Shared Broadband NetworksSunday, December 06, 2009
I was recently invited to participate in a Telus 3G Media Roundtable in Toronto that was attended by business and industry press. The purpose of this event was to introduce the new Telus HSPA+ network. I asked why this network as so special since HSPA+ is being rolled out by AT&T and T-Mobile in the United States and by other operators around the world. The answer got my attention: This network is a joint venture between Telus and Bell Mobility and it covers 93% of the Canadian population.
Telus is and will remain a CDMA network operator, as will Bell Mobility in Canada. Both offer EV-DO Rev A in most of their coverage area and have roaming agreements between themselves and other networks in Canada and around the world. Rogers, the third network provider in Canada, is a GSM/HSPA network operator, and while it has rolled out HSPA in some parts of its coverage area, it does not begin to match the large area covered by this new combination network.
Bell Mobility and Telus have worked together in the past but not on building a shared network. This is a first, but on other sharing agreements the two have found that sharing has worked out well for them. In this case, they built a large (and growing) HSPA+ network they are billing as a 21-Mbps network that will deliver about 10 Mbps of download speed to its customers. They shared the capex and the sites, and of course they will share the opex. By sharing, the network was built faster and covers more territory than either could have done on its own. Both companies realized that they could share a common network and vie for customers based on what they have to offer in the way of applications, services, and customer support.
Telus, for example, is promoting itself as a business-friendly network and not a network solely for consumers—although it will be selling the iPhone and other consumer products. It is making a special effort to attract small, medium, and large companies to this new network by setting up priority calling help desks, a policy of shipping a replacement device to anyone whose device is broken, lost, or stolen anywhere in the world, and by working with business customers to help them integrate this new wireless broadband network into their existing wired and wireless systems. Jim Senko, Telus’ Vice President of Mobility Solutions Marketing, spoke about the company and its broad range of services from Mike (the Canadian version of Nextel) to its CDMA and EV-DO Rev A network, and now its new HSPA+ network.
The HSPA+ network has the best coverage of all of the networks, with the exception of one area of Canada that will be built out over the next year and will be the fastest of them all. However, Mr. Senko was quick to point out that Telus does not intend to migrate its EV-DO customers who are happy with the network and performance to the HSPA+ network. Rather, it will go after companies that have not yet deployed wireless broadband or that need a faster network with better overall coverage and might have employees who travel to countries where EV-DO is not offered.
Some of the trade and business press tried to put this network into the category of a commodity network, which is basically a pipe delivering content. Telus made it clear, at least to me, that it understands that network technology can no longer be used to sell a network. Services, applications, devices, and customer care will differentiate one network from another and make one more competitive than another.
This partnership is not the type of thing Google and others have been advocating as part of their Open Access push. Google does not want network operators to sell anything but wireless connectivity—all device and application sales would be through a third party, which means the only income for network providers would come from the per-minute or per-kilobyte charges customers pay. Anyone who does the math for the capex and opex of running a wireless network knows there would be no incentive to build out a network under these conditions.
This Telus/Bell Mobility partnership provided the companies with cost savings and more coverage in a shorter period of time. Customers benefit from better coverage and, I believe, better service from the two network operators since they are not only competing with Rogers, they are also competing with each other. Another aspect of this partnership is that in Canada, the AWS auction was set up to encourage new players who will have to build greenfield networks. Telus and Bell Mobility were able to get their new network in the ground and on the air before new AWS entrants complete their networks, which is a decided advantage.
The one thing that surprised me, and perhaps this will change, is that Telus did not talk about dual-mode devices that would work on both EV-DO and HSPA+. There are such devices available today; Verizon Wireless sells several BlackBerry models and other devices that are designed for international roaming, but you cannot use them on, say, both the Verizon and AT&T networks in the United States. The SIM has to be for Vodafone or a non-U.S. carrier to be recognized by the device. It would not take much to change the software to permit one device to operate on both of Telus’ networks.
This is also true of notebook computers with an embedded multi-mode and multi-spectrum-capable Qualcomm Gobi chipset. A notebook/netbook on Verizon’s network can also be used in the United Kingdom on the Vodafone network. I have discussed this with several software vendors and they claim that it would be easy enough to build a client for the Gobi chipset that would permit the notebook/netbook to look for both HSPA and EV-DO signals and select the strongest signal for a given session.
Using these types of dual-technology devices would enable Telus customers to take advantage of the broadband networks and mix and match their fleet of devices depending on location and data speed requirements. Verizon will be offering devices that work on LTE on 700 MHz and EV-DO Rev A on 800 MHz and 1900 MHz, and devices that will include other portions of the spectrum to make them truly international devices. It seems as though Telus could start with HSPA/EV-DO and as its HSPA+ network is upgraded to LTE, it would already have a choice of devices because of the Verizon LTE build-out.
In regard to the HSPA+ network itself, every site is connected to the main network via fiber, which will be needed not only for HSPA+ but also as it moves toward LTE in a few years. Telus has recognized that it cannot afford to have a fast wireless network that has any choke points, so it spent the money upfront to provide an end-to-end network without any obvious choke points.
The Telus/Bell Mobility partnership is not like one network owning the infrastructure and one that is an MVNO on the network. Rather, it is about two networks that compete directly with each other building out their next-generation broadband network faster and to cover more of the Canadian population than would have been possible building it themselves. There will be fierce competition, of that you can be assured, but it won’t be based on coverage or technology. It will be based on pricing, device selection, applications, and customer service.
Actually, there was one example of a shared network prior to the AT&T/Cingular merger. In California, AT&T and T-Mobile shared much their network. However, during the merger, the federal government required AT&T to divest its interest in the joint network.
We can expect to see more of this type of joint network development around the world, perhaps even in the United States in rural areas where the return on investment models are tougher than in urban areas. As Telus and Bell Mobility have discovered, it makes great economic sense.
Andrew M. Seybold