“OTT video killed the cable tv star?”The rise and rise of neTflix

December 2014 • Published by Decisive • A CommsDay publication

Telcos face 4K revolution

Copper: The shape of things to come

The road to 5G

apple bites into mobile payments

a quantum leap in telecoms - literally?

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COMMSDAY

5 The rise and rise of Netflix

8 The decline of cable TV

11 Telcos’ 4K challenge

15 Latest developments in copper

19 The path to 5G

26 Apple moves into mobile payments

29 Datacentres and telcos

33 The quantum shift in telcos

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They're known as the cord cut-ters: consumers who ditch their

traditional pay-TV service in favourof a generous broadband package,coupled with an over-the-top contentprovider such as Netflix, AmazonVideo, Hulu and the like. While thetrend has been most notable in theUS market, some of those sameOTT players now have their sightsset on new markets in the Asia Pacif-ic, while local service providers arealso launching their own offerings. Ifthe region follows the trends in theUS and Europe, a new generation ofconsumers will soon be looking tocut the cord – with implications forbroadband traffic.

According to the latest data fromSandvine, Netflix alone now ac-counts for 34.9% of downstreamtraffic in peak evening hours in theUS market. And in Australia –where users have been accessing Net-flix via VPNs ahead of its launch in

March next year – Sandvine suggestsit could already account for 4% ofdownstream traffic. Amazon InstantVideo is now the second largest paidstreaming video service in NorthAmerica, accounting for 2.6% ofdownstream traffic. While still rela-tively small, its share of traffic hasmore than doubled in the last 18months. HBO GO accounts for just1% of downstream traffic in the US,but given that it plans to start offer-ing a standalone streaming service inthe US, it's also likely to be a factorin future. Users in the Asia Pacificare already heavy users of real-timeentertainment services – accountingfor 47.5% of peak downstream traf-fic in the latest Sandvine report – sothe arrival of the OTT video servicesis likely to put further demands ontelco networks.

SNL Kagan analyst Wangxing Zhaosays that OTT providers are takingon traditional multichannel provid-

ers with diversified revenue modelsincluding advertising, streaming vid-eo on demand premium rental, anddownload-to-own. Based on indica-tors including market size and de-vice/service penetration, he nomi-nates the top-ranking countries inAsia Pacific for OTT viability asSouth Korea, Japan, China, Austral-ia and Taiwan. Other factors citedthat would boost OTT viability in-clude telecom infrastructure, anopen regulatory environment, di-verse international content, stronglocal broadcaster presence, and resi-dential purchasing power.

NETFLIX IS COMING: The mostsignificant OTT announcement forthe region is that Netflix has finallyconfirmed that it is arriving, firstly inAustralia and New Zealand but withplans to also tackle other markets in-cluding China. The impact of Net-flix is already evident in the UK andIreland, where just two years after its

The cord-cutters

Netflix has finally announced that it is officially coming to the Asia Pacific region in 2015.Geoff Long looks at what it means for traditional pay TV providers and telcos alike.

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launch it was the second largest driv-er of traffic on fixed access networks,accounting for over 17.8% of down-stream traffic in the evening.

The company itself says that it’s beenobtaining the rights to content inAustralia and other places in Asia,making it easier to expand withinthe region. “A lot of our contentchoices have proven to be extremelyglobal, starting with all of our origi-nal series – Orange Is the New Blackand House of Cards have been hugesuccesses in not just in Australia butin China, I mean, all over the world.So these buys bode well, I think, forfuture expansion in all territories,”says Netflix chief content officer TedSarandos.

Netflix director of content deliveryarchitecture David Fullagar is alreadytelling the Australian service provid-er community that the arrival of theservice is likely to see a major surgein downstream traffic. “The interest-ing thing is after a few years in everymarket we've operated in, we start tobecome a dominant form of traffic,”he says, noting that Netflix typicallyaccounts for between 30-50% ofdownstream traffic in a range of mar-kets. In its home market in the US,Netflix makes up around 33% of

downstream net traffic in peakhours.

When the service does make its wayDown Under, Fullagar and his teamwill use the same ‘Open Connect’model for large-scale content deliverythat it uses in other markets. In abriefing at Swinburne University, hetold the audience that Netflix hadoriginally used a combination of con-tent delivery networks from Level 3,Akamai and Limelight to deliver itsservices. It was the largest trafficsource on each of those networksbut has since moved to its own deliv-ery system.

“It made a lot of sense from a scalepoint of view to bring that back inhouse. So from this (Northern) sum-mer we actually now have all our

traffic on our own network,” he said.

Before joining Netflix in 2011, Ful-lagar was the principal network ar-chitect for Level 3's CDN; he also

jointly holds a number of patents forload balancing and media storage.He told the audience at Swinburnethat the Netflix service now runs on“at least a couple of thousand differ-ent types of products,” from mobilephones and set top boxes, to gameconsoles, tablets and TVs. He saidone of the keys to serving up reliablecontent was to pre-load content incaches and use analytics to deter-mine the likely content and the de-vice being used.

The Netflix client runs in-house de-veloped adaptive bitrate heuristics,which choose the right bitrate forthat particular connection. Clientmetrics then offer information aboutwhat sort of user interface they needto see, what sort of recommenda-tions they're going to see and whichservers on its delivery network willbe used. The service also uses a cloud-based control plane connection thatis hosted in three different locationson Amazon's web services platform.

Netflix benefits from having a con-tent delivery network that serves asingle purpose: delivering video froma fixed library of content. It can uti-lise off-peak times when the net-works are less busy to fill its cachesin advance. Those caches are locatedboth in fixed exchanges that Netflixoperates itself as well as cache appli-ances that it can place within the ser-vice provider's infrastructure.

“We developed this cache thatwould be very effective for serviceproviders that wanted to have Netflixcontent within their network and re-duce that middle mile traffic,” ex-plains Fullagar. “For service provid-ers that don't want to peer with us atthe locations we have, they can takecaches to augment [service] and fur-ther reduce costs.” He also suggeststhat the move to its own CDN infra-structure had made negotiationswithin new markets easier; he notesthat third-party CDNs are not neces-sarily totally aligned with either Net-flix's or ISPs’ bests interests.

“So by having our own CDN we canhave those conversations, we can

“The interesting thing is

after a few years in every

market we've operated in,

we start to become a

dominant form of traffic”

make compromises and make chang-es in the way we do design to theISP's benefit and we can execute onit from the beginning because we'rein control of the infrastructure,” hesays.

COMPETITION RISES: Of course,Netflix will have to battle the localswhen it does arrive in Australia andNew Zealand next year. In Australiaboth Foxtel and Telstra have recentlyintroduced significant prices dropsfor basic services. New offering Stan– a joint venture between the NineNetwork and Fairfax – is also slatedto launch just ahead of Netflix. Overin New Zealand, Spark has recentlylaunched its Lightbox video stream-ing service, while rival Sky is launch-ing a service that will be bundledwith Vodafone broadband at the endof the year. And West Australian-based Quickflix operates a similarservice to Netflix in both Australiaand New Zealand.

The reaction from New Zealand toNetflix’s announcement has beenlargely positive. Slingshot GM TarynHamilton welcomes the news andlooks forward to more similar ser-

vices entering the field, while Inter-netNZ CEO Jordan Carter says hisorganisation is “thrilled” that Netflixwill be launching locally. “It’s becom-ing clearer that the future of broad-casting is online. Netflix has shownwith its huge success overseas that itis one of the very best at this game.Competition like this will lead tobetter choices and more content forNew Zealanders,” he says. “We’vehad Quickflix for a while, Lightboxis all go and Sky is also moving to anonline model. With this level ofcompetition we expect prices to dropand quality to improve.” Carter alsosuggests that the arrival of Netflix islikely to help drive the uptake of fi-bre.“This is exactly the sort of con-tent that the UFB was designed for.It wasn’t long ago that Youtube vide-os were all in grainy 240p. Nowwe’re talking about streaming moviesin HD. Getting the UFB out to NewZealanders like we are will ensurethat we get the best of what the inter-net can offer.”

FetchTV CEO Scott Lorson, mean-while, is similarly unruffled by thenews. FetchTV partners with compa-

nies like iiNet and Optus and com-petes directly with Telstra/Foxtel,but Lorson has long argued that thereal pay-TV money in Australia is inthat platform space – the battle forthe main living room TV – ratherthan OTT streaming. “The courtingis now coming to a close, and we’reentering a new phase in Australianmedia. We think it’s going to be avery exciting next six months,” saysLorson. “We believe the platformplayers, ourselves and Foxtel, are in-credibly well-positioned – and thatone, and possibly two winners, willemerge in the SVOD space. Butthere’s no denying that will be abloody battle with very high stakes.”

Fetch has previously publicly ex-pressed a willingness to partner withplayers such as Netflix. “We aspire tobe a platform ecosystem, and theability to integrate third-party prod-ucts is a core competency,” says Lor-son.

However it plays out, service provid-ers can be guaranteed one thing: theamount of video traffic on their net-works will continue increasing.

At the same time, cable TV viewers

are rebuffing rate increases trig-

gered by increased programming

costs. A growing number of inter-

net users are becoming ‘cord-

cutters’, ditching cable TV sub-

scriptions entirely in favour of

streaming video services such as

Netflix and Hulu.

Programmers and cable networks,

The decline of cable televisionThe cord-cutting phenomenon might be driving broadband traffic, but it poses some very serious challeng-

es for cable operators. William Van Hefner reports on how the situation is playing out in the US.

A perfect storm of sorts has

been building in the cable in-

dustry for a number of years now. As

most cable operators are increasingly

pinning their hopes on broadband

sales to ensure their survival, a long-

running war with cable TV networks

has made the business of selling ca-

ble television programming an in-

creasingly difficult affair.

on the other hand, have seen a

sharp decline in viewers and adver-

tising revenues in recent years and

are increasingly looking to subscrip-

tion fees for cash to create new and

original content.

