Broker Report which we expect BIS to
broadly adopt its recommendation appears to take the view that LTE is already
the dominant technology. WiMAX is here today and its absence from the UK is directly
attributed to the continued and unnecessary spectrum auction delays. Based on
the litigation, against the Ofcom plan to release 2.6 GHz, initiated in May
2008 by T-Mobile and subsequently O2 it is evident that the objective is to delay spectrum release and avoid competition
from new technologies that are commercially available today.
Delay in spectrum release
should be avoided at all costs and a market forces approach should continue to
be the key objective of UK
policy and spectrum regulations.
Friday,
25 September 2009
[1] The Mobile
Broadband Performance of Carrier Networks, September 2009 by Arc Chart
[2] Thomas W. Hazlett and
Roberto E. Munoz, " A Welfare Analysis of Spectrum Allocation Policies,"
Manhattan Institute for Policy Research, June 10, 2004, p. 17.
[3] Digital Britain Final Report June 2009
[4] Report
from the Independent Spectrum Broker: findings and policy proposals; Final
Report 12th May 2009
[5] A proposal from the Independent
Spectrum Broker; Draft - 25th August 2009
[6] As Intel charged in its 20 July letter: "However, the complementarities of auctioning
these bands simultaneously appear overstated. The relatively small amount of
Digital Dividend spectrum available would not accommodate the larger channel
sizes needed for next generation mobile networks. Indeed, the most important
complementarity of the Digital Dividend spectrum with other bands may come, not
from its propagation characteristics, but the additional capacity it could
provide existing voice and low bandwidth data networks with minimal network
redesign."
[7]
http://www.wirelessweek.com/News/2009/09/Ericsson-HSPA-LTE-Transitions/
September 16, 2009
[8]
Chetan Sharma, Independent
Wireless Analyst
[9]
John Donovan, CTO AT&T.
[10]
The New York Times http://www.nytimes.com/2009/09/03/technology/companies/03att.html
[11]
The New York Times http://www.nytimes.com/2009/09/03/technology/companies/03att.html
[12] http://www.rethink-wireless.com/?article_id=1927
23rd September 2009
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