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Background on Opportunities in Broadband Leasing

Understanding the Opportunities

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2013 edition:
Opportunities in Broadband Leasing

Broadband leasing

Thintri, Inc. announces the release of Opportunities in Broadband Leasing, a new market study that surveys growing opportunities in bandwidth leasing, particularly wireless broadband leasing. The report discusses the imminent shortage of available wireless bandwidth, explores the sources of that shortage in terms of the explosive growth in wireless data traffic, with an analysis of the individual markets contributing to that growth in demand, including the latent demand in rural and other underserved markets. A discussion of the growth and development of today’s wireless networks with new technologies such as 4G and LTE includes the adaptation involved in today’s wireless networks, namely, the offloading of data traffic off of cellular networks and onto WiFi and other types of networks.

Established fixed wired broadband (optical fiber, DSL, cable) is analyzed, along with the leasing opportunities already established in dark fiber and wavelength services.

Finally, wireless technologies, particularly millimeter waves and TV white space, are presented with a thorough analysis of the markets available to them, in terms of both system sales and leasing opportunities, all enabled by the imminent wireless broadband crisis.

The report separates hype from reality and assesses the dramatically changing landscape facing telecommunications providers, and the opportunities for them and others who are prepared to address the dramatic opportunities now emerging. Forecasts are supplied for demand in data traffic and systems sales, under current conditions going out to 2020.
  • Background: The Bandwidth Crunch           
    • Sources of Wireless Data Traffic Growth
    • Current Approaches to Expanding Capacity

  • Demand Drivers
    • Consumer Markets
    • Non-Consumer, Business and Industrial Markets

  • Rural Broadband and Underserved Markets
    • Wired Options
    • Wireless Options
    • Wireless Rural Broadband Demand

  • Evolution and Options in Today’s Wireless Networks
    • 2G/3G, 4G, Long Term Evolution (LTE), WiMAX
    • Backhaul
    • Bandwidth Scarcity and Optimization Schemes

  • Mobile Data Offloading
    • The Need for Data Offloading
    • Today’s Offloading Market

  • Fixed Wired Broadband
    • Optical Fiber Networks
    • DSL
      • Very High Speed DSL, Vectored DSL
    • Cable

  • Dark Fiber & Wavelength Services
    • Market Drivers
    • Wavelength & Lit Services vs. Dark Fiber

  • The Opportunities: TV White Space
    • The Regulatory Environment
    • Spectrum Management
      • Database Approach
      • Dynamic Spectrum Access
    • Applications and Markets
    • Market Growth

  • The Opportunities: Millimeter Wave Systems
    • Applications and Users
    • The Millimeter Wave Telecom Market
    • Market Growth 

  • Wireless Bandwidth Leasing
    • Existing Models: MVNOs, Lightsquared
    • Trends in Wireless Bandwidth Leasing Demand


Background on Opportunities in Broadband Leasing

The global telecommunications industry faces an imminent crisis in growth of mobile data traffic, and its inability to meet growing demand with the industry’s present (and planned) infrastructure. Wireless carriers compete on the basis of coverage and performance. Both are at risk in the near future.

The last few years have seen the beginning of a significant shift from fixed (mostly wired) to mobile (wireless) data transmission.

Exponential growth of data traffic over cellular networks has led network operators to look at new, alternative approaches to managing congestion, because the pace of building out new networks is too slow by itself to keep up with bandwidth demand. Already the incidence of dropped cellular calls has increased markedly.

In 2010, mobile traffic was about 240,000 terabytes (TB) per month. By 2015, that is expected to grow to 6.3 million TB per month. At that rate, all the mobile traffic of 2010 will be carried in the first two weeks of 2015. 

In response, carriers are adjusting their business models, expanding coverage areas, deploying 4G and LTE networks, taking advantage of picocells and femtocells to enhance available bandwidth. Most importantly, they are beginning to offload data traffic onto other networks, primarily WiFi.   

It is this dire need for greater network capacity, combined with the need for carriers to find bandwidth quickly where available, that has presented some unique business opportunities, which are highlighted in this report.

