Mobile Europe:
Andy, it’s been a year since we last spoke at this length. In that time data usage of 3G networks has really begun to take off, and there are now a host of live commercial HSDPA networks. Mobile internet use, as well as increased music and video downloads and streaming are finally giving mobile operators a nice problem. They anticipate a bandwidth bottleneck on the backhaul, and are planning right now how to get around that. What’s your view on that market trend?
Andy Singer:
It’s true that growing usage of HSPA and WCDMA networks is driving the need for an increase in backhaul capacity. The end users are taking up offers for high speed data, taking and sending high spec photos, streaming video and increasing their internet browsing. There’s a lot more usage and you can clearly see the market driving forward strongly for mobile data. So operators are faced with the imminent need for higher capacity backhaul, but at the same time they want to cut operations costs. But if they add more leased lines, or more fibre, then that just adds to that ongoing expense. Point-to-Point and Point-to-Multipoint Microwave, for a relatively small capital expense, can give a substantial reduction on opex, and I think this explains why we are seeing a surge for a demand for microwave.
Mobile Europe:
Of course, Microwave isn’t the only option for leased line replacement, so what would you say the advantages are?
Andy Singer:
If you make a comparison with the other would-be similar options, then you are probably looking at Free Space Optics (FSO), Satellite and WiMax. FSO has several things against it that are clearly the reasons for its lack of success, despite many predictions to the contrary. It has a limited range, it has deep fade in fog and rain, and it also suffers from a lack of commercial experience. Satellite is dealing with issues around SDH radio, and it offers a lower capacity. There are also quality issues in urban and suburban areas and of course it’s not very cost effective for most areas, although clearly it has useful applications in rural and remote areas. WiMax is easily and rapidly deployable but again it has limited bandwidth, and if the capacity is going to be shared with other users making use of high bandwidth services, is there really going to be the high capacity operators need for backhaul?
Compared to this, point-to-point Microwave is very proven and scaleable, and is relatively inexpensive. There’s also new products available offering increased capacities – up to a GB as we move forward into the future.
Mobile Europe:
Along with drive in demand for mobile backhaul, the other big networks theme recently has been on network sharing. Yet mostly that has concentrated on the radio access part of the network. Could you envisage a situation where operators share the capacity on the backhaul link as well?
Andy Singer:
Well, there is an interesting model we see currently in the US, which is the business that FiberTower are making for themselves. FiberTower has built out a network of Point-to-Point Microwave links, then they have gone to the mobile operators and instead of the mobile operators building the network they lease capacity from Fiber Tower. From our point of view, whether capacity is leased or owned by the operators, that still drives a demand for microwave radio links.
Mobile Europe:
Yet can available frequencies support the range and capacity required for Microwave backhaul?
Andy Singer
Now obviously, along with this huge increase in the need for backhaul, operators are looking for frequencies that are available to them. A lot of the Microwave bands are getting pretty full. So a lot of people are looking at licensing the 31.8-33.4GHZ band, and this is very new. I mean, even within the last two months we have received a surge in interest and orders for antennas in this band.
The other area we speak to our customers about – and an area that is certain to be exploited – is the E-band, the new technology I just mentioned. Here we work with our global partner Bridgewave Communications in the 71-86GHz range. Now, depending on propagation factors such as climate and environment, E-band can give you a 1GB link over a range of between one and four miles. The thing about that is that in most cities across Europe, that is more than enough for the required link.
The other nice thing about the E-Band is that many countries are applying a “light regulation” touch to the licensing of the band. In some cases there are online databases established into which an operator or other applicant can enter their proposed usage data and so on. Now, if there are no conflicts with existing plans, many people can have their license within literally 15 minutes, for what is really a nominal administration fee. Certainly this is something we have seen in the USA, and in Europe CEPT (European Conference of Postal and Telecommunications Administrations) is suggesting E-band is opened up across the continent.
