In Business Model, Internet Access, Mobile, Spectrum

Aside from deploying new spectrum to support next generation networks, mobile Internet service providers face other business issues when the new networks are activated.

Often, capacity and resources are less used when a new next-generation network is activated, creating a stranded asset problem.

Bigger problems happen when users have to be moved off an older network.

Sometimes, stranded assets can be put back into revenue-producing ways (either direct or indirect).

FreedomPop, a U.S. mobile service provider, recently provided an example when it introduced a “better calling experience” called “Premium Voice technology.”

So is it a fancy new Internet Protocol tweak? No, the service uses the Sprint second generation network, much as 4G networks often rely on 3G for voice services.

When possible, FreedomPop uses local Wi-Fi connections, and reverts to the mobile network when necessary. In the case of voice services, unstable Wi-Fi can degrade voice quality.

So FreedomPop now shifts calls to the Sprint 2G network to protect voice quality, and offers that as a premium service. That’s a good example of monetizing stranded assets.

Another problem will be faced by mobile service providers in Indonesia, which must move 2G users off current spectrum so the resources can be reallocated for Long Term Evolution 4G networks.

As part of the spectrum clearing, planned outages will affect 180 million Indonesian mobile customers as the 1.8 GHz frequencies now used to support second generation networks are reallocated for future fourth generation networks.

The reallocation involves 75 MHz of spectrum, affecting Telkomsel (22.5 MHz), XL (22.5 MHz), Indosat (20 MHz), and Hutchison 3 Indonesia (10 MHz).

The problem is that the frequency plan in Indonesia does not presently conform to global recommendations for Long Term Evolution networks.

In Indonesia the current allocated spectrum for 4G deployment is at 2.3 GHz, a  band previously allocated for WiMAX services.

But existing mobile devices have not been built to deliver LTE on this frequency. If it were to use a non-standard frequency, Indonesia would not benefit from volume production of devices running on global standard frequencies.

The 700 MHz band presently is licensed only for broadcast TV, although the shift to digital TV broadcasting in 2017 eventually will free up that band for other purposes.

The 900-MHz bands already are used to support 2G and 3G connectivity by Indonesia’s top three mobile carriers (Indosat, XL Axiata, and Telkomsel).

Ultimately, service providers and customers will benefit from the new 4G network. But there will be immediate pain as users are moved to other frequencies for 2G services.

In a sense, reallocating 2G bandwidth for more lucrative and strategic 4G services also represents a better monetization of spectrum.


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