In the United States, this three-way

battle has put the industry on the

brink of a watershed moment. Pro-

grammers and content providers,

which face increasingly stiff re-

sistance from cable and satellite pro-

viders to steep rate increases, are

slowly coming to the conclusion that

eliminating the middle-man may be

the only way to retain their audienc-

es.

A number of high-profile disputes in

late 2014 have resulted in cable and

satellite providers in the U.S. com-

pletely dropping the network pro-

gramming of channels which have

insisted on raising rates, at a time

when advertising revenues and view-

ership for many of these channels

are on the decline.

Programmers, which once had the

upper hand in these negotiations,

are suddenly finding themselves fro-

zen out of entire markets – resulting

in literally millions of lost viewers

and with them, monthly subscrip-

tion fees.

In a move viewed by many as long

overdue, and by others as a desperate

gamble, content providers are slowly

beginning to dismantle the wall that

separates them from their viewers.

On the heels of other successful

streaming services, a number of con-

tent providers have made announce-

ments of their direct entry into video

streaming delivery.

HBO, which briefly experimented

with delivering such a service to Eu-

rope in 2012, has announced a new,

cable-free streaming platform to be

introduced within a year. The CBS

Network has already launched its

own streaming service and promises

to add its premium channel Show-

time to the lineup in 2015.

Cable and satellite providers them-

selves have fought back, launching

their own streaming access to pro-

gramming. Until now, these services

have usually been tied to a tradition-

al cable TV subscription. However,

in 2015 DISH Network will begin

offering a low-cost streaming service

featuring much of its traditional sat-

ellite TV lineup without the need for

a cable connection or a satellite dish.

Third-party content distributors are

also set to jump on the streaming

bandwagon in 2015. Sony plans to

offer its own streaming service direct-

ly to consumers via their Playstation

platform. The company has already

negotiated content rights with doz-

ens of programmers eyeing a world-

wide audience.

Although most of the moves current-

ly being made by programmers to di-

rectly bypass cable and satellite pro-

viders are happening in the United

States, the ripple effect will not take

long to affect other countries.

An increasingly internet-savvy gener-

ation have learned to bypass geo-

graphical restrictions by utilizing

proxy servers, a service that has seen

explosive growth over the past year.

Simply put, geographical boundaries

no longer exist for those who choose

to bypass them. It is almost as easy

for someone to watch a Netflix mov-

ie in Beijing as it is in the United

States, whether content providers or

governments approve of the practice

or not.

Statistics in the cable industry do not

bode well for the future of tradition-

al distribution models. The Wall

Street Journal recently reported that

the number of cable television sub-

scribers in the U.S. actually contract-

ed in 2013, by over 200,000 custom-

ers. It is the first year in the history

of cable television that the number

of subscribers has actually declined.

Another critical threshold was

crossed this past year by two of the

nation's largest cable providers.

Comcast and Time Warner Cable.

In the summer of 2014, both compa-

nies reported adding more new

broadband subscribers than cable tel-

evision subscribers for the first time

ever. This trend seems to be acceler-

ating, provoking some small cable

providers to drop cable television

programming entirely and concen-

trate instead on the wider popularity

and increased margins that broad-

band services currently provide.

With an increasing number of agree-

ments between cable television com-

panies and programmers failing to

be renewed, there is little doubt that

the number of programmers offering

streaming services directly to con-

sumers will continue to increase.

Third-party programming packagers

such as Sony will also likely take

their own share of the market.

How many separate streaming ser-

vices consumers are willing to pay for

remains to be seen, though, especial-

ly in light of the public's aversion to

most internet paywalls.,

With no end in sight for the broad-

band market, cable operators are in-

creasingly unlikely to stay aboard

what amounts to a sinking ship.

With so little to be gained in the ev-

er-dwindling cable television market-

place, the days of cable companies

offering television content not under

their direct control would seem to be

numbered.

“How many separate

streaming services consumers

are willing to pay for re-

mains to be seen, though,

especially in light of the pub-

lic's aversion to most inter-

net paywalls”

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A kamai Technologies mediabusiness CTO John Bishop

throws around a lot of big numbers;forecasts that, if they turn out to beaccurate, could severely disrupt theinternet in its present form.

For example, his presentation recent-ly at an industry event literally wasoff the chart when it came to project-ed bandwidth requirements to sup-port global adoption of 4K video,the version of digital video with aresolution four times the pixel countof high definition television.

Bishop’s equation is probably toosimplistic, but it is effective insketching the challenge that the tele-coms industry could face in the fu-ture. Taking the average primetimeviewership globally of 2.5 billion, hemultiples that number by 10Mbps,or the estimated bandwidth neededto transmit a high definition and/or4K video signal – depending on fac-tors such as compression, encoding,and frame rate – and he comes upwith a big number: 25,000Tbps.That’s the estimated bandwidth tosupport global adoption of HD/4Kprimetime viewing.

Then he takes the number of majorcore networks in the world today,100, and multiplies that by their av-

erage capacity of 5Tbps. The resulthe comes up with is, again, pretty big– 500Tbps, which is more than all ofthe world’s subsea cables put togeth-er today – but not big enough, sinceit represents just 2% of that25,000Tbps overhead for globalHD/4K.

Obviously, the idea of globally ubiq-uitous HD and 4K video is a longway from reality today. And not all2.5 billion primetime viewers will bestreaming across the internet back-bone; so those figures create an ex-

treme, and slightly abstract, versionof the real world bandwidth de-mand.

On the other hand, Bishop high-lights two real world events that have

seen bandwidth consumption grownearly tenfold in a matter of fouryears.

First he points to the Winter Olym-pics of 2010 and 2014. In the fouryears between the games in Vancou-ver, Canada and Sochi, Russia, thetraffic carried on Akamai’s networkgrew from 12 petabytes to 81petabytes. Secondly, he describes themassive traffic surge on Akamai’snetwork generated by another once-every-four-year event – the FIFAWorld Cup. Between the 2010 tour-nament in South Africa and the2014 event in Brazil, traffic surgedfrom 29 petabytes to 222 petabytes.

“That’s a compounded annualgrowth rate of 63% for the twoevents,” Bishop says, pointing outthat traffic on Akamai’s infrastruc-ture is growing even faster, at aCAGR of 81% over the past 15years, from 1Gbps of capacity on itsnetwork back in 1999, to 7Tbps in2014.

So even as network operators acrossthe world voice their lament over theimpact of Netflix’s traffic on theirnetworks, the challenge is onlyemerging. With the advent of ultraHD and 4K, the situation is set toget a lot more difficult – by a factor

Telcos facing 4K video conundrum

The emergence of 4K video could flood networks with video content that offer few upsides for telcos,while demanding heavy investment in infrastructure. Tony Chan looks at the potential impact of ultra

high definition content on the global network infrastructure.

Akamai’s John Bishop

of four.

RESOLUTION REVOLUTION:While the growing number of usersrepresents one dimension of thechallenge, video quality is also a ma-jor contributor, adds Bishop.

“If you turn your attention to what ishappening on quality, there is simi-lar growth curve,” he says. “If you goback, you are looking at postagestamp video back in the late 90s, ear-ly 2000s – really we [were] doingquarter VGA, so 160x120 resolu-tion, and maybe in MPEG1, butwith also a lot of proprietary codecs.”

From that beginning where streamsrequired 550kbps, the industry hasmade strides forward, first to fullVGA quality (640x480 pixels) onMPEG2-4 requiring 1.8Mbps circuitsaround the 2004 time frame, then to720p HD and 1080p HD usingAVC/H.264 codecs that needed3.5Mbps and 7.5Mbps to work.

“We have advanced quickly and wenow have 4K. We have gone thoughthe HD, the SD shift, we have goneHD at 720p at 24 frames, 30 framesand 60 frames, and now we have1080p/24, 1080p/30, 1080p/60…so the revolution in data rates thatwe are seeing on the web is exactlywhat is put out on a traditional tele-vision today. There is no difference,”says Bishop. “When we look at whatwe are starting to see, we are just atthe tip of the iceberg with 4K. What

we are seeing with 4K is beyondwhat television is doing. There is nolinear 4K being distributed out overnormal television today, but there is4K video-on-demand content goingout over Akamai’s network. We areseeing data rates there of around15Mbps, we are seeing data ratesright now on 1080p live streamingcontent in some countries pushing 8-10Mbps, so the numbers keep rising

up.”

Telcos have a lot to worry aboutwhen it comes to Bishop’s numbers.First of all, 4K is coming whetherthey like it or not. A recent Ericssonstudy found that up to 60% of con-sumers see HD video as a “very im-portant aspect” of their TV and vid-eo experience. Perhaps more im-portantly, 43% of those surveyedspecifically pointed out they felt thesame about ultra HD and 4K.

A more worrying point for telcos,perhaps, is that their networks couldbe the only ones capable of deliver-ing beyond-HD content. Accordingto Bishop, 4K exceeds the capabili-ties of traditional broadcast medialike satellite. IP networks are proba-

bly the only networks that will beable to support 4K content at scale,he says.

“4K video won’t be simply internetvideo, but is likely to replace broad-cast television. And what we can de-liver over IP is bigger than what wecan deliver over the traditionalbroadcast infrastructure,” he says.“The challenge at Akamai media is‘how do we put out the ultimate vid-eo quality at scale?’ When I say ulti-mate, I don’t mean HD, but beyondHD, so 4K, which is either here to-day, or just around the corner, or isaround the next corner after that.But it’s coming. I’ve already had dis-cussions around 8K and 12K, andaround 3D 4K, and 3D 8K, there isalways more. The ultimate videoquality is a moving target.”

