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CBRS Auction Winners

The FCC held a recent auction for the  3.5GHz Citizens Band Radio Spectrum (CBRS). The auction went for 76 rounds and raised over $4.5 billion for the FCC. This auction was unique in that spectrum was licensed at the county-level awarding up to seven licensed 10 MHz channels in each county. Each PAL (Priority Access License) is good for 10 years.

CBRS spectrum can be used in several applications. The spectrum has good field operating parameters and falls in the middle between the two existing blocks of spectrum used for WiFi. This makes the spectrum ideal for rural point-to-multipoint fixed wireless broadband since it can carry a decent amount of bandwidth for a decent distance. The best aspect of this spectrum is that it’s licensed and will largely be free from interference. For the same reasons, this is also a good spectrum for cellular data.

The biggest winner in the auction was Verizon which spent $1.89 billion on the spectrum. The company landed 557 PALs licenses in 57 counties. The company needed this spectrum to fill-in mid-range spectrum for 5G. Verizon has also recently announced a fixed cellular broadband product for rural homes and this spectrum could provide an interference-free way to deliver that product from rural cell sites.

As expected, Dish networks was also a big winner and will be paying $913 million for CBRS spectrum. As the newest nationwide cellular carrier, the company needed this spectrum to fill in the holes in the cellular spectrum it already controls. The other traditional cellular companies were a no-show. AT&T didn’t buy any of the CBRS spectrum. T-Mobile only purchased 8 PALs licenses in six counties.

The largest cable companies scored big in the auction. Charter bought $464 million of spectrum, Comcast is paying $458 million for spectrum, and Cox purchased $212 million of spectrum. As the newest entrants in the cellular business, Comcast and Charter have been buying wholesale cellular broadband from Verizon – this spectrum will let them shift to their own cell sites for a lot of cellular traffic. There is also speculation that cable companies might be planning on using the new spectrum to launch a fixed-wireless product in the rural areas surrounding their cable properties. Both Charter and Cox have entered the upcoming RDOF auction that is awarding $16.4 billion for rural broadband and the companies might be planning on using this spectrum to cover any areas they can win in that reverse auction.

One of the smaller cable companies, Midcontinent Communications, spent over $8.8 million for PALs licenses. Midco already won sizable rural grants to deploy 100 Mbps broadband in Minnesota and the Dakotas. This spectrum will help the company meet those grant pledges and perhaps allow it to pursue RDOF grants.

There were a few other large bidders. One was Nextlink which provides fixed wireless broadband today in Texas, Oklahoma, Kansas, Nebraska, Iowa, and Illinois. Windstream purchased over 1,000 PALs and the traditional telco is likely going to replace aging rural copper with wireless service, while also possibly be expanding into new service territories with fixed wireless. SAL Spectrum LLC won 1,569 PALs. This company owns numerous other blocks of spectrum and it’s not clear who the user of this new spectrum might be.

The biggest news is that the auction allowed smaller bidders to win licensed spectrum. There were 228 different winners in the auction, most of which are small WISPs, telcos, and electric cooperatives. These entities benefited by the FCC’s willingness to auction the spectrum at the county level. Most previous wireless spectrum was allocated using much larger footprints, which kept small bidders from acquiring spectrum.

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Technology

How Fast is Your Data Traffic Growing?

I saw a quote recently from Jeff Finkelstein, the chief of the networks at Cox Communications, who said that the data demand on his networks was growing at 53% per year. I would hope that the managers of most large networks can cite their growth statistics.

There has been a metric in the industry that residential data usage has been doubling about every three years. This metric has roughly held true since the early dial-up days. Year after year people download more than they have the year before.

But it’s easy for us to lose sight that the bandwidth that people and businesses use for getting to the web is only a piece of the bandwidth usage on an ISP network. There are two other big uses of the networks that are growing faster than Web usage. We are seeing the first real growth in traffic from the Internet of Things, but the fastest growing contributor to web traffic right now is machine-to-machine (M2M) traffic.

M2M is when devices talk to each other. One example would be programs that automatically back up things to the cloud. PCs and cellphones now routinely send data to and from the cloud without any specific action by the user. The proliferation of storing data and using programs in the cloud has exploded the M2M usage.

The expected increase in M2M traffic is staggering as more and more things move into the cloud. In 2015 so far the average M2M traffic worldwide is about 50 terabytes per month. By 2018 that is expected to grow to over 900 terabytes per month. And while IoT traffic is relatively small right now, it is starting to grow rapidly as well.

Finkelstein says that the only way for his company to keep up with this fast growth is through the use of software defined networks (SDN). Cox uses SDN today to identify segments of traffic to route everything as efficiently as possible. He says that the company can isolate things like children’s traffic from parent’s traffic from business traffic and route each differently.

Just a few years ago there was a proliferation of peering arrangements established at companies like Cox. They created direct peering connections with companies like Google. But peering is getting more complicated and the goal for a large company is to peer with the major clouds – the Google cloud, the Amazon cloud, the Microsoft cloud etc. And that is where SDN comes into play to help route traffic as efficiently as possible to save on transport costs and to cut down on latency.