While basic-feature handsets still make up 88% of the mobile telephone market, and home gateways and other wireless devices will continue their traditional growth, data traffic consumption is rapidly moving to a new generation of smartphones, tablets and laptops/netbooks. On top of that, a potentially enormous machine-to-machine (M2M) market is emerging which will grow to consume vast amounts of bandwidth, much of it wireless, in the near future.

Other market drivers are making themselves felt as well. Education and healthcare, for example, are rapidly moving toward greater use of mobile data.  

The benefits to schools and colleges connecting to the Internet by broadband wireless networks are many. Remote learning, virtual classrooms that can be attended by students everywhere without regard to distance, is increasingly used to establish presence of academic institutions throughout the world.

At the college/university level, the introduction of campus- or building-wide wireless networking options will also act to include research communications and academic data transfer on wireless networks.

Today's healthcare is a very data-intensive business. Increasingly, medical institutions need high-bandwidth connections to run demanding tasks such as e-mailing x-rays, MRI scans and other medical images, sharing databases, transferring medical records and other tasks.

Demand for wireless medical services is anticipated to increase by 50% per year throughout the decade. Including mobile applications, the digital health market is estimated to have been $1.7 billion in 2010, growing to $5.7 billion by 2015. Consumers today have made use of more than 200 million health-related downloads on portable devices, with that number growing more than 100% per year.

One of the greatest disruptive influences in today's mobile networks is machine-to-machine (M2M) applications, namely, the communications between separate electronic devices without human intervention. This "Internet of things" promises to remake a host of industries.
Most of these connections will be from hardware that will be connected to the Web independent of human interaction. Some will be connected appliances such as household refrigerators and washing machines, as well as healthcare devices, and consumer electronics like televisions, game consoles and cameras.

Another big problem the world over is bringing the benefits of the Internet age to those who, because of geography, limited resources and lack of proximity to digital infrastructure, have been left behind. Internet access is inherently more difficult to bring to sparse populations due to higher costs, given the greater number of network links that are required to reach the population.    

Wired solutions, preferable both in cost and performance, do not generally reach locations of low population density, which has left much of the rural population underserved or unserved, although DSL and even some optical fiber networks are extending their reach outside urban and suburban areas.  

The unserved/underserved market in the US is 3 to 6% of the population, almost all in rural locations. In many nations, the percentage is much higher.  The demand for broadband access in underserved areas, while a relatively small fraction of the whole, is nevertheless significant.    
The main focus in reaching rural customers is on wireless technology, which will in many cases serve to extend existing fiber or other fixed wired networks outside their normal ranges.

That extension of fiber networks need not apply only to rural and underserved markets. As the report shows, there is significant demand for broadband capacity beyond established fiber networks in heavily populated, even congested areas. Quite often, in an urban environment with a high density of fiber networks, extending those fiber cables to nearby users is prohibitively expensive, creating a solid market for broadband wireless fiber extension access even in the largest cities.       

Understand the Opportunities

The way out of the current crisis largely lies on a path similar to that taken by fixed wired broadband technologies, optical fiber in particular. An entire industry has sprung up around optical fiber networks offering dark fiber and wavelength services. Users are able to lease or purchase optical fiber already in place, or merely lease specific wavelengths on existing “lit” fibers or portions of a fiber cable’s capacity.        

Emerging technologies such as TV white space and millimeter waves will be key components in bringing a similar model to bear on wireless networks, where wireless links can be set up for the purposes of offloading wireless data traffic from 4G /LTE networks, or simply to lease capacity, or entire links, to anyone who needs it.  

A key feature of these new alternatives is that, while they will be employed by large carriers, they need not be. Smaller firms, similar to those managing dark fiber and wavelength services, are also well situated to offer wireless systems specifically designed to address the burgeoning demand for wireless bandwidth. 