FEW UPSIDES: But even as theyface this pending avalanche of traf-fic, there isn’t much upside fortelcos, at least on the retail side. Un-less telcos start charging specificallyfor carriage of 4K traffic and offersome kind of performance guaran-tee, there isn’t any inherently obvi-ous way for them to monetise 4Kproportionate to the hugely in-creased data volume.

According to Bishop, there are threeclassic monetising models for mediacontent: sell through such as video-on-demand, subscription based ser-vices, and advertising. None of theseare actually applicable to telecoms

“The challenge at Akamai

media is ‘how do we put out

the ultimate video quality

at scale?’”

S Y D N E Y

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operators unless they start their ownover-the-top or content service.

One way telcos might benefit is,ironically, to become like Akamai –by licensing Akamai’s technologyand building their own CDN intheir network.

“We are licensing our technology totelcos across the globe. And we aremaking sure that our CDN technolo-gy can be used in various telco net-works on an on-net capacity,” saysBishop. “When we look at the telcoon-net delivery using Akamai tech-nology, they can provide higher qual-ity of service than an open internetsite. So if someone is on-net, I mightbe able to deliver a better Netflix ex-perience, or my own content if Ihave my own content. I think thereare opportunities for telcos to differ-entiate services as an on-net deliv-ery.”

One environment where this is im-mediately applicable is when the ser-vice provider is actually a quad- ortriple-play provider. 4K would imme-diately become a competitive differ-entiator not only because of the su-perior quality of the images, but inhighlighting the quality of the opera-tor’s network in supporting the high-er resolution content.

“When you look at the role of thetriple play and consumers dollarsspent on voice, data, and video, thedollar is now being spent on the dataside. So if they can differentiate theirservices by providing higher tier data,this is what we are seeing across theglobe, that the higher tier data ser-vices are now the things that are sell-ing,” Bishop says.

F1 TRIAL: Another way for carriersto monetise 4K video is in the back-haul, by delivering content not toconsumers, but by transported 4Ksignals between their origination andproduction houses.

One example is Tata Communica-tions’ recent trial of a 4K broadcastsystem from the Singapore GrandPrix. While the trial was a proof-of-concept demonstration by Tata asthe official telecoms partner for the

Formula One races, it showed it waspossible to technically deliver 4K livecontent from Singapore to a controlroom in London.

In Tata’s case, the operator used a480Mbps IP pipe to carry the full 4Kfeed from Asia to Europe. The band-width was four times the typicalamount that Tata Communicationsprovides to F1 during each raceevent.

According to Tata CommunicationsF1 business MD Mehul Kapa-dia, the trial proved the commercialreadiness of 4K. While obvious chal-lenges remain, such as critical massof 4K TVs in use, he says that he hasbeen in discussions with a numberof broadcasters regarding potential4K deployments.

One low hanging fruit for 4K broad-cast is live sporting events such asF1, Kapadia points out. “Somethinglike a 4K service can get them thatadditional value-edge over their com-petitors. And they can also com-mand a little bit of a premium.”

But even on the backhaul side, 4K isnot without its challenges. Kapadiaadds that the massive pipe at480Mbps was necessary to ensurethat there were no latency or packetloss issues during transmission. Eventhen, the traffic was carried over Ta-ta’s optimised video delivery infra-structure Video Connect Network.

“Also, we wanted to do it at muchhigher throughput to see the impact.As you can imagine, you can do 4Kat lower capacities if you wanted to.We choose 480Mbps to see, if wetook a reasonable chunk of capacity,

and see its performance, and to beprepared in the future if we want toput more channels over it,” he says.“[And] from an international band-width perspective, we have the capac-ity.”

MANAGING COSTS: Lastly, thereare emerging solutions that shouldhelp telcos cope with the video del-uge, as well as offer value-added ser-vices for content providers, Bishopadds.

These include the high efficiency vid-eo coding, or HEVC, and emergingtechniques for trickling and preposi-tioning content for off-peak delivery.

“We know HEVC is really going tobe the enabler for 4K, and HEVC isgoing to give about 50% savingsfrom a video codec perspective,” hesays. “We are going to have to man-age the cost, so lower delivery costswill be a critical element with non-peak delivery. Now I can start tolook at things at off-peak hours, andget things delivered a lot cheaper.This could be an order of magni-tude, it could be 10%, it could be80% savings on their transit costs forcontent.”

The primary benefits for these mech-anisms will be to reduce costs, buttheir ability to accelerate content per-formance means that they can alsobe offered to content providers asvalue added services.

All up, the migration to 4K videopresents a dilemma for telcos. Onthe one hand, additional traffic ontheir networks logically adds to thevalue of their infrastructure. On theother, there are few opportunities forthem to monetise that traffic, a situa-tion made all the more dire becauseof the investment required to sustainperformance.

Embracing 4K means committing toinfrastructure investment that mightend up predominantly fuelling therevenue streams of OTT players. Notdoing so risks disappointing custom-ers, who may look elsewhere fortheir broadband connections. Eitherway, it’s going to be a tough choicefor telcos.

Tata Communications F1business MD Mehul Kapadia

Everything old is new again; orso it seems, at least, in the cur-

rent deployments of fixed-line accessnetworks.

A year ago, CommsDay Magazine re-ported extensively on DSL vectoring:a crosstalk-cancelling technology setto breathe new life into operators’legacy copper assets, by massively in-creasing throughput speeds toaround the 100Mbps mark on looplengths of 300-500m. We also report-ed on G.fast: a more recent innova-tion that targets speeds of 500Mbpsover a 100m copper loop – and upto 1Gbps – by using a much broaderfrequency range.

Alongside these developments hascome a subtly nuanced transfor-mation in fixed-line broadband dis-cussions around the world. Opera-tors and some governments are stilldeploying FTTP networks wherepracticable; Google Fibre, of course,is frequently cited, and it’s oftencommercially sensible to build fibreaccess nets in brand new

‘greenfields’ developments. But aglance at the news coming out ofBroadband World Forum in Europethrough the last two years shows thatoperators are also striving to squeezemore bandwidth from existing assets,in particular legacy copper infrastruc-ture – avoiding the huge capital ex-pense of ‘rip and replace’ campaignsto overbuild with fibre. And the ven-dors, of course, are flocking to pro-vide solutions. If there’s a mantrathat sums up the current state of thefixed-line market, perhaps it’s thephrase coined by Alcatel-Lucent:“fibre to the most economic point.”

So where are some of these coppertechnologies now in practice – andwhat’s next on the horizon?

Certainly, vectoring seems to be tak-ing off in a big way. It’s become a keypart of the roadmap, for example, inAustralia’s national broadband net-work rollout – reconfigured, via achange of government, away from itsoriginal FTTP-heavy model to a

broader blend of access technologies– as well as at least one competingprivate FTTB rollout in the samecountry. Alcatel-Lucent, one of themost aggressive vendors in the vec-toring space, says it’s shipped 9.4million vectoring lines globally as atOctober this year; Fast Net News edi-tor and industry veteran DavidBurstein estimated in Septemberthat Huawei, Keymile, Adtran andAlcatel-Lucent between them ac-counted for at least five million vec-toring-capable ports shipped.

It’s worth noting, however, thatBurstein points out that actual com-mercial activations are lagging some-what; or in some cases – as in Bel-gium’s Belgacom, one of the firsttelcos to deploy vectoring – are beingspeed-capped below their theoreticalmaxima for the sake of stability. AndAssia CEO and ‘father of DSL’ DrJohn Cioffi highlights the differencebetween numbers of vectoring-readylines shipped, and systems actually inactive service. “Along with George

Copper: the shape of things to come

Interest in vectoring and G.fast continues to surge – and several new developments in the pipelinepromise even more ways to wring value out of legacy copper assets. Petroc Wilton reports.

Ginis, we have the original patent onthis stuff, filed back in 2000 – sowe’re big supporters of it, butG.vector [the International Telecom-munications Union standardG.993.5, covering vectoring for usewith VDSL2 transceivers] is notthere yet,” he says. “It can get there,in terms of numbers – and we willsee a lot of DSLs being upgradedto... vectored VDSL in futurearound the world, I have no doubtof that.... I think it’s going to besome time next year.”

G.fast, for which the technical stand-ard is expected to be completed bythe end of December 2014, is alsostarting to attract significant atten-tion. “It’s essentially a version of[VDSL2 with] G.vector that just usesa wider broader swathe of [signalprocessing] bandwidth on a shortertwisted pair – so let’s say [copperpairs used with] FTTB or fibre-to-the-kerb,” says Cioffi. “Since the lengthof the copper is only a couple ofhundred metres or less, you can useup to 100MHz, or in some caseseven 200-300MHz, of bandwidth.G.fast expands the bandwidth of[VDSL2 with] G.vector, which is on-ly up to 30MHz, and in most casesthey only use 17MHz.... but if youtriple that bandwidth or multiply itby six, you get G.fast; which requiresmore signal processing power in theequipment, because you’re runningat higher speeds.”

“You can go all the way up to 1Gbpswith these technologies, and that isfeasible as well... if you use enough[signal processing] bandwidth on ashort twisted pair, like 100m, youcould get all the way up to 25Gbps.But no-one tries to run that fast; no-body needs that kind of speed, and itis difficult, in signal processing, topress the limits like that at thosehigher speeds. You get a more expen-sive component the faster you go.The compromise has been G.fast;that’s sufficiently low power andhigh-speed to get to 1Gbps, it match-es the fibre speed at that level.”