What this means for the small ISP is that the rate of growth of overall data traffic is accelerating. The 53% annual growth number would have seemed like an unbelievable number five years ago. For anybody not preparing properly the effects of that level of exponential growth can catch up to any network in a hurry. If Cox’s 53% growth is sustained they will have 5.5 times more traffic five years from now than they have today.

I don’t know how many network operators are planning ahead for that kind of growth. Certainly every network is seeing growth even if it’s not at quite the speed Cox is seeing. Traffic on rural networks is probably not growing quite as quickly as the Cox network, but it is still growing rapidly.

The major issue for most network owners will be to keep an eye on the various choke points in your network to understand where more data is going to cause you problems in the near future. Choke points can exist at many different places in the network from the backbone data pipes down to neighborhood nodes. And keeping all parts of your network  ahead of demand is going to require capital spending to upgrade electronics.

 

 

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Technology

Path to Gigabit Cable Systems

I saw an article yesterday where Pat Essex, the president of Cox talked about offering gigabit cable modem speeds to customers later this year. This conflicts with what the Cox CTO told Fierce Cable, and who said that the company has a five-year plan to free up enough bandwidth on their systems to be able to fully implement such a conversion. I think the CTO has it right. Perhaps later this year Cox might find a way to offer a gigabit to a handful of customers as a press release opportunity.

The article estimated that it would take ‘hundreds of millions’ for Cox to make this upgrade. What sorts of changes will Cox have to make on their networks to have speeds this fast? They will have to do most or all of the following network upgrades:
• Convert everything to digital. One of the biggest upgrades that benefit a cable network is to get rid of all analog channels. Analog channels can transmit only one TV channel in a 6 MHz slot, but once converted to digital you can fit as many as twelve channels in the same slot. Cox is probably mostly digital now, but anywhere they are not would need to finish this conversion.
• Convert to all MPEG4. MPEG4 is a compression scheme and it is the most efficient way to squeeze a cable channel into the least amount of bandwidth. A lot of channels are still delivered in an older compression technology called MPEG2. The big cost of making this kind of conversion is that any settop boxes that still can’t receive MPEG4 would have to be replaced.
• Split Nodes. A node is the number of customers in a geographic area that share the network. This is important when talking about data speeds, because whatever speeds is delivered to the node is then shared with all of the customers on that node. Passive fiber-to-the-home networks have nodes that are no greater than 32 homes. Active Ethernet fiber networks effectively have a node size of one home. But cable systems normally have nodes around 200 – 250 homes. Cable companies have to build more fiber to get closer to homes to get the node sizes smaller and closer in size to what fiber can deliver.
• Upgrade to DOCSIS 3.1. DOCSIS is the acronym for the technology that operates the cable modem network. This new standard was just released in October 2013. The standard lays forth a technology that will support capacities of 10 Gigabits downstream and 1 Gigabit upstream using 4096 QAM, if all of the capacity is used for data. The DOCSIS 3.1 specification does away with 6 MHz and 8 MHz wide channel spacing and instead use smaller (20 kHz to 50 kHz wide) orthogonal frequency division multiplexing (OFDM) subcarriers; these smaller pieces of spectrum can then be bonded together to create one large data path that could end using multiple 200 MHz wide frequency paths.

The new standard is expected to be fully deployable by 2016, so I don’t quite understand the timing mentioned by Cox. The biggest issue with deploying DOCSIS 3.1 is that unless you change every cable modem to be DOCSIS 3.1 compatible you will need to have enough system bandwidth to operate both the new and old cable modems side-by-side using two sets of network bandwidth. There is no sensible logistical path to flash-cut from one to the other and so cable networks will have to operate two large swaths of data simultaneously.
• Upgrade the whole network. In order for a network to have enough bandwidth to make the conversion it will have to be at least 1,000 MHz, and possibly larger. Today many cable networks are smaller than this and there is a lot of work needed to make such an upgrade that includes such things as changing taps and repeaters throughout the network, and even in some cases replacing the coaxial cable and many of the drops.

These changes can all be made. Each of these are major upgrades and require a lot of changes in the network. There are parts of the cable plant that will need to be rebuilt. Fiber must be built. Settop boxes and cable modems all have to be swapped. There are major electronics upgrades needed.

But one thing that this upgrade path doesn’t consider is that there is still an ever-increasing need to add more channels to a cable system. Cable customers want more and more HD channels which are much larger than standard channels. And now we are looking at the threat of having to offer super HD channels using 4K which are many times larger than today’s HD channels. At the end of the day there is only so much bandwidth in a cable network. Cable network engineers spend all of their time making tradeoffs between programming and cable modem bandwidth and it’s a challenging job. Do I think Cox can eventually offer gigabit service to everybody and not just to a small number of people for the press releases? Yes, but they have a whole lot of work to do and a whole lot of money to spend first.