Mobile Europe:
So are mobile operators the only likely users for high capacity Microwave links, or are there other potential users for the technology who could also benefit from this light touch licensing regime?
And Singer:
There’s a large spectrum of users for these types of services, many of them enterprise users — for example universities or hospitals that need to share large amounts of data between sites. The 1GB nature of the link, where the client needs a relatively short hop, offers great capacity for a really nice price, and that is really attractive for a while host of users.
Mobile Europe:
And that leads us into another topic that we touched on the last time we spoke. A year ago, you were really enthused by the innovation and usage around the 5GHz unlicensed band, what are you seeing in that area that justifies that enthusiasm?
Andy Singer:
Well, we’re seeing a continued demand for the unlicensed spectrum bands. Distributors can carry the radios on the shelf, and that makes the services very quickly deployable. It’s amazing what applications people are using Microwave for. Mobile operators are using it for temporary types of installation where they are not sure if they need a permanent or a high capacity solution – and they can go down this path before investigating a licensed link if needed. Communities are using it for area networks, and Wireless ISPs are utilizing he spectrum, with some companies in the US making a business out of selling internet capacity using these networks. And of course [WiMax operator] Clearwire is building a nationwide network at 5GHz, making good use of unlicensed spectrum.
In fact there’s so much usage that people are starting to get more worried about congestion, but we have developed a product for that. Traditionally 5GHz has been about standard performance dishes, but now we are marketing high performance dishes for unlicensed spectrum, with better side lobe performance and a much higher front-to-back ratio.
Mobile Europe:
With all of this growth in demand for microwave, how do you make sure that a company like Radio Waves can meet the market needs, given the competition that’s out there?
Andy Singer:
It’s like any market. There are people who buy cars who just want something with four wheels that will take them from A to B. Then there are people who want a car delivered to their specification, delivered on time, delivered to the quality and performance they expect with the right service support once they own the car. When it comes to Microwave antennas, those latter people are our kind of customers. We are fixated on impeccable service, quality and customer support. If we say we can deliver something to you in three weeks we will deliver it in three weeks. We won’t have pretended we can have it with you in two weeks just to win the business, then take four, six or eight weeks to deliver the product. So although we may cost a little bit more out of the box than some competitors, when you look at the total cost of ownership, we really have a value offering. We really are the high performance and quality manufacturer in the market place, with support close to our customers.
Mobile Europe:
You’ve also prided yourself on operating close to the European market, despite being a US based company, and on always differentiating on quality.
Andy Singer:
Just this year we have again increased our manufacturing capacity in the UK to get closer again to the European market, and we have started producing a number of six foot dishes from that facility to meet a specific demand for six foot, as well as two and four foot, dishes.
We’ve also increased the number of OEM partners we work with to reach our markets – adding Codan this year. Codan is a company known for their high reliability Microwave radios, making our integrated antennas a perfect match for a reliable microwave solution. We’re also working with MNI to enable the quick delivery of their solutions for point-to point-Microwave.
We also retain our relentless drive on quality. Last year when we spoke I think we were at about a 0.2 % production return fault rate. We now have that down to 0.1% and we have a number of Lean 6 Sigma green belts in the company. We’ll have some black belts by the end of the year. We will also have ISO14001 certification by June 2007, which added to our RoHS compliance, means we will be committed to the best environmental practices.
All of this backs up our claim to be the high quality, high service, high performance supplier in the market.
ABOUT Andy Singer
Andy Singer, President Radio Waves, Inc.
Prior to joining Radio Waves, Andy held senior marketing and product management positions with a number of antenna and R.F. system companies, including RFS(Alcatel) and Allen Telecom Group. Andy began his career as an antenna design engineer and has a B.S.E.E. and M.B.A. degree. He has received multiple patents in regards to remote tilt antenna systems. Andy is a well-known speaker and writer in the industry. Andy has had numerous articles published in industry trade journals. He is a member of a number of industry organizations such as the IEEE and the Radio Club of America.
