February 25, 2016 — A sure sign that Wi-Fi calling is gaining traction is when Apple includes it in their Operating System (OS). The latest beta version of Apple’s iOS 9.3 includes support for Voice-over-Wi-Fi for Verizon Wireless subscribers — the final piece of the carrier puzzle.
On the hardware side, Apple’s iPhone 6, iPhone 6 Plus, iPhone 6S and iPhone 6S Plus all include support for the new VoWi-Fi service. If the user enables the function, the handset will automatically connect to a proximal Wi-Fi network when the cellular signal is either weak or not available. Verizon was the last of the big four U.S. carriers to offer VoWi-Fi to customers.
The new iOS 9.3 is in public beta. That means that Apple customers have the option to use the OS by signing up for access to public betas.
October 29, 2015 — The financial news from Verizon Wireless is upbeat.
Verizon corporate third quarter financials, reported on October 20, showed positive gains for Verizon Wireless: nearly 1.3 million new subscribers, postpaid churn below 1 percent, and $7.7 billion in operating income. Moreover, Verizon corporate maintained guidance for overall 2015 capital expenditures (capex) at $17.5-18.0 billion. We estimate that total 2015 capex budget breaks down roughly: $11.8 billion for wireless, $4.8 for wireline, and $1 billion for corporate.
For the third quarter, Verizon Wireless reported capex of $2.9 billion, down 7 percent from $3.1 billion in 2Q15 but up 18 percent year over year from $2.5 billion in 3Q14. Note that the third quarter dip was not unexpected and is in line with historical network spending patterns.
Third quarter capex accounted for 25 percent of the projected wireless network investment, estimated at $11.8 billion, for the year. Year-to-date, Verizon Wireless has invested 72 percent of its full-year 2015 budget. Capex/service revenues came in at 18 percent for the quarter indicating that the carrier is in an expansion mode.
One point of clarification: Some Wall St. analysts have suggested that Verizon is shifting its capex away from its wireline network in favor of its wireless network. Verizon’s own numbers do not support that view. The chart shows that Verizon’s investments in its wireline network have been the minor portion of its overall capex budget for the past several years.
Get Ready – a Big Uptick is Coming!
Based on full-year guidance, we think 4Q15 wireless capex will come in around $3.3 billion. That’s a 14% jump quarter to quarter, and up 23 percent over the $2.7 billion spent in the fourth quarter 2014. This means that 4Q15 capex will account for 28 percent of the full-year budget.
Verizon Wireless’ infrastructure equipment vendors and contractors should feel good about this outlook. Its capex is ramping through year-end 2015, and spending momentum likely will carry into 2016.
Where is the Wireless Capex Being Spent?
We estimate that that Verizon Wireless’ capex budget splits roughly 70/30 between radio access network (RAN) and the core switching infrastructure.
RAN includes deployments and upgrades of macrocells, small cells, and distributed antenna systems (DAS) used for in-building wireless. Radio gear still accounts for the majority of RAN capex. The balance goes into the RF subsystem including antennas and cables along with towers, shelters and power. RAN capex includes capitalized labor for site acquisition, engineering and installation (E&I). Where carriers own their backhaul systems, that investment is accounted for in RAN capex as well.
Core capex includes routers and switches, network management and operations support systems, and billing systems along with capitalized E&I. Core capex also includes investments in software-defined network (SDN) and network function virtualization (NFV) capabilities.
For now, Verizon Wireless’ focus is on increasing its network densification. This means putting radios closer to customers with high-speed connections that handle growing volumes of mobile data and video. Densification is facilitated with small cells along urban or suburban streets, and DAS inside buildings.
Stay tuned for more in-depth carrier capex analysis. Contact me with any questions.
John Celentano is a principal at Skyline Marketing Group and is on the marketing team of AGL Media Group. [email protected]
September 17, 2015 — Verizon is testing the waters, investigating increased involvement in the health care communications space, Tom Gourley, manager technology HQ in-building, Verizon Wireless, told the audience at CommScope’s Healthcare Networks Summit, Sept. 14, in Minneapolis.
“We are pushing forward,” he said. “Verizon is seriously looking at providing service to the health care market. Beyond providing DAS, we are looking at building up our presence, putting more devices on LTE networks.”
As Verizon pushes toward the enterprise user, health care stands out as an obvious choice because it has already seen the value of sharing the cost of the infrastructure, Gourley said. For example, Verizon has worked with Kaiser Permanente, which paid for 100 percent of its DAS deployment infrastructure.
“I think it’s a good trend. If [hospitals] are willing to share the cost, we need to be there,” he said. “We can’t afford to build all of these systems.”
Gourley said he was at the conference to learn more about the health care space and asked the audience questions about providing asset tracking and telemetry, as well as patient amenity communications to the hospitals.
“Can we evolve telemetry to work off of the LTE network? Would there be opposition to running monitoring information over a public network?” he asked. One audience member responded, “That would be great. One less network to worry about.”
InSite Wireless Group has traditionally done high-profile stadia and subway DAS installations. However, it has had many discussions with health care industry officials and is open to involvement.
