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LTE Insufficient from the Start, Boingo IPO Propitious

Tom Evslin

The trouble with planning way ahead is that the world changes before you execute. The major wireless carriers have been planning their 4th generation LTE (Long Term Evolution) rollouts for a long time — that's how they do things. Now, even as Verizon Wireless is doing an aggressive rollout of LTE, it's becoming clear that LTE networks will not be able to slake the data thirst of a world full of smart phones and tablets. Whoops.

According to Gizmodo, early tests of lightly loaded LTE sites are showing blazing data rates over 10mbps, certainly fast enough for streaming video to a small screen and satisfactory even for larger streams. But, the better it is, the more it'll get used. It's very unlikely that urban sites will be able to handle the number of smart phone and tablet equipped video-streaming customers who will want to use them simultaneously once LTE devices are widespread, Phil Leigh explains part of the problem on insidedigitalmdedia.com:

"...the iPad's screen is seven times larger than that of the iPhone. Thus it is much more likely to be used for streaming video and other rich media applications. Simultaneously its owners will require higher resolution images in order to get a satisfactory viewing experience. Similarly, the iPhone-4's FaceTime video calling feature is expected to be so popular that AT&T Wireless banned it from the company's cellular network."

Since adjacent sites need to avoid stepping on each other's frequencies, you can't just deploy more and more sites, even if the economics were favorable, in order to solve the too-many-customers problem. Penalizing customers for using the data service you just sold them is not a very good long term solution for carriers either. Phil Leigh again:

"AT&T Wireless' decision to impose usage sensitive pricing on iPhones and iPads portends turmoil in The Wireless Internet. Consumers dislike metered pricing and are much less likely to increase usage of services that require it."

So what's the answer? Will we be in a hell of slow downloads and constantly-pausing videos? Will we rarely be able to hear anyone anywhere because of network congestion?

No, those bad things won't happen; it's likely that WiFi will save us. We already see the carriers encouraging us to connect our phones via WiFi or even our home broadband connections. Rumored reasons for AT&T's plan to buy T-Mobile include not only being able to obtain more radio spectrum but also to get control of T-Mobile's vast WiFi network and create more places where AT&T devices can connect automatically without using capacity on the cellular network.

You can deploy a very dense network of WiFi hotspots and make it more and more dense as it gets more users. WiFi hubs are designed to compete constructively with adjacent hubs; WiFi uses radio bandwidth much more efficiently than cellular technologies because WiFi grew up in the wild west of unregulated spectrum, not in the neatly (over)engineered garden of the licensed spectrum, where each company owns its own radio space. WiFi is used mainly at low broadcast power, which turns out to be a good thing when you want to crowd in more transmitters — think lots of little circles with less users in each circle than the big circles with lots of competing users around a cell tower. And WiFi devices being consumer devices are cheap, cheap, cheap so cost is not an obstacle to deploying many of them. As we need more bandwidth for WiFi, it will easily move into the newly freed TV white space because this is also free-for-all unlicensed spectrum.

While the use of WiFi instead of cellular radios gives the big carriers a way around the inadequate capacity of their coming 4G networks, it also diminishes the value of those networks and the expensive spectrum licenses that the carriers already bought. A Telco 2.0 executive briefing asks "Public Wifi: Destroying LTE/Mobile Value?" and answers "By building or acquiring Public WiFi networks for tens of $Ms, highly innovative fixed players in the UK are stealthily removing $Bns of value from 3G and 4G mobile spectrum as smartphone and other data devices become increasingly carrier agnostic."

Which brings us to the Boingo IPO scheduled for this Wednesday; their ticker symbol on NASDAQ will be WIFI. According to Ryan Kim writing on GigaOm, the company operates 325,000 hotspots in more than 100 countries.

"The goal is for Boingo to help carriers offload their data needs on to Boingo's network, helping them stay ahead of the crushing demand for wireless broadband. Even with the rollout of 4G services, Boingo is a good position to participate in the growing consumer appetite for wireless connectivity. The company believes its scalable and global network will provide a reliable way in which to increase capacity for operators."

I haven't done enough research to recommend for or against buying, but it's an interesting proposition. Also ironic that companies like Boingo may prosper by selling the use of free unregulated spectrum to the very companies that own huge, expensive swaths of the regulated space.

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Share your comments

Wishful thinking Richard Bennett  –  May 04, 2011 2:25 PM PDT

Two of your claims got my atention:

1. "WiFi hubs are designed to compete constructively with adjacent hubs;"

Nope. There's not a single protocol feature in Wi-Fi for inter-access point coordination (unless you count the feature that advertises associations by pre-OFDM devices.)

2. "WiFi uses radio bandwidth much more efficiently than cellular technologies..."

Nope. WiFi uses a CSMA/CA scheme that's about 40% efficient in the best case, while 3G/4G can use 99% of available bandwidth through scheduling. Wi-Fi has an optional scheduling mode too, because the engineers realized the drawbacks of CSMA, but most devices can't support it yet.

Just because you wish something were true doesn't make it so, Tom.

NOT Wishful thinking Tom Evslin  –  May 04, 2011 2:42 PM PDT

Richard, always glad when you give me a chance to explain more fully what I may not have explained well the first time:

1. I didn't say WiFi hubs "cooperate" with adjacent hubs (as you pointed out, that's not in the protocol); I said they "compete constructively" - eg the competition does not lead to s spiraling down of service but usually results in a good allocation of available bandwidth.

2. I should have been clear that unlicensed use rather than a specific technology leads to much more efficient use of spectrum than licensed use which results in purchased but unused spectrum and less practical message density than unlicensed use with protocols like WiFi.

Not really there yet Richard Bennett  –  May 04, 2011 2:55 PM PDT

1. CSMA systems allocate bandwidth according to the consumer appetites rather than to any well-accepted notion of fair (or "contructive") allocation. Wi-Fi has some prioritization features from 802.11e, but these can easily be abused by aggressive users. There's nothing in Wi-Fi to prevent a P2P user from hogging the air, so no, it doesn't generally go toward constructive allocation.

2. Now you're changing the subject. The FCC has imposed a mandatory data roaming obligation on spectrum license holders in the US, so there's no real argument to be made for the position that licenses take spectrum out of use. The issue with licensed vs. unlicensed primarily relates to coverage area, as no one is going to build large scale networks without licensed spectrum.

That has nothing to do with the technical efficiency of spectrum use. Unlicensed spectrum suffers an overhead cost from its requirement to employ run time means of Transmit Opportunity allocation. The time you spend colliding and retransmitting on a Wi-Fi network goes non-linear above 40% utilization. It's irresponsible to claim that this doesn't happen.

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