ABOUT Radio Waves, Inc.
Radio Waves offers a diverse range of reliable and innovative microwave antennas. Microwave and broadband wireless antennas are available that cover 1.3 GHz to 86 GHz for Point-to-Point, unlicensed ISM, UNII, 802.11 Wi-Fi & 802.16 WiMax broadband wireless bands at 2.4, 3.5 and 5 GHz, LMDS, Point-to-Multipoint and broadcast microwave applications. Radio Waves is known globally for their rapid delivery and reliable microwave antenna designs.”
According to Ernst & Young, the Top ten risks in telecommunications 2010 report finds that this data explosion is occurring at a time when operators face an intensifying cross-sector battle for ownership of their customer relationships, as innovative technology and device providers enter their core market.
This is the driving force behind why for the second consecutive year, “losing ownership of the client” is the biggest risk faced by operators and the “failure to maximize customer value”, new to the table this year, is the second biggest risk.
Vincent de la Bachelerie, Global Telecommunications Leader at Ernst & Young, said:
“This is a challenging environment where technology and device companies such as Apple and Google have been setting the pace in industry innovation, having shown themselves to be attuned to what consumers actually want, and able to innovate to deliver it.
“A demand for faster internet services is driving rising data usage in fixed broadband, and mobile data traffic is growing exponentially, reflecting rapidly-increasing usage of smartphones and mobile internet services.
“Operators are now challenged to monetize the growing volumes of traffic and must shift their business models from the anti-churn ‘all-you-can-eat’ flat-rate packages, which are not optimized for the explosion in data traffic, to a tiered usage policy around free and premium service elements.
“Operators must also recognize their potential as agents of change in other industries. Smart metering initiatives play to operator capabilities while the launch of mobile money transfer services in emerging markets shows how telecommunications infrastructure can be repurposed in a way that transforms societies.”
Regulatory pressures
The challenges of managing this explosion in data traffic are compounded by the rise of “network neutrality” as the dominant regulatory issue globally, with “rising regulatory pressures” cited as the third biggest risk.
La Bachelerie says: “Net neutrality means operators can gain little financial benefits from the rising volumes of data on their networks. The effect is that operators are facing a “Catch-22″, in which they need to invest in building out next generation access to meet customer needs, but cannot be sure of generating sufficient financial return to justify the capital expenditure.”
At the same time, the regulatory burden is rising as we see fixed and mobile broadband markets converging while the internet transforms the supply of content. Ensuring a level playing field for all market actors while also upholding consumer rights in the digital world is far from straightforward.
Investor expectations
While telecom operators have benefited during the crisis from their status as a “safe haven” for investors, this defensive posture is no longer sufficient to attract investors’ cash in 2010, thus “Inability to manage investor expectations” is also a new risk this year, at seventh on the table.
Jonathan Dharmapalan, Global Deputy Telecommunications Sector Leader at Ernst & Young, says, “Instead of telling a short-term story of cost reduction and strong cashflow, as markets recover, telcos now need to convince investors that they have a long-term growth and innovation strategy.
“To close this innovation gap with the likes of Apple and Google, operators need to make the most of their assets including their wealth of customer data and tap into the best internal and external talent. To reassert the value of their networks and tell the right story to investors, telcos will need to reprioritize R&D and deliver ongoing innovation for consumers. Building the right partnerships, dialogue with policy makers and strategic hires from technology and media will be critical for reclaiming the industry’s fair share of value among both customers and investors.”
The 2010 top business risks for the telecoms sector are:
1. Losing ownership of the client
2. Failure to maximize customer value
3. Rising regulatory pressures
4. Ineffective infrastructure investment
5. Inability to reduce costs
6. Lack of talent and innovation Inability to manage investor expectations
7. Inability to manage investor expectations
8. Inappropriate systems and processes
9. Poorly managed M&A partnerships
10. Privacy, security and piracy