Bandwidth leasing, in a time of crisis for today’s telecommunications industry, presents an unusual opportunity for industry players and other investors. Opportunities in Broadband Leasing presents an analysis of those opportunities, relying on in-depth interviews with industry executives, market development managers and other experts.  The report provides a survey of the imminent bandwidth crunch, its driving forces, the response of the telecommunications industry, a detailed discussion of potential alternatives such as TV white space and millimeter waves, markets available to those alternatives, and demand for wireless broadband leasing over the decade. Forecasts are provided out to 2020. 


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Opportunities in Broadband Leasing

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Report Table of Contents

Executive Summary 1

E.1 The Bandwidth Crunch 1
E.2 Demand Drivers 2
         E.2.1 Education     2
         E.2.2 Healthcare     2
         E.2.3 Public Safety     3
         E.2.4 Transportation     3
         E.2.5 Business     3
         E.2.6 Machine-to-Machine     3
E.3 Reaching Underserved Markets     4
E.4 Evolution & Options in Today's Networks     5
         E.4.1 2G/3G     5
         E.4.2 4G     5
         E.4.3 Long Term Evolution (LTE)     6
         E.4.4 WiMAX     6
         E.4.5 Backhaul     7
E.5 Data Offloading     7
E.6 Fixed Wired Broadband: Fiber, DSL, Cable     8
         E.6.1 Fiber     9
         E.6.2 Cable     9
         E.6.3 DSL/VDSL     10
E.7 Dark Fiber and Wavelength Services     12
E.8 White Space     14
E.9 Millimeter Waves     19
E.10 Wireless Bandwidth Leasing     23

Part 1 Background – The Bandwidth Crunch     25

1.1 Introduction     25
1.2 Growth of Mobile Data Traffic     26
1.3 Background on Wireless Broadband Demand     28
1.4 Current Approaches to Expanding Capacity     30
1.5 Hazards to Carriers     30
1.6 Regulatory Factors     33

Part 2 Demand Drivers     34

2.1 Consumer Markets     34
2.2 Non-Consumer Markets     37
        2.2.1 Education     37
        2.2.2 Healthcare     38
        2.2.3 Public Safety     39
        2.2.4 Transportation     40
        2.2.5 Business     41
        2.2.6 Machine-to-Machine     41

Part 3 Rural Broadband & Reaching Underserved Markets     44

3.1 Stimulus     44
3.2 Wired Options     44
3.3 Wireless Options     45
3.4 Issues with Wireless Rural Coverage     48
3.5 Rural Broadband and Healthcare     49
3.6 Rural Broadband and Business     50
3.7 Wireless Rural Broadband Demand     50

Part 4 Evolution & Options in Today's Wireless Networks     53

4.1 Introduction     53
4.2 2G/3G     53
4.3 4G     54
4.4 Long Term Evolution (LTE)     55
4.5 WiMAX     57
4.6 Backhaul     59
4.7 Bandwidth Scarcity and Optimization Schemes     60

Part 5 Mobile Data Offloading     62

5.1 The Need to Offload Mobile Data Traffic     62
5.2 Today's Offloading Market     64
5.3 Network and Topology Issues     66
5.4 Trends in Mobile Data Offloading     67

Part 6 Fixed Wired Broadband     68

6.1 Introduction     68
6.2 Today's Optical Fiber Networks     68
        6.2.1 Network Organization     69
        6.2.2 Trends in Fiber Deployment     71
6.3 DSL     72
        6.3.1 Very High Speed DSL     73
        6.3.2 Vectored DSL     74
        6.3.3 Shared WiFi-DSL Options     76
        6.3.4 DSL Markets     76
        6.3.5 DSL Bandwidth Leasing     78
        6.3.6 The DSL-Fiber Ecosystem     78
6.4 Cable     79
        6.4.1 Cable in Backhaul & Broadband Leasing     80
        6.4.2 Today's Cable Markets     81
6.5 Trends in Fixed Broadband     82

Part 7 Dark Fiber & Wavelength Services     84

7.1 Background     84
7.2 Dark Fiber Market Drivers     87
7.3 Implementation     89
7.4 Dark Fiber Markets Today     90
7.5 Wavelength & Lit Services vs. Dark Fiber     92
7.6 Trends in Wavelength/Lit Services and Dark Fiber     94

