The arrival of Dense Air has big implications for New Zealand’s cellular market, apart from anything else it will spice up the next spectrum auction.
London-based Dense Air has purchased a considerable amount of New Zealand wireless spectrum from Malcolm Dick’s Blue Reach business and Cayman Wireless.
The company intends to set up a wholesale small cell mobile network. Dense Air says it will not compete direct with existing mobile carriers. It says it can begin operation “almost immediately”.
Dense Air now has rights to 70 MHz of spectrum in the 2.5GHz band. Of this, it acquired 30 MHz from former CallPlus owner Malcolm Dick who previously talked about running a similar wholesale cellular operation using his Blue Reach brand. The rest comes from Cayman Wireless which is a part of Craig Wireless, a Canadian company.
The New Zealand Herald reports Dense Air paid a total of almost $26 million for the spectrum. That is about 13 times the amount the owners paid for the spectrum in 2007.
There are implications for prices when the government decides to auction 5G spectrum some time in the next 18 months or so. If Dense Air decides to enter that auction it will push prices higher and could edge out cash-strapped 2degrees and Vodafone.
Dense Air is unknown in New Zealand. The company began operation in February of this year and part of US-based Airspan.
The company says it is a new class of wholesale network operator. It aims to “enhance and extend” coverage and capacity for existing mobile carriers and says it will run as a “carrier of carriers”.
Small cell sites
In practice this means Dense Air will build and run a series of 4G and 5G small cell sites. The aim is to compliment existing networks. It says that in most cases these will extend existing networks in places that need denser coverage. This might be places such as shopping malls, office parks, campuses or sports stadiums. Dense Air says its small cell approach can dramatically improve performance and capacity.
That said, Dense Air has more than enough spectrum to compete with all three carriers in New Zealand. Should it choose to do so, it could offer MVNO (mobile virtual network operator) services. This could be of interest to telcos such as Vocus or MyRepublic, both wish to offer mobile services but own neither spectrum nor their own cellular networks.
Telecommunications Commissioner Dr Stephen Gale says:
“We believe the power to regulate remains an important competition safeguard, especially with 5G networks and potential new entrants on the horizon”.
Money go round
In the past government spectrum auctions work by dividing available frequencies into blocks. Bigger blocks give carriers more bandwidth to play with. In simple terms more bandwidth can mean faster data speeds.
Spectrum auctions can make a lot of money for governments. Past auctions have poured gold into the public sector. The recent UK 5G spectrum raised £1.3 billion, around NZ$2.5 billion.
It may look like a windfall. Governments often treat the money that way. But it is more about moving money from one place to another. When telcos pay a lot for spectrum the cost is passed onto customers.
If they overpay, they may spend money that would otherwise be used to build towers and extend the network’s reach. Overpaying often means a network roll-out is slower.
Given the value of cellular communications to the wider economy, squeezing out the maximum amount of cash in a spectrum auction can be counterproductive in the long term.
New Zealand’s last spectrum auction took a more sensible approach.
The government realised the economy could be better served in the long term by a good mobile network than by a windfall. So carriers were offered a fixed price well below what it might have made in a competitive auction.
Not everything sold so one remaining block of spectrum was then auctioned off.
In the past different cellular services have run in different frequency bands.
This can still happen. Yet one of the features of 5G is that carriers are able to mash together greater amounts of bandwidth from different bands. Or to use an engineer’s language: they can aggregate spectrum.
While this already happens a little with 4G, Spectrum aggregation is central to 5G. How that works in practice will be interesting. It will be a challenge for phone makers.
Most people in the telecoms business expect 5G to use higher frequencies than today’s mobile phones. Depending on who you talk to, the options go all the way up to 95GHz.
This brings us to another challenge carriers face. Radio waves have different properties in different bands.
Low frequencies are useful for communicating with submarines or in mines. Shortwave radio is good for broadcasting over long distances. And so on.
Dealing with this is an engineering problem. There are also political challenges. In some cases existing spectrum users may have to give up their rights or move services to different frequencies. It can be disruptive.
Compared with some other countries, New Zealand is well placed to deal with these challenges.
