Notes From Spectrum Futures 2017

This week I attended Spectrum Futures 2017, sponsored by Pacific Telecommunications Council (PTC) at the Pullman Bangkok Grande Sukhumvit on Asoke Montri Road in Bangkok. The conference was rather lightly attended, which allowed for a very collegial, clubby atmosphere to prevail.  Gary Kim and the PTC Events Team did a super job organizing and presenting the conference.

I can appreciate the paradox conference organizers face, wanting enough participants to make the conference profitable, while not destroying the right mood for collaboration and discussion.  I don’t know the finances of the event, but PTC definitely got the atmosphere right.  There were several outstanding presentations during the conference.  For me, the best part of the conference was the level of audience participation and interaction.  During many of the presentations, audience questions often led to continued discussion and further questions.  It was a very positive feedback loop.

I wanted to share my take on a couple of the presentations.

Financial Perspective

James Sullivan, Managing Director for J.P. Morgan in Singapore presented an Investor’s view of the Telecoms industry.  By his own admission, he claims little Technological expertise vis-a-vis Telecoms.  But he has analyzed the industry over many years for the benefit of his investing clients.

He said Telecom’s key challenge is ROIC, Return on Invested Capital.  With the proliferation of Unlimited usage plans, selling more bytes does not increase revenue. Telecoms Operators are essentially trapped in a race to the bottom, a race where additional CapEx does not increase revenue.

Especially in Emerging Markets, where the current level of CapEx will never achieve the amount of service which Developed markets enjoy. Jim said Telecoms CapEx per-capita in Developed Markets is on the order of $1,500-$2,000. In Emerging markets is closer to $100.

Mr. Sullivan’s way out of this trap in developing markets was Nationalization.  Nationalize telecoms networks to a) optimize Capital Expenditure, and b) reduce the redundant spending which provides no additional coverage or functionality. By the way, in a nationalized network the prices for data services would surely be raised. Thanks, Jim.

Several times he analogized having multiple competitive Telecom carriers as 2 or 3 side-by-side toll roads. His point is that it is hugely inefficient to build redundant networks when in absolute terms there is not enough to build a single proper network.

He also said this approach was intentionally chosen to be incendiary. In other words, upsetting people and stimulating passionate debate seems to have motivated this solution. I won’t pretend to have a better answer to this problem but I admired how well Jim presented it and his willingness to suggest an unpopular solution.

CBRS

CBRS is the Citizens Broadband Radio Service.  It is a block of spectrum in the USA which is already occupied but in which the USA is trying to implement a creative form of sharing. This effort is being facilitated by the CBRS AllianceDave Wright is Director of Regulatory Affairs & Network Standards at Ruckus Wireless and the Corporate Secretary of the CBRS Alliance.

I’m sure I couldn’t present all the details correctly.  But essentially, the spectrum has incumbents, such as US Navy radars which are not always in use, but which cannot completely relinquish their rights to the spectrum.  So a novel sharing technique is being instituted.   

The spectrum will be monitored by a function called Spectrum Access System (SAS).  The SAS acts as a gatekeeper.  When non-incumbent licensees wish to broadcast in this spectrum, the SAS checks whether the incumbents are using the spectrum.  If so, SAS instructs the licensees to move to other channels.  If the incumbents are not using, the licensee’s use is allowed to proceed. 

It is to be hoped that, once in use, the system will prove workable in other potential spectrum sharing situations.  Many such opportunities may exist throughout the spectrum and around the world.  It could become a model for making much more spectrum available.

Commercial users of the spectrum will bid for blocks in an auction to be held early next year.

You can get more information from the CBRS Alliance by completing a simple opt-in form.

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