Again, Cioffi warns that – while ven-dors are starting to ramp up the hype

around G.fast – broad-scale commer-cial deployments are still some wayoff. Nevertheless, Alcatel-Lucent hassaid its first G.fast solution will beavailable in the first quarter of 2015.Adtran EMEA and APAC CTO Ro-nan Kelly says the firm has alreadybeen seeing “substantial interest inthe technology” across the operatorbase it’s been testing with, usingcommercially available chipsets, with

many “hugely impressed with the sta-bility of G.fast” in its early days. Inlab trials on that same commercialsilicon, Adtran has recorded speedsof up to 600Mbps downstream and100Mbps up over a single copperloop at 100m, using 106MHz G.fast;ultimately, the technology is set touse up to 212MHz.

Kelly also notes some key advantagesof the technology over conventionalVDSL. “One of the main differencesis that G.fast is a time division tech-nology, while VDSL and ADSL... arefrequency-division duplex,” he says.“What that means is that G.fast al-lows a lot of flexibility in the types ofservice that you dimension off it; it’sfar easier to do symmetric services,but also, for the first time ever, you

can dimension services that are bi-ased in the upstream dimension.”Additionally, as both Kelly and a re-cent Analysys Mason whitepaperpoint out, the G.fast standard ad-dresses the possibility of reverse pow-ering: drawing on customer premiseequipment to power active equip-ment deeper in the network, whichmight help to overcome the chal-lenge of deploying larger numbers ofhigher-density nodes in order to getto the short loop lengths over whichG.fast works best.

But G.fast and vectored VDSL are byno means the only game in town the-se days when it comes to next-gencopper technologies. Alcatel-Lucent,for instance, has been talking up its‘Vplus’ vector tech – which extendsthe frequency range of vectoredVDSL to 30MHz and, according tothe vendor, is capable of deliveringaggregate speeds of 200Mbps overcopper loops up to 400m, and300Mbps on loops shorter than200m. Huawei’s SuperVector offer-ing runs along similar lines, extend-ing the frequency band to 35MHzand bringing in new coding and sig-nal spectrum optimization to pushup to 400Mbps inside 300m or100Mbps within 800m. Adtran’sKelly, on the other hand, describesanother alternative –‘frequency-division vectoring’ – as a means tobetter combine the benefits of bothG.fast and vectored VDSL2 across asingle subscriber line.

“If we look at G.fast performance...if we... ‘chop off’ the bottom 17MHzso we don’t interfere with existingVDSL service... it has a hit on perfor-mance. The percentage hit on shortloops is quite small, but as you getfurther out in the network that per-centage gets much, much bigger,” hesays. “That co-existence is the bigchallenge; and that’s where Adtrancame to the fore with what we callfrequency-division vectoring. Ourview was ‘what if we could leveragethe existing VDSL signal, and com-bine that signal with a compatibleG.fast signal, combine the two tech-nologies together in one solution?’”

“... if you use enough [signal

processing] bandwidth on a

short twisted pair, like

100m, you could get all the

way up to 25Gbps”

Assia’s John Cioffi

IN2065A Copyright © 2014 ADTRAN Inc. All rights reserved.

visit adtran.com/reinvent

ADTRAN has a proud heritage and continuing commitment to invest in Australia. Since establishing local operations in 2000, ADTRAN has become the country’s leading equipment supplier for copper-based, business-class services and the world’s leading supplier of sealed FTTN/FTTdp platforms. ADTRAN is reinventing the networks of service providers around the globe with a full portfolio of ultra-flexible, high-capacity, deep-fibre, solutions. Whether the need be FTTH, FTTN or FTTdp, these solutions provide lowest total cost of ownership while allowing operators to rapidly expand their addressable market and ensure that no customer is left behind.

Ultra-Flexible, High-Capacity, Deep Fibre Solutions

“It’s actually in excess of what we’dhave achieved with full-spectrumG.fast... and to avail of that solution,the CPE a vendor would use has tohave a G.fast element in there. Soeven though you’d deploy that solu-tion from a cabinet location, you’renow seeding the network with G.fast-capable CPE. So at a point in the fu-ture where you want to move to thedistribution point and offer 5-600Mbps-type services, you don’thave to replace the customer premiseequipment; you simply replace theactive equipment in the field. So itmakes that migration very, veryeasy.”

Cioffi, meanwhile, also highlights aslightly different type of technology:G.Now. “G.Now is a marketing termthat’s been promoted by a companycalled Marvell, a chip company... butit’s based on a different standard,called G.hn, for ‘home network-ing’. It’s used to transmit data ratesup to about 200-500Mbps on in-home twisted pairs, in-home powerline, or in-home coaxial network,” heexplains. “[It] was standardised with-in the last several years. It does notuse vectoring for crosstalk cancella-tion, because it’s in-home – and nor-mally, you don’t have that muchcrosstalk in-home because there’s noother twisted pairs there. But other-wise, it’s a nice viable standard, anduses a lot of the same technologies asVDSL and G.fast – just no vector-ing.”

“So what Marvell and some of theircustomers have decided to do is runit longer than just in the home – torun it to the fibre point, typically inthe basement, of a building. This ispopular in Korea, Japan and general-ly in Asia... where you have FTTBsystems already. They used to beVDSL, they’d run at 25-50Mbps, andwhat G.now allows them to do is goup to 250-500Mbps on a single twist-ed pair, so they get a speed increase,”continues Cioffi. “That is viable, ex-cept you have crosstalk. And sinceit’s not being eliminated by vector-ing, Assia’s contribution is to... use

our management system, not to com-pletely eliminate crosstalk, but tominimise the effects of it betweenthe different systems. And you canintroduce stability that way as well,managing the in-home noises, whichis important.”

“G.now could in some cases do bet-ter than G.fast; in other cases it’ll doworse, depending on the situation.But it’s called G.now because the

home networking components arealready available, and it can be de-ployed more quickly. It’s got sometechnological limitations, but maybealso some advantages; so it’s seeingsome level of competition right nowwith the G.fast technologies.”

It’s clear that operators have an in-creasingly broad arsenal of FTTX ac-cess technologies that they can de-ploy to serve customers across a mul-titude of scenarios. Situations whereit’s practical to install nodes veryclose to premises, for example, mightmake the best use of G.fast orG.now; medium-length loops mightbe better served by vectored DSL us-ing more spectrum; longer copperpairs could be better candidates forthe more standard 17MHz vectoredVDSL deployments. G.now could

offer more rapid deployment optionsthan newer technologies.

As Analysis Mason points out in itswhitepaper, each will have quite dif-ferent cost implications dependingon applications. And, as Cioffi iscareful to emphasise, increasinglyhigh-speed copper technologies aremore sensitive to noise generated byin-home appliances and indeed byeach other, making the proper andproactive application of managementsystems (Assia’s own field of exper-tise) more important – particularlywhere multiple different technolo-gies are being deployed in close prox-imity.

That said, perhaps the most im-portant factor in the newest genera-tion of copper access technologies iswhich will reach a critical mass of de-ployment when. Cioffi, for his part,is hoping that some of the newertechs break the pattern of history.

“We’ve jokingly called it ‘Cioffi’s 14-year rule’, but it’s been accurate – ifyou go back even into the seventies,with ISDN which was really the firstform of DSL – from the initial mo-ment that something was proposedin standards, it [takes] fourteen yearsbefore you see one million de-ployed,” he says.

“This is true in the fixed-line side,the mobile side is faster... if you lookat ADSL, it was originally proposedin 1987 and in 2001 they had a mil-lion lines deployed. Look at VDSL,it was originally proposed in 1994 –I know, I did it, with some others! –and it was 2008 before we had a mil-lion VDSLs deployed. VectoredVDSL was proposed in 2001 – Iknow, I did that one [too!] – and so2015 would be fourteen years! Andwe’re going to get close to a millionlines. So it’s still working.”

“G.fast was proposed in 2009; so ifyou add fourteen to that, we’ll have along wait! So hopefully my rule isbroken for G.fast... god bless the in-dustry, we could use that, because ithas been a sobering rule.”

“So hopefully my rule is

broken for G.fast... god bless

the industry, we could use

that, because it has been a

sobering rule.”

Adtran’s Ronan Kelly

A s recently as a year ago, themention of 5G usually resulted

in someone rolling their eyes in dis-missal. After all, 4G was only begin-ning to get traction globally, withsome markets still struggling with li-censing and spectrum auctions.

It didn't help that there was very lit-tle concrete detail at the time about5G. Sure there were some vague no-tions, conjectures, inferences, pro-posals even; but there were no realtechnical specifications, let alone ac-tual prototypes.

Fast forward 12 months, though,and a solid story about what 5Gshould and could be has emerged.Both vendors and operators have an-nounced specific trials. Huge re-search and development initiatives

have been launched by governmentsin Asia and Europe.

Today, there’s a plethora of infor-mation, white papers, corporatestrategies – not to mention press re-leases – on the subject of 5G, com-plete with an emerging list of acro-nyms. There are even concrete time-lines set by operators in Japan andKorea to launch some form of 5G byas early as 2018.

So while everyone agrees 5G is yearsaway from being an industry stand-ard, the marketing machine behindthe concept has already shifted intohigh gear. Vendors, operators, andregional governments are jostling tostake their claim in 5G, putting forththeir own visions, proposing tech-nical solutions, and even showing off

pre-commercial prototypes of key sys-tems and components.

“If you look at the time line, a yearago, Samsung highlighted some mil-limetre wave work that they hadbeen doing [which] they claimed thatwould be 5G,” says Alcatel-Lucentwireless business line CTO MichaelPeeters. “Of course when the Kore-ans say something, in that region...everybody is very competitive; so theChinese jumped on the boat, andstarted talking about tens of millionsof connected things, and 10Gbps,and the Japanese came onboard, andthen suddenly you have a hugeamount of hype.”