The traditional neutral host model in which the carrier pays through capex and rent is transitioning to a business model whereby enterprise will be expected to help pay for the DAS, according to Joseph Mullin, DAS chief technology officer, InSite Wireless Group.
“There are still some venues [to be built out] that can command capex and a rental fee from the carrier, but it is not going to continue. There just isn’t enough money and return on investment there,” Mullin said. “We are seeking a lot more participation by the venue to contribute part or all of the cost. The carriers aren’t going to break down your door.”
InSite Wireless Group may take a management and facilitator role with health care DAS, becoming a liaison with the carrier community
“How can we provide a benefit?” he said. “DAS is a living, breathing thing. It is difficult to keep up a DAS, and liaising with carriers is complicated.”
InSite Wireless Group could help meet carriers’ timetables and different technology needs and keep the DAS up and running smoothly, Mullin said.
August 20, 2015 — In its first foray into VoLTE, Verizon has expanded to almost 4 million customers on what it calls Advanced Calling 1.0, David Small, EVP of wireless operations, Verizon Wireless Capital, said during the Oppenheimer Technology, Internet & Communications Conference, held Aug. 11, in Boston.
“Our call-in rate [to complain] on those customers is not any higher than what we would see from a non-Advanced Calling 1.0 consumer. And I do think they very much value that experience,” he said.
Small went on to say that the carrier has 100 people drive testing the VoLTE network, as well as system performance engineers working with the handset manufacturers and hardware providers to ensure overall network performance. He said the system has achieved a dropped call rate of .4 in half the time of previous network technology upgrades.
“So we feel very good about the service and we are testing it every day and having very good experiences,” Small said.
VoLTE Goes Global
Around the world, a number of contracts for VoLTE, as well as voice over Wi-Fi (VoWi-Fi), were signed in recent weeks.
China Mobile has signed a flurry of contracts to move its VoLTE aspirations forward. Alcatel-Lucent, which heretofore had only penetrated the United States with its VoLTE equipment, received a contract for its Rapport VoLTE communications software from what is known as the world’s largest telecom provider. It will the deploy platform in nine provinces, including Jiangsu and Zhejiang, as well as the cities of Shanghai and Chongqing.
China Mobile is also conducting a trial of Rapport as a network functions-based VoLTE solution. The deployment will also set the stage for China Mobile to offer VoWi-Fi.
Alcatel-Lucent wasn’t alone, thought. Huawei won nearly half of China Mobile’s VoLTE procurement project and was selected to be responsible for deployment of commercial VoLTE networks in the developed coastal provinces. ZTE Corporation said it too was a big winner securing large-scale orders for IP Multimedia Subsystem (IMS) core network solutions from China Mobile to enable the rollout of VoLTE services, including equipment and systems integration.
Elsewhere, Telenor Sweden has chosen Ericsson as the sole supplier for a full-scale upgrade of the operator’s core network, enabling VoLTE and VoWi-Fi to its customers. In Iceland, Síminn (Iceland Telecom) has entered into a five-year strategic partnership with Ericsson to further rollout of LTE across Iceland and eventually deploy VoLTE and VoWi-Fi. Under the agreement, Ericsson will be the prime supplier of all radio access equipment and the common core network, including the Ericsson IMS and Evolved Packet Core.
August 20, 2015 — There is some real movement on the small cell front. Someone other than a vendor is hyping small cells. The industry is gearing up. And hopeful vendors are now expecting a carrier to deploy.
The reason is that small cells are expected to be the primary focus of Sprint’s network upgrade. Macro network upgrades are on the back burner perhaps until after the next spectrum auction. The carrier is bullish on rolling out up to 70,000 outdoor picocells.
And why it may work is because Softbank, which owns 78 percent of Sprint, has already deployed a small cell network in Japan. The company’s hyperdense network uses cloud-controlled base stations no bigger than a suitcase, packing in as many as 150 nodes per square kilometer in Japan’s largest cities. Softbank has also installed thousands of small cells on post offices throughout rural Japan, using satellite backhaul. They want to try this here. We’ll see.
Small Cells (and C-RAN?) in San Fran
My position on small cells has always been that they will play various roles in networks. But it is still a small cell. And in that vein, Verizon Wireless said it negotiated the right to place small cells on 400 San Francisco light poles and utility poles by moving “the brains of the network” to remote locations. Shades of C-RAN. While it isn’t exactly C-RAN, it is close enough for government work.
“What’s unique to this deployment for the United States, is that it’s going to be a C-RAN-type configuration,” said Jake Hamilton, engineering director for Verizon Wireless’ Northern California region. “Our baseband units, or the brains of our network, will be remotely housed in hub locations, and we use dark fiber to connect out to the city … poles on the streets. That really allows us to minimize how much equipment we put on the poles, which was kind of a requirement from … the planning department.”
And finally, Huawei expects to ship 400,000 small cells this year. Huawei expects small cells to play a key role in the future “4.5G” and “5G” network deployments. It is the fastest-growing segment of the company’s business. According to Huawei, the increasing demand for small cells will make the small cell business grow by 18 times in terms of revenue by 2020.
That is promising.