Part 8 The Opportunities: TV White Space     96

8.1 Background     96
8.2 Regulation     98
8.3 Technology & Equipment     100
8.4 Spectrum Management     102
        8.4.1 Current Implementation     102
        8.4.2 Dynamic Spectrum Access     104
8.5 Applications and Markets     105
        8.5.1 Last Mile and Broadband to the Home     107
        8.5.2 Rural & underserved area broadband access     107
        8.5.3 Wide area, metropolitan & local area networks     109
        8.5.4 Public Safety & Security     109
        8.5.5 Automotive     110
        8.5.6 Machine to machine (M2M)     110
8.6 White Space's Place in the Telecom Landscape     111
8.7 Backhaul & Bandwidth Leasing     112
8.8 Market Forecasts     114

Part 9 The Opportunities: Millimeter Waves     118

9.1 Background     119
9.2 Millimeter Wave Systems in Telecommunications     120
        9.2.1 Range Limitations     121
        9.2.2 Licensed vs. Lightly Licensed vs. Unlicensed     122
        9.2.3 The 23, 24, 26 and 39 GHz Bands     124
        9.2.4 60 GHz     125
        9.2.5 The E-band     126
   Propagation Characteristics     127
   Performance, Reliability & Availability     128
   Applications & Users     130
      Wireless Backhaul     130
      Metro Area/Enterprise Networks     132
      E-band Licensing     132
9.3 The Millimeter Wave Telecom Market 133
        9.3.1 Past Market Growth     133
        9.3.2 Current Market Growth     134
        9.3.3 Market Segmentation     134
        9.3.4 Cost Considerations     137
        9.3.5 Capacity Considerations     138
        9.3.6 Small Cells     139
9.4 Millimeter Wave Telecom Market Forecasts     140
9.5 Millimeter Wave Bandwidth Leasing     144

Part 10 Wireless Bandwidth Leasing     145

10.1 Wireless Broadband Leasing: How It Works     145
10.2 Sample Wireless Broadband Leasing Models     147
        10.2.1 MVNOs     147
        10.2.2 Lightsquared     148
10.3 Wireless Bandwidth Leasing Demand     149
10.4 Trends in Wireless Bandwidth Leasing     151