USE CASES: While the marketingmachines of different vendors andgovernments have sounded their bat-

On the road to 5G: new air interfaces,spectrum bands, and use cases

Over the past 12 months, 5G has gained considerable momentum; attracting multiple technology pro-posals, complete with a full list of acronyms, for competing air interfaces, new use cases, and new trafficprofiles. But the need to support a complex ecosystem of applications plus the need for official spectrumallocation means there’s a lot more work ahead, writes Tony Chan.

tle alarms and engaged weapons sys-tems, there is surprisingly very littledissention when it comes to manyaspects of 5G. For an industry thathas seen arguably the fiercest stand-ards war in recent history when for-mulating 2G and then 3G wirelessstandards, it seems every has agreednot to disagree in defining what 5Gshould do, and what it should looklike as a system.

Even as Huawei and ZTE claimed in-dustry firsts in specific areas such asmassive multiple in, multiple out an-tenna prototypes, an overarchingconsensus has emerged that 5Gshould meet certain performance tar-gets, that it should support certaintypes of application behaviours, andthat it will probably need certainspectrum resources.

The industry calls these use cases. Allthe major vendors have their ownwhite papers on these use cases, butthey are surprisingly similar when itcomes to terminology such as appli-cation requirements, and when itcomes to defining specific networkcharacteristics such as latency andcell density.

Some of the use cases are prettystraight forward, calling for biggercapacities and lower latency perfor-mance. Some are less obvious; likethe need to support healthcare appli-cations, which presumably requiretraffic prioritisation and high relia-bility, or sensor networks, which re-quire more efficient protocols toconserve energy on the device end.

Perhaps the most comprehensive ex-ploration of 5G scenarios comesfrom NTT DOCOMO, which hasmanaged to convince many of themajor vendors to participate in argu-ably the most extensive trial of po-tential 5G systems to date.

In addition to new ways to interactwith the internet, like virtual reality,and new communications types likesensors, M2M and internet of things,DOCOMO envisions applicationsfor healthcare and safety, education,transportation, home automation,all in a world where its network traf-

fic “would be at least 1000-fold largercompared to 2010,” and “serviceswill be more diversified.”

DOCOMO’s vision, echoed by mostvendors today, calls for a 5G systemthat will exceed today’s networks bya wide margin in five areas. Accord-ing to DOCOMO’s target, 5Gshould achieve higher systems capaci-ty (1000-fold per square kilometre),higher data rates (100x typical

speeds, even at high mobility), sup-port massive connectivity (100xmore devices, even in dense areas),have reduced radio access networklatency (less than a millisecond), andhave a reduced cost structure withhigh energy efficiency and reliability.

BEYOND MOBILE: The industryhas learned from 4G that definingthe requirements of a network is per-haps more important for successthan the underlying technology it-self, according to Nokia NetworksVP of research and technology LauriOksanen.

“We feel it is very important to agreeon a target for 5G, so the industryhas a good idea what should be de-veloped for 5G,” he says “We havegood examples and bad examplesfrom past generations. For 3G, it wasnot really clear what the main focusand the use cases would be and ittook time to be successful... it wasn’tsuccessful until we added HSPA, andthat was when it was able to providethe performance that people wantedto see – that was mobile broadbandfor accessing the internet. When 4Gwas developed, it was clear that thatwas the main use case, and every-body agreed that it had to be for mo-bile broadband and the internet, andwe developed the standardisation for4G with other vendors and it result-ed in very good specifications… as

you know it has been very successfulin the market with good perfor-mance.”

“So we would like the same for 5Gas 4G, in the sense the industry has agood understanding of the perfor-mance requirements and the use cas-es and develops a good standard andgood system, rather than just devel-oping something for the sake of de-veloping something new.”

For DOCOMO, the path to achiev-ing those 5G targets will consist ofimplementing a coverage layer madeup of an evolved version of 4G, anda second layer using a completelynew radio access technology for add-ing capacity.

DOCOMO is now in the process oftesting a number of potential tech-nologies with six vendors, includingAlcatel-Lucent, Fujitsu, NEC, Erics-son, Samsung, and Nokia. Each ven-dor trial targets different aspects ofDOCOMO’s vision: Alcatel-Lucent’strial consists of experiments on can-didate waveform technologies to sup-port mobile broadband and M2Mservices; Fujitsu will experiment on“super dense base stations;” NEC on“time domain beamforming withvery large number of antennas;” Er-icsson on new radio interface con-cept and Massive MIMO; Samsungon super-wideband hybrid beam-forming; and Nokia on a “super-wideband single carrier transmissionand beamforming.”

4G WILL BE A BIG PART OF 5G:While DOCOMO’s vision is justthat – a vision – it is representativeof a larger industry-wide accord for5G, which sees an evolution of 4Gnetworks with the inclusion of po-tentially new air interfaces to addressspecific 5G use cases.

One reason for this, according toNokia’s Oksanen, is that 4G is prettyhard to beat.

“For the basic usage of mobile broad-band and wide area coverage, LTE isa very good system. It’s not easy tomake something that is clearly better

“For 3G, it was not really

clear what the main focus

and the use cases would be

and it took time to be suc-

cessful... ”

than LTE. There isn’t any magictechnology out there that will signifi-cantly improve over what LTE cando over a large area network,” hesays. “So we believe LTE will defi-nitely be a big part of 5G. We don’tthink there will be a new air inter-face that will surpass or make LTEobsolete. There’s a lot of work ongo-ing for LTE evolution and that willstay there for the foreseeable future.”

At the same time, Oksanen sees theneed to evolve LTE to meet low la-tency and low power profiles, includ-ing the need to include Wi-Fi and itsevolved versions in the 5G stand-ards. And, like DOCOMO, he alsosees the need for a higher frequencylayer for adding more capacity intonetworks. This layer is where a brandnew air interface will be needed dueto the propagation characteristics ofhigh frequencies, as well as the avail-ability of bigger blocks of spectrum.

“Eventually, we believe capacity re-quirements on network will grow, sowe will need more spectrum. The on-ly place you can find significantamount of spectrum is above 6GHz,so we believe that we will have sys-tems operating on spectrum up to90GHz… eventually, that spectrumwill be needed. Maybe not in thevery beginning, but eventually,” hesays. “There is no one single air in-terface like there was for LTE. Thiswill likely be a more modular ap-proach.”

After all, wireless networking envi-ronments today take similar ap-proaches across 2G, 3G, 4G and Wi-Fi networks. Operators use 2G forlegacy M2M applications and roam-ing, 3G for roaming and low speeddata, 4G for mobile broadband, andWi-Fi for handoff.

“2G and 3G to some degree will alsobe part of 5G. We have spoken to

operators about whether they plan toturn off 2G, and we see that it willbe present in most markets in 2020,”Oksanen says. “Also we expect Wi-Fito continue to be there; it is alsoevolving and also needs to be includ-ed in the future 5G landscape.”

In these terms, 5G would be a stand-ard that encompasses all existingtechnologies, plus new air interfacesin new spectrum bands to add extracapacity.

KITCHEN SINK APPROACH:There is obvious logic to the ap-proach of including multiple tech-nologies across multiple spectrumbands, but not everyone agrees it isthe best approach – at least not atthe beginning, and not for new high-er frequency bands.

“It’s an ‘everything but the kitchen

sink’ approach. That is like sayingthat ‘we actually don’t have a specificview for what 5G is going to be’,”says Alcatel-Lucent’s Peeters. “So Idisagree strongly that everything go-ing together is going to make 5G, be-cause then you are actually saying,‘well, you have to implement every-thing’... that’s not true. There is avery clear, and I think defendable,case to go to 5G that doesn’t requiremillimetre wave technologies. It tdoes however depend on a new airinterface.”

In his opinion, 5G will be drasticallydifferent from 4G, which he says ac-complished a single application – al-lowing users to use broadband awayfrom their home or office.

“Operators have swapped out entirenetworks, and invested hugeamounts of money in new infrastruc-ture, to allow people to do morebroadband,” he says “5G is aboutthings that you cannot do today,they are not normal extensions forwhat people are doing in the hometoday. And the number one case thatcan be made are for things that re-quire M2M and very long batterylife. If you think about things thatrequire M2M and long battery life,you’d come to the realisation that itcannot use the neutral model forbroadband take up.”

And because people don’t upgradetheir home automation system ortheir cars every six to nine monthsjust so they can have the latest wire-less technology (unlikesmartphones), 5G necessitates agradual, incremental business casethat adds new capabilities to existing4G services.

“For an incremental business case towork, we see two things... that willdefine 5G. One is an air interface,not an experimental one for millime-tre wave, but... in the normal fre-quencies. For me, really below2GHz, a coverage frequency, like arefarmed 3G frequency – not a 4Gone because 4G is a perfect one formobile broadband, and not a 2Gone because there are going to be leg-

“We don’t think there will

be a new air interface that

will surpass or make LTE

obsolete.”

Nokia Networks VP of researchand technology Lauri Oksanen

acy M2M applications, but a re-farmed 3G one,” Peeters says.

The second component of Peeters’vision is that the new air interfacewill have four distinct network layersaddressing different application re-quirements, ranging from sustainedhigh bandwidth downloads andbursty traffic, to a signalling opti-mised layer and a low energy layerfor sensors.

NEW AIR INTERFACE: The chal-lenge with Peeters’ plan is that it re-quires a completely new air interface,which highlights the only point ofreal contention in the road to 5G.According to Peeters, there are threemajor camps backing three differentair interfaces in the lower spectrumbands below 6GHz.

These include an evolved version ofLTE’s orthogonal frequency divisionmultiplexing, a new technologycalled filter bank multicarrier, and athird called universal filtered multi-carrier. Alcatel-Lucent is testing thislast with DOCOMO – which, in itsown white paper, has highlighted an-other method called non-orthogonalmultiple access.

At least one other proposal may bein the market. Huawei has discusseda technology called semi orthogonalmultiple access, but it is unclearwhether it is a new air interface orjust a variation in definition of exist-ing standards.