UHF – ultra-high frequency
Almost all of today’s mobile telephone traffic takes place in what is known as the ultra high-frequency band or UHF. This is the spectrum from 300 MHz to 3GHz.
Some of the spectrum that will be used for 5G is in the next band up: super high frequency or SHF. That runs from 3 to 30 GHz.
UHF and SHF frequencies are microwaves. Which means the band is used by microwave ovens. It’s also used by Wi-Fi and other home wireless devices, satellite communications, radar and radio astronomy.
As you move into higher spectrum bands radio signals run into a different set of physical problems. At 5GHz and above signals get absorbed by solid objects.
The signals don’t propagate so well. So antennae cover shorter distances. In other words, you need to build more towers to give carpet coverage.
Bluetooth devices operate in part of this frequency band.
The devices have low signal power levels compared with cellular phones. They are only designed to work over a short distance.
Even so, you a taste of what to expect from a 5G cell site operating at this frequency by thinking about Bluetooth’s limitations around your house. The signals may pass through wooden walls, masonry can block them. So can metal frames.
When outdoors, microwave signals don’t tend to pass through mountains or hills. In effect, they only work in line-of-sight. A cell site operating at higher microwave frequencies that works for a customer in winter might struggle in summer when there are leaves on the trees.
Go beyond 30GHz and radio signals are affected by water molecules. That means rain — satellite TV users will already know about rain fade. From about 60GHz oxygen molecules get in the way.
This tells you something about the risks, although the power used for cellular phones would be many times lower than any weapon.
To keep things simple, let’s leave it at this: higher frequency radio waves are harder to use. On the other hand, they offer much more bandwidth and that means higher potential data speeds.
As a rough rule of thumb, higher frequencies mean faster data, but over shorter distances. Typically higher frequency sites will be in densely populated areas and will be only a few dozen metres apart.
When cell sites are a few dozen metres apart, you need a lot of them. They don’t need to be big. You could put them on existing telephone or power poles.
In New Zealand
For now, talk of higher frequencies and the problems using them is largely academic. Most of the planned 5G action here in New Zealand is in or around frequency bands already used by mobile phones.
When Spark managing director Simon Moutter outlined his companies plans he called for more spectrum below 1 GHz.
He says it will be needed to provide 5G services in rural areas. This will almost certainly mean the 600 MHz band, which is already in the government’s sights. Signals in this frequency band can travel over long distances.
Moutter also identified the “two most likely spectrum bands”. Spark wants the mid-frequency C-band and high-frequency mmWave band to be ready as soon as possible so it can put its 5G network in place in time for the 2020-21 America’s Cup in Auckland.
This shouldn’t be difficult in principle.
Is there enough for 5G?
There should be enough usable spectrum in the 600 MHz band and the C-band to give New Zealand’s three big mobile carriers all they need to build viable 5G networks.
Yet they are not the only possible bidders for 5G spectrum. Wisps — wireless internet service providers — do a fine job filling in the gaps in regional broadband coverage.
Wisps could also make good use of more spectrum. And the spectrum of most use to them happens to be the spectrum the carriers are keenest to buy.
Small regional service providers lack the financial clout of the mobile carriers, but they can argue the service they offer is as deserving. Maybe more, after all, wisps service New Zealand’s exporters.
Economic logic says a competitive auction is a way of ensuring spectrum goes to the bidder who stands to gain the most. This, the argument goes, means the most economically efficient use is made of each block of spectrum.
In practice, some bidders sit on unused spectrum. The last NZ auction made that unlikely as it included a use-it-or-lose-it clause.
Some less well-heeled organisations find it hard to buy the spectrum they need. How these issues will be addressed will become clearer when the auction terms are formally announced.
Last week Spark installed new 4.5G technology on five Queenstown cellular towers. They mean the region now has New Zealand’s fastest mobile data network. The Queenstown towers join one-off upgraded Spark towers in Christchurch and Silverdale.
Spark says Queenstown users saw 400Mbps downloads during testing. An earlier test using specialist kit in Christchurch CBD downloaded data at 1.1Gbps. On paper that performance compares with fibre. But wireless users share spectrum, so the speed a user see will drop as others join the network.