Tables and Figures

Figure 1-1 Total Global Internet Traffic     25
Figure 1-2 Global Consumer Internet Traffic     26
Figure 1-3 Global Mobile Consumer Data Traffic     27
Table 1-1 Present Trends: Growth in Users vs. Growth in Bandwidth Consumption     28
Figure 1-4 Present Trends: Wireless Bandwidth Demand vs. Capacity     29
Figure 1-5 Revenue per GB vs. Cost per GB     31
Figure 2-1 Global Consumer Mobile Bandwidth Demand     34
Figure 2-2 Global Consumer Bandwidth Demand, Video and Raw Data Transfer     35
Figure 2-3 Global Consumer Bandwidth Demand, VoIP, Gaming, File Sharing     35
Figure 2-4 Consumer Mobile Bandwidth Demand: Conventional Phones, Gateways, etc.     36
Figure 2-5 Consumer Mobile Bandwidth Demand: Smartphones, Tablets, Laptops     36
Figure 2-6 Mobile Bandwidth Demand, Education and Research     38
Figure 2-7 Mobile Bandwidth Demand, Healthcare     39
Figure 2-8 Mobile Bandwidth Demand, Public Safety     40
Figure 2-9 Mobile Bandwidth Demand, Transportation     40
Figure 2-10 Mobile Bandwidth Demand, Business Markets     41
Figure 2-11 Mobile Bandwidth Demand, Machine-to-Machine     42
Table 3-1 Wireless Network Cost as a Function of Link Range, Population     48
Figure 3-1 Rural/Underserved Wireless Broadband Demand by Market     51
Figure 3-2 Rural/Underserved Wireless Broadband Demand: North America, Western Europe,     Asia/Pacific     51
Figure 3-3 Rural/Underserved Wireless Broadband Demand: Latin America, Central & Eastern Europe, Middle East/Africa     52
Figure 4-1 Global Spending on 4G Base Stations     55
Figure 4-2 Global Spending on Last Mile Backhaul     59
Figure 5-1 Demand, Mobile Data Offload vs. Total Mobile Data Traffic     67
Figure 6-1 Growth in Fiber Broadband Subscribers, Worldwide     71
Figure 6-2 Growth in Broadband DSL/VDSL Subscribers, North America     77
Figure 6-3 Growth in Broadband DSL/VDSL Subscribers, Worldwide     78
Figure 6-4 Growth in Broadband Cable Subscribers     81
Figure 6-5 Broadband Subscriber Growth, Fixed vs. Mobile, Worldwide     82
Figure 6-6 Broadband Traffic Growth, Fixed vs. Mobile, Worldwide     82
Figure 6-7 Broadband Subscriber Growth, Fixed vs. Mobile, Worldwide     83
Figure 7-1 Wavelength/Lit Services Traffic, Worldwide     94
Figure 7-2 Dark Fiber Leasing Traffic, Worldwide     95
Table 8-1 Coverage and Site Count, White Space vs. WiFi     108
Table 8-2 MHz per POP by Wireless Standard     112
Figure 8-1 TV White Space Traffic, Addressable Markets: North America and Rest of World     115
Figure 8-2 TV White Space Traffic, Addressable Markets: Consumer, Healthcare and
    Business     116
Figure 8-3 TV White Space Traffic, Addressable Markets: Machine-to-Machine Applications     117
Figure 8-4 TV White Space Systems Markets, Worldwide     117
Figure 9-1 Primary US Microwave and Millimeter Wave Band Allocations     118
Figure 9-2 Absorption of Millimeter Waves by Atmospheric Oxygen and Water Vapor     121
Table 9-1 Five Nines Link Range and Availability for Several Cities     128
Figure 9-3 MMW Systems Sales by Application Share     135
Figure 9-4 Overall MMW Systems Sales, Worldwide     135
Figure 9-5 MMW Systems Sales by Application, Worldwide     136
Figure 9-6 MMW Systems Markets by Frequency Range     142
Figure 9-7 Traffic Carried by MMW Systems, Worldwide     143
Figure 10-1 Overall Addressable Leased Wireless Bandwidth Demand     150
Figure 10-2 Addressable Leased Wireless Bandwidth Demand, Conventional
     Phones & Smartphones     151
Figure 10-3 Addressable Leased Wireless Bandwidth Demand, Laptops,
     Netbooks & Tablets     151
Figure 10-4 Addressable Leased Wireless Bandwidth Demand, Home
     Gateways & Other Portable Devices     152
Figure 10-5 Addressable Leased Wireless Bandwidth Demand, Machine to
     Machine Applications     152
Figure 10-6 Addressable Leased Wireless Bandwidth Demand, North America,
     Western Europe & Asia Pacific     153
Figure 10-7 Addressable Leased Wireless Bandwidth Demand, Latin America,
     Central & Eastern Europe, and Middle East/Africa     153
Figure 10-8 Addressable Leased Wireless Bandwidth Demand by Technology,
     Conventional Phones     154
Figure 10-9 Addressable Leased Wireless Bandwidth Demand by Technology,
     Smartphones     154
Figure 10-1 Addressable Leased Wireless Bandwidth Demand by Technology,
     Laptops and Netbooks     155
Figure 10-11 Addressable Leased Wireless Bandwidth Demand by Technology, Tablets     155
Figure 10-12 Addressable Leased Wireless Bandwidth Demand by Technology,
     Home Gateways     156
Figure 10-13 Addressable Leased Wireless Bandwidth Demand by Technology,
     Other Portable Devices     156
Figure 10-14 Addressable Leased Wireless Bandwidth Demand by Technology, M2M     157
Figure 10-15 Overall Addressable Leased Wireless Bandwidth Demand by Technology     157


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Opportunities in Broadband Leasing


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