“We do have ideas, and we knowthat others have ideas. We don’t be-lieve this will become a bottleneck.We have been working for a fewyears, and we believe we have a quitegood concept and technology forthese areas,” says Nokia’s Oksanen.“Of course there already are severaldifferent ideas around, and peoplehave published [or] are thinkingabout new modulation methods. Wethink OFDM is pretty good actually,or some variation of it, but there areideas around for new things.”

For Peeters and Alcatel-Lucent, thebet is on UFMC, but the company isnot ignoring other approaches. “Weare building a test bed for NTT DO-

COMO which is in fact a real timetransmission system working at2.6GHz, and it has a receiver part aswell. We are using this and helpingNTT DOCOMO to do theirUFMC, we are also building it so itcan be used to benchmark theFBMC and the traditional OFDM,”says Peeters. “The work is so we can

quantify the performance of the dif-ferent proposals on a single platformagainst a number of channel condi-tions defined by the 3GPP – so thatthere will be, not an apple to orangescomparison, but an apples to applescomparison of all of the air interfacetechnologies.”

While he admits there is obvious un-

certainty regarding an air interface,Peeters, like Nokia’s Oksanen, is nev-ertheless confident that 4G’s successwill set an example.

“What I’m expecting is that consid-ering the success of 4G... people willhave realised that there is an ad-vantage in defining things in a singlestandard,” says Peeters. “I stronglybelieve that there will only be a sin-gle 5G standard, which will have 4Gas a supplementary downlink, or pos-sibility for carrier aggregation.”

“The fight won’t be specificallyabout technology within the 3GPPor cellular community, but it will bemore about what is the most effi-cient way to use spectrum betweencellular and mobile, what is the roleof Wi-Fi, what is the role of WiGig,and what is the role of licensed andunlicensed spectrum. I think the bat-tle will be for the unlicensed spec-trum.”

TOO SOON FOR MILLIMETRE?Peeters adds that this new air inter-face will effectively meet all the pa-rameters of 5G. Specifically, it willalleviate the need to go to millimetrewave technologies, which he feelswon’t become necessary until cur-rent spectrum resources run outaround 2022 and 2023.

“If you look at spectrum exhaustionprofiles around the world, if youtake 4G, LTE and add LTE-Advanced, you add small cells, whatyou see… is that mobile broadbandwill probably... take us to 2022,” hesays. “And this includes the currenttechnology and essential evolutions,which includes some higher orderMIMOs and other things we areworking on today.”

“So mobile broadband by itself is notsufficient as a business case for anoperator to say ‘I’m going to startbuilding a new technology’.”

The other argument is that, becausemillimetre wave technologies offerbasically more mobile broadband,their inclusion at the onset of 5Gstandardisation risks bringing in ad-ditional distractions.

Those distractions include the needfor yet more air interfaces. Accord-ing to Peeters and Oksanen, thehigher frequencies will require a dif-ferent approach to radio design be-cause of millimetre wave’s propaga-tion characteristics and the availabil-ity of large blocks of spectrum – upto 1GHz for example.

“Up to about 10GHz, maybe20GHz, you can use the same air in-terface, maybe with slightly highercarrier spacing. But if you go higher,it doesn’t make sense to have pushed

“I strongly believe that there

will only be a single 5G

standard, which will have

4G as a supplementary

downlink”

Alcatel-Lucent’s Michael Peeters

out carrier spacing because you willneed way too many carriers – whichwill drive up complexity,” saysPeeters. “Secondly, narrow carriersrequire very accurate and stable fre-quency and carrier synchronisation,and the higher you go in frequency,the harder it is to build systems thatactually are that accurate. And infact, those are not necessary becauseyou have so much more spectrum.”

CRITICAL CORES: Just as im-portant as the work on new radio in-terfaces will be work on the core net-work, says Oksanen.

“We will need to somehow enable asystem with multiple radios that ismanageable for the operators and al-so provides good and simple service.We have from the beginning put alot of effort into what we call archi-tecture research: how to manage mo-bility, how to manage deployment ofthese networks, how to manage con-nections, how to manage security, sothat it will be as easy as possible foroperators,” he says. “A few interest-ing things that are happening al-ready... in the core network... before5G [include] network virtualisationand software defined networking.”

“We are now doing research onRAN virtualisation, which is notquite so straightforward because ra-dio access networks are by definitiondistributed rather than centralised.”

Ultimately, Oksanen and Peeters be-lieve that virtualising the core net-work will be the key enabler for 5G.

On the one hand, 5G needs to sup-port different application profiles,hence necessitates a virtualised net-work core to support the differenttraffic types. On the other, 5G willincorporate, sooner or later, new fre-quency bands – and if those frequen-cies are in the millimetre wave spec-trum, new air interface as well –which will require a virtualised infra-structure to support efficiently.

“What I see is a software defined net-work, where you have the controland data plane,” says Peeters. “Wecan extend that same idea to theover-the-air interface, where you haveyour control, your exchange, yourlow latency packet exchange on the5G air interface below 6GHz. Thenyou can augment it with supplemen-tary uplinks and downlinks with mil-limetre wave... purely data plane onlyoriented for high speed, super highcapacity downloads.”

SPECTRUM SCHEDULES: Thelast component of the puzzle is spec-trum. Nokia’s Oksanen points outthat even if 5G gets standardised, theindustry still needs to find spectrum

to deploy the new technology in.

“There is new spectrum below6GHz, for example around 3.5GHz,which many countries are thinkingof allocating.. [but] it may be thatthese will already be used for LTE, sothere [may not be] more spectrumavailable under 6GHz for 5G,” saysOksanen. “That means we will needa new band to be identified for mo-bile by the ITU, so we will have torely on the world radio conference,which happen only every three years.Next year, 2015, there will be aworld radio conference; but becauseof the relatively complex process, wewill not be likely to be able to discussspectrum above 6GHz. [We] will on-ly be able to prepare the discussionfor the next WRC conference, whichwill be in 2018, which hopefully willbe able to develop new spectrum inthe higher frequency.”

Peeters is less concerned about spec-trum because he believes 3G spec-trum can be refarmed for initial 5Gservices. “There are a number ofplaces where you can find spec-trum... when you are talking aboutpure coverage, there is some spec-trum that is used for legacy technolo-gies today. 3G spectrum is a perfectexample of spectrum that is not be-ing use very efficiently today.”

At the end of the day, Peeters believethat it is possible to meet some ofthe ambitious timelines outlined byoperators like NTT DOCOMO andSK Telecom.

“I think 2018, 2019, may be reacha-ble if we focus on the strategy,” hesays. “It is possible to have pre-standard 5G trials if the communityfocuses on the right things. If wedon’t try to push in massive MIMOand millimetre wave and all thesethings into the standard all at once,and only focus on what we can addto 4G, I think it is possible.”

[We] will only be able to

prepare the discussion for

the next WRC conference,

which will be in 2018,

which hopefully will be able

to develop new spectrum in

the higher frequency.”

Source; DOCOMO

The idea of paying for thingsthrough a mobile phone has

been around for quite a few yearsnow but – a few developing marketsaside – has never really taken off. En-ter Apple, which has a history of dis-rupting markets and popularising ex-isting technologies by making themeasier to use. It did it with the iPod,it did it with the iPhone and now itwants to do the same for mobile pay-ments with its Apple Pay system. Theleading questions are: will it succeed,and what will it mean for carriers?

According to Capgemini directorand industry practice lead for bank-ing and payments Phil Gomm, it willlikely succeed. And for carriers, thatcould provide a boost in terms ofcarriage services – but could also by-pass them when it comes to transac-tion fees. The Apple Pay mobile pay-ments system was announced as partof the iPhone 6 and has nowlaunched in the US. However, Applehas yet to announce its strategy forother markets around Asia.

Gomm likens Apple's service to that

of other ‘over-the-top’ services thathave frustrated carrier efforts to cap-ture more value. He says that whileApple Pay needs connectivity, itdoesn't need a commercial arrange-ment with the telco beyond the pro-vision of a data carriage transfer.“Itmeans the telco has a role to play interms of network and carriage of thetransaction, but it's quite difficult forthem to participate in a clip on theticket in terms of participation in thevalue chain,” Gomm says.

He adds that previous attempts atgetting into the mobile paymentsspace from telcos have been frustrat-ed by commercial challenges andbanking issues, and as a result thepayment system providers have large-ly worked around the telcos and de-vised alternative approaches. Gomm,who is also involved with theCapgemini Payments Centre of Ex-cellence in Europe and a contributorto its World Payments Report, saysthe consultancy firm has been tip-ping Apple's move into NFC andmobile payments for some time.

In the US market, Apple has got keybanks and card providers on-side. Ithas negotiated to get a small percent-age point of the transaction fees, butin general Apple Pay is seen as com-plementary to the financial servicescompanies. According to Gomm, theactual payment of the transaction isnot the battleground that success orotherwise of mobile payments will bewon on. Rather, the key will be thevalue-added services that are over-layed at the point-of-sale to give cus-tomers an incentive to use a phonefor payment. And key to that couldbe data and analytics.

“It's all about customer analytics, it'sabout knowing intimately your cus-tomer, having a customer-centric ap-proach and being able to present inreal time at that point of payment, avalue proposition that's attractiveand encourages the consumer to beable to use your service. And I thinkwe'll find that's the way Apple isthinking also,” Gomm says.

He expects Apple will be working on

Apple bites into mobile payments

Apple wants a slice of the lucrative mobile payments market, but will its plans come at the expense ofcarriers? Geoff Long investigates the Apple system and some carrier alternatives

a commercial basis with major retail-ers and their participating schemesand banks in order to provide an at-tractive value proposition back toiPhone users. “In order to encour-age widespread takeup, it's the over-lay service that you put on top thatencourages your customer to use thattransaction,” he continues. “So you'llbe happy to take out your phone ifyou know you'll be getting a discounton the transaction, if you knowyou're getting a few points for a loyal-ty programme or you know you'regetting a free cup of coffee or someother incentive.”