Storm in a 4.5G cup
Spark describes the technology in Queenstown as 4.5G mobile. Some rivals disagree with that name. Others point out there’s no agreed 4.5G standard yet.
Quibbling over names misses the point.
Calling the technology 4.5G tells customers it sits on the path from 4G to 5G mobile — that’s a useful shorthand.
The correct technical terms for the technology is LTE-Advanced Pro. While communications experts might understand the term, Joe Public doesn’t. Everyone can relate to 4.5G.
Either way, real 4.5G will be here soon enough. Spark expects 5G to arrive in New Zealand some time around 2020.
Spark’s push towards next generation mobile data is more important than the label on the technology. The pilot Queenstown, Christchurch and Silverdale projects deliver state-of-the-art wireless data. Users can’t get all the benefit of this yet because the hardware isn’t available. But those with modern phones will see big speed improvements.
Spark has laid down a marker for the future. It says it will add another 10 similar turbo-charged sites over the next year. This puts it well in front of Vodafone. There’s an sense of aggression behind Spark’s mobile data push. The company wants to be seen as leading the mobile charge.
It’s big picture stuff. Vodafone appears to be broadening its scope, moving into new areas of activity. Today’s deal with Sky illustrates that. Meanwhile Spark is sticking to its telecommunications knitting and doubling down on the $84 million it spent on the last parcel of 700MHz spectrum.
Whether you call it 4.5G or LTE-Advanced Pro, Spark’s new towers offer about four times the speed and capacity of 4G. The towers can aggregate spectrum giving users more bandwidth to play with.
Users share wireless spectrum. Towers get congested at peak times. More bandwidth may not always mean downloads at those high speeds . But they should see an improvement over today’s speeds.
For now, Spark’s 4.5G towers serve mobile phone users on the regular cellular network. The company also sells fixed wireless broadband connections. It isn’t selling the hardware needed for fixed broadband customers to use the faster towers yet. That will come in time.
For most of us wi-fi is the wireless technology that moves data around the house. Or it might the service you log-on to in a cafe, airport lounge or local hotspot.
D-Link and Microsoft have a plan to use wi-fi as a way of connecting remote areas in poor countries to the Internet.
It’s not the wi-fi you know and love. The two are talking about a standard called 802.11af. You may see it described as “an air interface for white space frequencies”.
In the USA that means snippets of spectrum between 54 MHz and 698 MHz. Europe and the UK use a more modest selection of frequencies between 490 and 790 MHz. Much of this spectrum is already used in New Zealand by 4G cellular networks.
Super Wi-Fi potential
In theory the channels in these frequency bands can each take a few dozen Mbps. Engineers say they can bond the channels together to deliver a total bandwidth of more than 500 Mbps. Again, that’s theory.
Like all wireless bandwidth, it has to be shared between all the users, but bandwidth isn’t the most important aspect of the technology and the chosen spectrum band. Radio signals at these low frequencies can travel long distances. Engineers designed the 802.11af standard for signals to travel up to 1km from a single access point.
In other words, Super Wi-Fi isn’t going to compete with fibre or 4G cellular except, perhaps, on cost.
While 802.11af is designed as a point-to-point service, D-Link and Microsoft are keen to talk about operating mesh networks in places where there is no existing internet infrastructure. They say these will be used for voice phone calls as well as data, but these days there’s no real distinction between the two.
No doubt some small-scale rural broadband providers in New Zealand are checking the 802.11af specification as you read this. Perhaps it could be useful in more extreme remote locations. However, there’s a lot of work still to do. The af standard is still a work in progress.
Phones connected to Spark’s Central Christchurch mobile site can now download data at 1Gbps. Or, to be more accurate, they will when the hardware arrives in New Zealand later this year.
Spark has worked with Huawei to upgrade its Central Christchurch cell-site to 4.5G. The company’s Hereford Street building houses the Pacific region’s first commercial 4.5G site. It is one of the world’s first non-test 4.5G sites.
