Memorandum submitted by Intel Corporation
INTRODUCTION
Intel Corporation (Intel) welcomes the opportunity
to comment on the "Business and 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 may be
used by the Business and 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, ie
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 and
Enterprise Committee are seeking input on the 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[91]
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.[92]
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."[93]
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."[94]
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."[95]
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,[96]
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[97]".
— 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 ".[98]
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".[99]
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"[100]
in New York Times published 2 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".[101]
The reality to actual broadband speeds is startling
as a recent article published this week "Vodafone rebrands,
but UK mobile broadband claims disappoint"[102]
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, ie 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 two 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.
25 September 2009
91 The Mobile Broadband Performance of Carrier Networks,
September 2009 by Arc Chart. Back
92
Thomas W. Hazlett and Roberto E. Munoz, " A Welfare Analysis
of Spectrum Allocation Policies," Manhattan Institute for
Policy Research, June 10, 2004, p. 17. Back
93
Digital Britain Final Report June 2009. Back
94
Report from the Independent Spectrum Broker: findings and policy
proposals; Final Report 12 May 2009. Back
95
A proposal from the Independent Spectrum Broker; Draft - 25 August
2009. Back
96
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." Back
97
http://www.wirelessweek.com/News/2009/09/Ericsson-HSPA-LTE-Transitions/
16 September 2009. Back
98
Chetan Sharma, Independent Wireless Analyst. Back
99
John Donovan, CTO AT&T. Back
100
The New York Times http://www.nytimes.com/2009/09/03/technology/companies/03att.html Back
101
The New York Times http://www.nytimes.com/2009/09/03/technology/companies/03att.html Back
102
http://www.rethink-wireless.com/?article_id=1927 23 September
2009. Back
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