Gomm also suggests that Apple's en-try into the mobile payments marketwill likely mean that NFC-based sys-tems will become a more widespreadstandard. “Apple is never the first,but it comes when the market isready and it creates the opportunity.What the direction statement doesgive us is confidence that NFC is thepreferred protocol. There have beensome barriers, but those barriers aregoing away,” he notes.

COMPETITION: How telcos farein the mobile payments space variesfrom market to market: in some cas-es they have proved a dominantforce, while in others they are beingleft behind. Interestingly, it seemsthat the places where telcos do bestin terms of mobile payments are incountries where other financial infra-structure is lagging.

One of the most successful carrierimplementations of mobile pay-ments is the M-Pesa system createdby Kenyan mobile operator Sa-faricom, with help from Vodafone.Its service provides an e-wallet on amobile phone that can performmany of the same functions as a tra-ditional bank: transfers between us-ers, transfers between a business andconsumers and even cash withdraw-als at designated locations. M-Pesaboasts more than 17 million users inKenya and has also expanded intoTanzania, Afghanistan, South Africaand India with varying degrees ofsuccess.

SingTel Group has also made signifi-cant strides in the payment space oflate. In its home market of Singa-pore in June this year, SingTelteamed up with Standard Charteredbank for the launch of the “Dash”mobile money system. It has an appon both Android and Apple devicesand allows consumers to downloadcash into their mobile phone anduse it to make payments.

More recently in Australia, SingTelsubsidiary Optus has announced asystem that will compete more direct-ly with Apple Pay. It is also the firstmove by an Australian telco into themobile payments arena.. Optusteamed up with Visa and HeritageBank for “Cash by Optus”, which

will allow its customers to pay forcash purchases below $100 withtheir Android-based smartphones.The system uses near-field communi-cation and Visa payWave technologyvia a payment app on the phone. Itwill be aimed at consumers wantingto make small purchases such as forlunch, petrol and groceries.

Optus mobile marketing VP BenWhite points out that there are al-ready nearly one million Optus post-paid customers with compatible de-vices who could download the app,get the SIM and make purchases us-ing Cash by Optus.

“We’re the first Australian telco tolaunch a mobile payments app, andbecause it’s compatible with many ofthe latest Android devices and canbe linked to any Australian bank ac-count, we’ve got a huge opportunityto bring this technology to a lot ofpeople,” White says.

Optus has not revealed how much ofa cut it gets from transaction fees,but according to White the main rea-

son that the carrier is offering theservice is to offer a service that differ-entiates it from other carries and en-courages more use of smartphonesby its customers.

He points out that Optus has beenworking on the mobile payments sys-tem for a number of years before itsintroduction. It works like a VisaPrepaid debit card and customerscan load up to $500 at any one timeand make contactless purchases un-der $100 anywhere that accepts VisapayWave. Users will also have to getan NFC-enabled SIM, which Optuswill send on request.

White casts the move as just a firststep into Optus' foray in mobile pay-ments, with future plans likely tolook at any type of account mecha-nism that stores value.

“As technology and communicationsconverge, Cash by Optus is a naturalevolution for Optus. This is our firststep towards launching future con-tactless applications in areas likepublic transport. Australians neverleave home without their mobiles, soit makes sense to build this technolo-gy into smartphones now,” Whitesays.

Heritage Bank is responsible for thebanking aspect of Cash by Optus.John Minz, CEO of Heritage Bank,says the launch of Cash was good forboth the bank and the carrier.“Heritage Bank is a relatively smallfinancial institution, but we’re al-ready recognised for our ability to de-liver really creative and effective pay-ment solutions for our corporatepartners, particularly in the area ofprepaid transactions,” Minz says.

Visa head of emerging products andinnovation George Lawson says therapid growth of contactless paymentsin Australia has set the right condi-tions to enable a mass shift to mo-bile payments. There were over 64million Visa payWave transactionsin September 2014, making Australi-ans one of the leading users of con-tactless payment systems.

“Apple is never the first, but

it comes when the market is

ready and it creates the op-

portunity.”

Telcos and datacentres have beeninextricably linked for years.

Many large telcos own and operatetheir own facilities; others co-locateracks of networking equipment inthird-party datacentres, a significantindustry in its own right; plentyadopt both strategies.

But now, both the respective indus-tries and their areas of overlap arenow in the throes of rapid transfor-mation – with associated opportuni-ties for new revenue streams. Beyondgeneral advances in technology, spe-cific trends around cloud, mobility,software-based applications and con-nectivity have prompted the variousplayers to reinvent their businessmodels to varying degrees.

For instance, many telcos are rework-ing their datacentre strategy – wheth-er that applies to co-located hard-ware, or the facilities they own andoperate themselves – in a tacticalshift towards offering cloud hostingservices. Some commentators arguethat the next logical step for theseenterprises would be to deliver soft-ware-as-a-service and thus add valueto their existing offerings. But otherscontend that telcos must beware theydon’t overreach – and build in safe-guards to ensure they retain a differ-entiated business portfolio, withoutlosing focus on their existing corestrengths. And several key industryplayers see opportunities for telco inthe datacentre space that go beyondhosted service offerings.

The datacentre market itself has hadits share of ups and downs. In the1990s, datacentre operators built ex-cess capacity because they predictedmassive demand for datacentre space– but this never eventuated, and sub-sequently many were bankrupted.

One such firm was Exodus Commu-nications, which at that time was ahosting the websites of internet gi-ants such as Google, Microsoft andYahoo. Yet, in September 2001 thefirm filed for bankruptcy, having suf-fered from a combination of overex-pansion which had left it with a raftof empty facilities and a collection ofunpaid bills, courtesy of some of itsless successful dotcom customers.

However, by 2007, Equinix foundthat global demand for colocationservices had jumped 12.5% over theprevious year – set against a supplyincrease of just 4.2%. And, at thattime, the firm reported expectedgrowth rates for colocation businessto hit 20% each year until 2010.

Today, the sustained growth in thesheer volume of digital data and theproliferation of online applicationshas led to strong and increasing de-mand for storage options. As a re-sult, many enterprises have elected toinvest in their own datacentres. Butbuilding and operating these facili-ties, particularly in light of the rapid-ly growing demands placed on them,calls for significant investment in re-sources. And modern datacentrebuilds are subject to strict guidelinessuch as those laid out by the Tele-communications Industry Associa-tion in TIA-942, a US nationalstandard specifying the minimum re-quirements for telecommunicationsinfrastructure of datacentres andcomputer rooms including singletenant enterprise facilities and multi-tenant internet hosting facilities.

However, the next dramatic shift forthe datacentre industry in terms oftelco is likely to centre on ownershipof the fabric of connectivity itself, ac-cording to Pacnet ANZ CEO Nigel

Stitt. “The next big leap would be inbuilding an interconnected ecosys-tem and owning the underlying fab-ric of the connectivity between differ-ent cloud platforms,” he says. “I see[that] telecommunications compa-nies will become the fabric that inter-connects hybrid, private and publiccloud platforms... therefore, telcosneed to be an ‘on net’ provider to alldatacentre locations in their [core]marketplace or build and operatetheir own facilities.”

Stitt goes on to suggest that telcoswill need to adopt and use innova-tive bandwidth models that allow cli-ents to interconnect ‘on demand’,adding that “these platforms will bebuilt and driven by technologiesbased on software-defined-networking.”

Bell Labs president Marcus Weldonsimilarly sees cloud connectivity aspresenting key new business oppor-tunities linked to the datacentre fortelcos. He argues that from a purelytechnical point of view, datacentresare to a large degree evolving into fa-cilities approximating IP networks,in the sense that they are starting touse the same internet protocols forpart of their internal operations thathave always been at the core of ser-vice providers’ main business propo-sitions.

“IP is a new opportunity for telcos toextend their business because thetechniques that they use in their net-works are the ones that are [now] en-tering the datacentre, which meansthat they can now couple to thoseclouds seamlessly [themselves],”notes Weldon, adding that as a re-sult, telcos could essentially offer au-tomated cloud connectivity and VPNservices which would effectively pre-

Telcos and datacentres: where to from here?

Both the telecommunications and datacentre industries are going through some transformative changes.Richard van der Draay reports on some of the key opportunities.

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sent them with untapped new busi-ness opportunities.

On the other side of the coin, mean-while, datacentre operators them-selves are looking for new points ofdifferentiation in an increasinglycrowded field. For Stitt, particularlyas power and cooling become in-creasingly commoditised, the answerlies in the ecosystem of players con-nected within the datacentre envi-ronment, and in monetising themovement of data. But he argues thebig question hinges on who is betterplaced to capitalise on these — data-centre players building their ownnetwork capabilities, or telcos build-ing datacentres and combining thatfocal shift with their already-provennetwork capability. “We would arguethat it is the telco who can build amore sustainable model,” he says.

For the moment, Stitt emphasisesthat traditional sales in the datacen-tre space continue to be the leadingrevenue areas. “However, the type ofcustomer we typically attract alsodrives good network revenues,” headds. “As clients start to understandthat the network layer and the abilityto use this securely and ‘on demand’is essential to any cloud strategyadoption, we will see this portion be-coming a larger part of the revenuepiece.”

Of course, there’s also the aforemen-tioned opportunity for the telcos tooffer their own cloud or cloud-basedservices. “Some telcos may see theirstrategy in the cloud world as goingfurther up the OSI stack, offering ap-plications and infrastructure ‘as a ser-vice’,” notess Stitt. But he warnsthat this model needs to be viewedwith caution, saying it pushes telcosinto a highly non-traditional spaceand moves them away from the focuson their core service of owning thedata flows between the various cloudand application providers.