At the network launch today, Spark New Zealand managing director Simon Moutter says: “We built the network well ahead of the devices. One of the key things is to learn from this. We’ll build other sites later in the year.”
Gigabit wireless in New Zealand
Spark’s general manager, networks Colin Brown demonstrated the network’s ability to deliver gigabit speeds. He used special equipment for the demonstration. In the live test, download speeds reached 1.12Gbps. Brown said overnight the test gear recorded a peak of 1.25Gbps.
While 1Gbps is the 4.5G headline speed that’s not what most user will see when they connect. Brown says people will see speeds that are; “three of four times what you see today”.
The key to 4.5G speeds is the technology’s ability to use spectrum in different bands at the same time. The telecom industry calls this carrier aggregation. It also uses multiple antennae simultaneously to boost capacity.
With 4.5G data speeds and capacity increase at the same time.
Huawei New Zealand CEO Jason We says beside boosting data speeds, a 4.5G cell site can service ten times as many users as a 4G site.
Moutter say it took just a matter of weeks to pull the 4.5G demonstration together. He says; “It demonstrates what we had our eyes on and why we were keen to acquire the Woosh spectrum.”
Because 4.5G is, in effect, a software upgrade to the 4G network, Spark could move fast.
Recipe for a 4.5G network
Brown says for a 4.5G roll-out Spark needs four things: “Above all else you need the software. We have this from Huawei and will be rolling out elsewhere between now and Christmas.
“The second thing you need is the antennae. You have to install them at the sites. To make 4.5G work you also need improved backhaul to take data traffic from the cell site to the internet. Generally speaking you need gigabit backhaul. You also need to devices”.
Huawei’s Wu says his company will be bringing 4.5G ready devices to New Zealand later this year.
Spark’s 4.5G project is the latest fruit from the company’s joint innovation programme with Huawei. Previously the two built the world’s first commercial 4G network using 700 MHz spectrum
At the Christchurch launch David Wei, President Huawei South Pacific, says that earlier partnership pushed the boundaries of technology.
He says: “Today we continue that tradition with New Zealand’s first 4.5G giga site. For us one of the best parts of this partnership is that we are able to deliver technologies which until very recently only existed in our research and development labs.”
Spark and Huawei agree that video will be the big application on the 4.5G network. Wei says: “4.5G can support rich content streaming and true 4K video. It will be used to create a strong network supporting the emerging internet-of-things”.
Video made the radio star
Moutter says for practical 4K streaming video, a network must deliver a consistent 15Mpbs.
Brown says one aspect of 4.5G is the 2300 MHz spectrum can be configured with TDD (time-division duplexing). He says this means the spectrum can be optimised for downloading. This is an arrangement that works well with video traffic.
TDD is also used by a lot of fixed wireless broadband services. The potential for a 4.5G network to deliver fibre-like speeds to fixed wireless broadband customers could change the nature of services in rural New Zealand and present Chorus and the other fibre network companies with a serious challenge.
4.5G means bigger data caps
A network capable of 1Gbps downloads could mean customers will chew through monthly mobile data caps in seconds.
Moutter says: “The additional capacity of the 4.5G network is significant. It allows use to expand usage bundles at economic prices”. In other words: expect to see more generous monthly data allowances from Spark as the new network rolls out nationwide.
He offered insight into the pricing of mobile data saying Skinny’s Wireless Broadband which gives users 60GB of data for $55 would have been impossible just two years ago. The same applies to Spark’s wireless broadband product.
Moutter says: “Spectrum has been the constraining asset. We’ve invested in buying more spectrum. Using aggregation is the key to getting more from our investment”.
Moutter says Spark chose to use Christchurch as a demonstration site because it “wanted to do something special for the region.
He says Canterbury area is one of the first to be updated with 700 MHz spectrum services. He says: “We’re close to half-way done with that.
“After the earthquake we had to move the network around in Christchurch. Much of it, indeed much of the city, moved out to the edge. Now we want to focus on bringing technology back to the centre of the city. This was a good opportunity to commit to the rebuild”.
You can see the Spark 4.5 antennae on the top of the Hereford Street building in the photo at the top of the page.