UK LTE trial takes new approach

OvumThe combined fiber and LTE trial network launched by BT Wholesale and Everything Everywhere to provide high-speed broadband to a rural community in South West England is a new and potentially replicable sharing-based model for rural connectivity.
 
Although the trial demonstrates the technical credibility of such an arrangement, the move from trial to commercial operation will highlight the imbalances in the partnership, and the differences in the parties’ retail and wholesale priorities. Nevertheless, the political benefits of delivering rural connectivity may well see this partnership reach maturity.
 
On a basic level, the trial tells us little we did not already know. LTE is far more stable than 3G was at the same point in its development, 800MHz spectrum is essential for rural coverage, and 10MHz spectrum blocks are the minimum required to make LTE useful. It is only when digging deeper that the trial becomes truly interesting.
 
Most importantly, it establishes that LTE can be used in conjunction with, and as an extension of, fixed broadband services on a retail or wholesale basis. It can also be run alongside one or more retail mobile operations on the same network. In addition, it is a further demonstration that spectrum from two mobile operators can be shared, dynamically managed, and services delivered with application-specific quality-of-service (QoS). These findings could be highly relevant in shaping the next-generation access landscape.
 
The cost benefits of a shared approach to radio access networks (RANs) are well known, and while the vast majority of the cost savings come from sharing towers, the performance benefits associated with sharing spectrum are also important. The two 10MHz blocks of spectrum in the 800MHz band used in the trial provided all the capacity, speed, and latency that were required. So far, consistent downlink speeds around 8Mbps are being achieved on a loaded network, making it comparable to ADSL+, something that essential to meet government and customer requirements.
 
For BT Wholesale, though, the trial is more about establishing the viability of adding LTE to its high-speed broadband access portfolio. BT does not, and is adamant it will not, hold a mobile license. BT Wholesale is therefore effectively looking at LTE as an alternative last mile or fixed wireless access solution, which is why the trial is testing LTE for both fixed and mobile services.
 
 
The services are delineated in the trial by the user equipment. For BT Wholesale’s fixed service that equipment is a home hub, while Everything Everywhere is using an LTE dongle to provide a mobile solution. The architecture of the trial network means that fixed and mobile traffic can be treated differently, with fixed routed to BT’s core network and mobile to Everything Everywhere’s.
 
However, the technical ability to do this and the development of a commercial framework with traffic prioritization principles that satisfy both parties are very different things. The commercial discussions currently sit outside the remit of the trial, which in our opinion is a serious omission. Obviously it needs to be understood what is technically possible, but business issues will make or break any such arrangement, and so an understanding of these issues must influence the direction of the trial.
 
It is widely accepted that network sharing works best when the partnership is symmetrical, and where the sharing parties have goals that are complementary and objectives that are aligned.
 
While the RAN sharing concept is relatively well understood, the practice of separate fixed and mobile companies developing a shared network is not. In this new arrangement each party brings something different, and they need to feel there is parity in the arrangement. There is no doubt that the capabilities are complementary, but equity is a different question. Each party may require different levels of reward from the arrangement.
 
There is also a possible conflict of interests between the retail priorities of Everything Everywhere and the wholesale targets of BT Wholesale. Even within a single company there are often tensions between retail and wholesale priorities, and while many organizations are beginning to understand that wholesale creates incremental rather than substitute revenues, this partnership is a big stretch for any mobile operator looking to make money from a new technology.
 
If BT Wholesale is to sell the technology to ISPs for home access, Everything Everywhere would need to be convinced that it would not lose potential customers to a lower-priced fixed service.
 
 
The saving grace for this particular experiment is that, without each other, neither party is really capable of reaching the last 10% of homes. This is hardly a major commercial loss to either company. However, the roll out of high-speed broadband access to rural communities is a key priority of governments across the globe. With that prominence comes stricter requirements of service providers, along with the potential for funding to reach areas that had previously been unconnected.
 
Everything Everywhere may well find that the 800MHz spectrum it so covets comes with requirements for rural rollout. Such a sharing arrangement with BT Wholesale will provide a lower cost way to satisfy any such requirements. Similarly, BT’s attempts to get a share of the government funding for fiber rollout is based on the provision of rural coverage.
 
In this the two companies are very much aligned, and it may be that any losses in these marginal regions may be more than offset by the gains elsewhere.
 

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