Spectrum demand for wireless access services - Philip Bates, Director, Analysys Mason

37644-376 | Commercial in confidence

Spectrum demand for wireless access services

Presentation for ACMA RadComms conference

2 October 2013 • Philip Bates


Introduction

Key issues

Methodology

Preliminary results

Contents

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Analysys Mason delivers business benefits to clients worldwide▪ Analysys Mason is a trusted adviser on

telecoms, technology and media

▪ We work with our clients, including operators, regulators and end users, to:

– design winning strategies that deliver measurable results

– make informed decisions based on market intelligence and analytical rigour

– develop innovative propositions to gain competitive advantage

– implement operational solutions to improve business efficiency

▪ We are respected worldwide for our exceptional quality of work, independence and flexibility in responding to client needs

▪ For 25 years, we have been helping clients in more than 100 countries to maximise their opportunities

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Assignments completed

Introduction

Analysys Mason has offices in: Boston • Cambridge • Dubai • Dublin • Edinburgh • Johannesburg

London • Madrid • Manchester • Milan • New Delhi • Paris • Singapore


ACMA has engaged us to prepare spectrum demand and market forecasts to 2025▪ We are looking at wireless access services

for consumers and business including:

– Mobile services

– Fixed wireless services

– Satellite services

– Wi-Fi

(note spectrum use for specialist emergency services, transportation, defence etc is out of scope)

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▪ We have been asked to prepare quantitative forecasts for each year from 2015 to 2020 plus 2025

▪ We have also been asked to provide qualitative analysis of the factors which may influence demand

▪ Our modelling also forms an input to The CIE’s work on the economic impact of mobile broadband (to be presented this afternoon)

Introduction

Project timelineJuly August September October November December

Kick-off Preliminary results

Initial research & analysis

Modelling

Stakeholder feedback

Finalise deliverables

Hand over to ACMADraft report


Introduction

Key issues

Methodology

Preliminary results

Contents

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Forecasting growth in mobile data traffic

▪ Forecasts of mobile data traffic in Australia vary considerably, but those published in 2013 are fairly close to each other, and significantly lower than those published in 2011-12

▪ For our base case we have used a consensus forecast based on data provided by the operators, which is towards the high end of other 2013 forecasts

▪ In the longer term we have assumed that growth continues to accelerate until 2018, but starts to tail off from 2019 onwards

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Mobile data traffic in Australia

Key issues

Sources: Operator-supplied data; Analysys Mason; Cisco VNI 2013; Ericsson Mobility Reports 2013 and 2012; 2011 ACMA White Paper

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Operator consensus (2013)Analysys Mason (2013)Cisco (2013)Ericsson (2013)ACMA (2011)Ericsson (2012)


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% t

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fload

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Home/work Wi-Fi offload Total outside Wi-Fi offload

Outside cellular traffic Home/work cellular traffic

Forecasting how mobile data traffic will be split between cellular and Wi-Fi networks

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Mobile data traffic offloaded through Wi-Fi as a percentage of total mobile data traffic

Categorisation of mobile data offloading by origin of traffic and type of offload

Key issues

Note: Offload percentages are for small- and mid-screen devices

Only a small proportion of total data traffic is carried on mobile networks and most offloading takes place at home or in the workplace

Privateoffload

Publicoffload

Mobileoperatoroffload

Carrier ClassWi-Fi

Passiveoffload

Activeoffload

At home or in the office

Away from home and the office


Forecasting fixed wireless and satellite traffic in light of key role played by NBN Co▪ Demand for spectrum is determined in large part by the technical and commercial

decisions made by a single company

8Key issues

• 2300 sites across Australia

• Expected to cover ~500 000 premises

• Take-up expected to be ~100 000 households by 2020

• 2 Ka-band satellites with 103 spot beams covering 100% of Australia

• High up-front cost for fixed amount of capacity

Satellite FWA

Interdependent


Forecasting the impact of emerging technologies and requirements▪ 10 years is a long time in this industry:

– 5 years ago there were no tablets

– 10 years ago there were no smartphones

– 15 years ago there was no Wi-Fi

▪ New generations of mobile technology typically come along every 10 years

– 2G was introduced in 1993 in Australia, followed by 3G in 2003 and 4G in 2011

– it is likely that 5G will be available in Australia before 2025, but at this stage it is hard to define when this technology will appear or to quantify the impact

9Key issues

2G in Australia

Wi-Fi launch

3G inAustralia

iPhone launch

4G in Australia

Potential start of 5G

iPad launch


Introduction

Key issues

Methodology

Preliminary results

Contents

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Mobile model structure

11Methodology

Spectrum availableSpectral efficiency

Site capacity

Traffic forecast

Cell radiiNetwork coverage

by geotype

Sites required for coverage

Input

Calculation

Total sites required

Extra sites required for capacity

Number of devices Usage per device

Sensitivity

Extra usage

By operator, technology and year:

Extra spectrum

Spectral efficiency

Traffic distribution


Mobile subscriber growth

▪ From 2012 to 2025, the number of handsets grows from 23.4m to 28.9m of which:

– Voice only users decrease from 6.6m down to 2.9m

– Voice and data users increase from 16.8m to 26m

– Penetration remains at 103%

▪ Tablets subscriptions grow from 1m to 6.4m

– From 4% to 23 % penetration

▪ Dongle/laptops subscriptions grow from 3.7m to 4.5m

– Penetration remains at 16%

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Mobile subscribers in Australia

Methodology

Source: Analysys Mason forecast built from operators’ data

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Handsets Of which voice only

Of which voice and data Tablets

Dongles/laptops

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Mobile traffic drivers

▪ Forecasts are based on traffic by technology (3G vs 4G) and type of device (handsets, tablets, dongles/laptops)

▪ We assume that there will a large number of M2M devices but that traffic per device will be small so M2M will not have a significant impact on overall traffic

▪ Voice forecast per subscription is assumed similar for voice only and voice and data handsets

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Data traffic by subscription (MB/month)

Methodology

Source: Analysys Mason forecast built from operators’ data

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3G handset 4G handset

3G tablet 4G tablet

3G dongle/laptop 4G dongle/laptop


Fixed wireless and satellite

14Methodology

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Fixed FWA Satellite

Subscriber numbers(derived from NBN Co corp plan)

Usage (scaled off AM’s forecast of fixed broadband usage)

22 39 52 80

100 122

148 165 178 191

208 221 237 245

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Satellite


Mobile geotypes

▪ Our model considers five geotypes based on population density:

– Dense urban

– Urban

– Suburban

– Rural

– Remote

▪ We assume that networks are rolled out from the most densely-populated areas to the least densely-populated

▪ 2013 coverage levels are derived from public sources. We assume that by 2020 LTE coverage matches today’s 2G/3G coverage

▪ Cell radius also varies by geotype (as well as frequency)

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▪ We assume different amounts of spectrum by operator and geotype, based on actual metropolitan, regional and national holdings

▪ We assume that with each technology, an operator first of all builds a coverage layer using a single band (though in the case of Telstra and Optus the coverage band for LTE is assumed to be 1800MHz until 2014 then 700MHz from 2015 onwards)

▪ When additional capacity is required we assume that this is first provided by adding additional capacity bands at existing cell sites

▪ Once the capacity bands are exhausted we assume that operators start to build additional capacity-only sites

Methodology


Introduction

Key issues

Methodology

Preliminary results

Contents

16


With our base case traffic relatively few capacity-only sites are required▪ Chart shows number of sites by technology

for all operators in Australia

– Total is more than number of unique sites in Australia because many sites support multiple technologies

▪ In 2020 the split is as follows:

– 2G: 16.5k sites

– 3G: 7.2k pure coverage sites, 7.3k with capacity upgrades and 500 capacity sites

– 4G: 14.6k pure coverage sites, 7.0k with capacity upgrades and 2.3k capacity sites

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Logical sites for all operators

Preliminary results – base case

Source: Analysys Mason

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4G capacity sites

4G coverage sites with capacity upgrade

4G purely coverage sites

3G capacity sites



2G capacity sites




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4G capacity sites



3G capacity sites



2G capacity sites



Increasing data traffic by 50% has relatively little impact on the total site count▪ As a sensitivity we increased the amount of

traffic by 50% in 2020

▪ For the total market, this would require:

– 3G: Upgrading 900 more sites and building 600 more capacity sites

– 4G: Building an additional 1.2k sites

– 4G: Upgrading 1.8k more sites and building 2.2k more capacity sites

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Logical sites for all operators

Preliminary results – sensitivity with higher traffic

Source: Analysys Mason


Fixed wireless and satellite

▪ We understand that NBN Co expects to support ~60 active subscribers per base station in 2025

▪ Based on our traffic forecasts we expect this will require an average of <60MHz of spectrum per base station

▪ Since NBN Co has 63 or 98MHz of 2.3GHz spectrum in most of its licensed area, plus 2 x 32.5MHz of 3.4GHz spectrum in many areas, we conclude that it generally has sufficient spectrum to 2025, but we accept that there may be constraints in the ‘metropolitan fringes’

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▪ Based on the class-licensed spectrum currently available, we expect that each of NBN Co’s new satellites will have a total capacity of 80-100Gbps

▪ Based on our traffic forecasts this capacity could be exhausted by 2025

▪ However, the satellite system is being designed based on the spectrum currently available and would probably not be able to make use of additional spectrum released later

FWA Satellite

Preliminary results


At this stage we are looking for inputs to help validate our preliminary findings▪ At present we are assuming that some 3G capacity sites are decommissioned in the

period 2014-2018 – if these sites were maintained and traffic forced on to them then fewer 4G sites would be required

▪ Results are sensitive to the assumptions about:

– % of traffic in the busy hour

– distribution of traffic within geotypes

– evolution of average spectral efficiency of 3G and 4G networks

– extent to which existing spectrum is refarmed

We welcome inputs on all of these points

▪ Based on the feedback that we receive, we aim to finalise the mobile model (and the rest of the study) in November

20Preliminary results


Contact details

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Philip BatesSenior Manager

[email protected]

Analysys Mason LimitedBush House, North West WingAldwych, London WC2B 4PJ, UKTel: +44 20 7395 9000

www.analysysmason.comRegistered in England No. 5177472

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Spectrum demand for wireless access services - Philip Bates, Director, Analysys Mason