“With the competition having well-established business models such asAmazon Web Service, Microsoft’sWindows Azure and Google CloudPlatform, a better model could be to

focus on the connectivity piece andinnovate in how bandwidth can beused, rather than building cloudplatforms,” says the Pacnet ANZCEO, adding that good industrypartnerships could also be an optionfor telcos keen to productise applica-tions and cloud services.

VIRTUALISATION: Stitt also high-lights the advent of virtualisation ofnetwork devices as a key disruptor inthe field, both for dedicated datacen-tre players and telcos, enabling CIOsto take a much more dynamic ap-proach to managing infrastructure.“Coupled with a portfolio approachto applications, we are going to seelots of challenges for operators as wetry to manage very flexible loads in

the datacentre and on the network.”

Virtualisation is certainly a hot topicfor Macquarie Telecom, a telco thatowns and operates its own datacen-tres. “Networking is a rapidly chang-ing area of IT and much of the pro-gress in network infrastructure hasmoved from Ethernet, cable, and fi-bre optic networks to virtualisation,”says the firm’s principal technicalconsultant Dayle Wilson. “Networkvirtualisation is the idea of shiftingcustomer segregation from a virtuallocal area network and hardware net-work devices into software, this iswhy the term software-defined-networking is often used to describenetwork virtualisation.”

Wilson says one of the benefits ofvirtualisation is the ability to easilymove servers elsewhere in the case ofincidents such as underlying hard-ware failure. “Because everything isstored in a database, functionality

has shifted from a hard-coded config-uration on a switch to a piece of soft-ware connected to a server,” he adds.“This speeds up the failover processfrom an administrative perspective,while also driving the trend of singletenancy.”

“Of course, virtual networks still liveon underlying physical hardware,”notes Wilson. “Therefore, the deci-sion to implement a virtual networkwill depend on scale and the desiredamount of throughput (and the un-derlying hardware) will ultimatelylimit how many virtual customerscan live on that piece of software.”Wilson says that this limit is general-ly either 1Gbps or 10Gbps, and thatonce that threshold is reached it maybe necessary to purchase physicalequipment and use dedicated ca-bling for each customer.

The Brocade paper ‘Industry Trendsand Vision: Evolution toward Data-centre Virtualization and PrivateClouds’, builds on some of thesethemes. The document tackles someissues involving design considera-tions around network convergence,which is often positioned as the net-work architecture for server virtuali-sation. Brocade says that networkconvergence was originally applied tothe convergence of voice, video, anddata on the same telco network butthat when network convergence isapplied to the datacentre, it refers totransporting IP network and block-level storage traffic on the same phys-ical network. “Although this is a sep-arate topic from virtualisation andcloud computing, some have posi-tioned it as essential for virtualisa-tion to succeed,” the authors note.

“Of course virtualisation and cloudcomputing cannot exist without dat-acentres and the physical hardwarethey house,” adds Brocade, echoingthe point made by Macquarie Tele-com’s Wilson. “To support virtuali-sation, the datacentre architect hasto harden the network against fail-ures and make it adaptable and flexi-ble without disrupting traffic and dothis while continuing to support ex-isting datacentre assets.”

“Networking is a rapidly

changing area of IT and

much of the progress in net-

work infrastructure has

moved from Ethernet, cable,

and fibre optic networks to

virtualisation”

WE’RE BETTER WHEN WE WORK TOGETHER

At Telstra Wholesale, we’re focused on the quality of our working relationships and

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Our number one priority is improving the way we work with our customers.

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A dvances in physics over thepast ten years have not only

led to a greater understanding ofhow our universe works, but alsoyielded practical breakthroughs infields such as quantum mechanics.

In the quantum world, sub-atomicparticles exhibit properties that simp-ly defy physics as they apply to ob-jects larger than the size of a singleatom. Information can travel atspeeds far exceeding the speed oflight. Objects can appear in multiplelocations across the universe simulta-neously. Superconductors cantransport energy with 100% efficien-cy. And what may sound to most likescience fiction has already movedfrom the realm of purely theoretical

physics to the labs of semiconductorfabricators in Silicon Valley.

Much like the race that propelled usfrom atomic theory to buildingatomic reactors in mere decades, to-day's race to capitalize on bleedingedge science is something that willalmost assuredly see practical out-comes within most of our lifetimes.Competitors from laboratories in theUnited States, China, Switzerlandand others are regularly upstagingone another in demonstrations ofpractical applications of quantumtechnology. These include the use offibre optic cables to transport quan-tum information at distances exceed-ing 100km.

QUANTUM TRANSPORT: The

first stage of applying quantum tech-nology to existing telecommunica-tions networks has already begun. In-deed the technology is in use todayby a small number of financial insti-tutions and governments, which areleveraging its ability to provide whatscientists have discovered to be un-breakable encryption technology.

A hybrid-quantum network, using apoint-to-point fibre optic link totransfer traditional data packets aswell as quantum information, is thebasis for the most common form ofquantum transport in use today.Companies such as IDQ in Switzer-land are already manufacturing off-the-shelf hardware to build these pri-vate and completely secure telecom-

A quantum leap

Unimaginable amounts of data are being transported securely across its networks on a daily basis.But William van Hefner reports that few seem aware of a coming quantum leap in technology that

promises to render all modern forms of secure communication obsolete.

munications systems. Quantum bits(known as Qbits) travel along thesame fibre optic lines and providethe actual encryption keys withwhich the normal data packets areencoded.

Unlike with traditional encryption,the laws of physics actually make in-terception of quantum bits impossi-ble without physically altering them.The simple act of observation by athird party being able to alter matterwas a concept that even Albert Ein-stein struggled to understand. He fi-nally came to refer to such seeminglyimplausible properties as “SpookyActions At A Distance”. Today, notonly have these “spooky” actionsproven to very real, observable andpractical to re-create, but are des-tined to revolutionize both the tele-communications and computing in-dustries.

QUANTUM COMPUTING: An-other practical breakthrough madepossible by the study of quantummechanics is the rise of quantumcomputers. A handful of laboratoriesalready claim to have built them, andat least one company is already sell-ing them. At $10 million each, D-Wave Systems in Canada offers whatit claims is the world's first commer-cially available quantum computer.Google has purchased one of the sys-tems, as have a handful of U.S. gov-ernment agencies.

The few operating quantum comput-ers today are perhaps comparable tothe earliest electronic computers de-signed in the 1950s. They are incred-ibly bulky, extremely expensive, needhuge resources to keep them cooledand can only be operated by a teamof scientists. However, just as manu-facturing methods led to those room-sized behemoths from the 50s beingscaled-down to hand-held calculatorsless than 30 years later, the size andprice of quantum computers can beexpected to greatly diminish overtime.

The computing capabilities of quan-tum computers promise to be revolu-

tionary in scope. While many break-throughs have been made in the ac-tual manufacturing process, the big-gest hurdle to their practical use atthis time seems to be in designing atype of operating system that makesthe vast amount of data they can pro-cess usable for humans. Once thishurdle has been overcome though,the capabilities of quantum compu-ting will far surpass those of tradi-tional supercomputers that currentlyoccupy entire floors of office space.

Without a doubt, the earliest usersof quantum computing will put it touse at what it does best: breakingcodes that are almost impossible tocrack with modern computers. Oncethis is accomplished, which could be

in a very short time by human stand-ards, all current forms of electronicencryption will become as transpar-ent to these devices as plain text. En-cryption keys that theoreticallywould take more computing powerto break using all of the planet'scomputers combined over thousandsof years should be a process thattakes mere seconds. In fact, any databeing encrypted using traditionalcryptography today can theoreticallybe captured, stored and decoded at alater date once quantum computingbecomes more widespread.

A GLOBAL QUANTUM NET-WORK: Transferring quantum in-formation from one site to another(teleportation) has not only been ac-complished via fibre optics but alsousing wireless – and, experimentallythus far, via satellite. China has al-ready announced plans to launch theworld's first satellite with quantumteleportation capabilities in 2016.

Much as with the early internet, gov-ernment agencies, military contrac-

tors, labs and financial institutionswill most likely form the earliestlinks of a global quantum network.However, with advances in quantumcomputing running neck-and-neckwith practical deployment of quan-tum-hybrid networks the need forrapid conversion of existing networkcapacity will be vital for both reasonsof (inter)national security and the in-tegrity of the world's banking and fi-nancial institutions.

Simply put, any entity that has botheavesdropping or wiretapping capa-bilities combined with the power ofa fully-functional quantum computerwill be able to intercept and decodeany form of encryption in use today,other than the few entities alreadyutilizing quantum encryption.

AHEAD OF THE CURVE: Alt-hough quantum teleportation of da-ta at distances reaching that of to-day's largest networks is not yet possi-ble, existing fibre optic networksshould eventually be able to be retro-fitted to quantum-hybrid networks,most likely within the coming dec-ade. The demand for these transportservices will almost certainly far out-strip supply once it begins. Eventual-ly, all e-commerce will necessarily de-pend upon it.

As quantum computers move fromthe reaches of well-funded laborato-ries to the desktop, quantum-hybridnetworks will begin to disappear, be-ing replaced with purely quantumcomputing networks. However, exist-ing fibre optic lines may still be ableto make that transition as well.

Knowing the huge investment thatmost governments and private enti-ties have made in traditional fibreoptics, most labs developing tele-portation technology today are focus-ing their efforts on leveraging exist-ing infrastructure. While the elec-tronics of existing networks will needto be upgraded for quantum tele-portation, existing undersea and ter-restrial fibre optic cables should con-tinue to carry traffic through thequantum revolution and beyond.

China has already an-

nounced plans to launch the

world's first satellite with

quantum teleportation ca-

pabilities in 2016

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