AI – rescuing the spectrum crunch (Part 1)

Chamath Palihapitiya, the straight talking boss of Social Capital recently sat down with Vanity Fair for an interview where he illustrated what his firm looked for when investing. “We try to find businesses that are technologically ambitious, that are difficult, that will require tremendous intellectual horsepower, but can basically solve these huge human needs in ways that advance humanity forward”.

Around the same time, and totally unrelated to Chamath and Vanity Fair, DARPA, the much vaunted US agency credited among other things for setting up the precursor to the Internet as we know it threw up a gauntlet at the International Wireless Communications Expo in Las Vegas. What was it: it was a grand challenge – ‘The Spectrum Collaboration Challenge‘. As the webpage summarized it – “is a competition to develop radios with advanced machine-learning capabilities that can collectively develop strategies that optimize use of the wireless spectrum in ways not possible with today’s intrinsically inefficient static allocation approaches”.

What would this be ‘Grand’? Simply because DARPA had accurately pointed out one of the greatest challenges facing mobile telephony – the lack of available “good” spectrum. In doing so, it also indirectly recognized the indispensable role that communications plays in today’s society. And the fact that continuing down the same path as before may simply not be tenable 10 – 20, 30 years from now when demands for spectrum and capacity simply outstrip what we have right now.

Such Grand Challenges are not to be treated lightly – they set the course for ambitious endeavors, tackling hard problems with potentially global ramifications. If you wonder how fast autonomous cars have evolved, it is in no small measures to programs such as these which fund and accelerate development in these areas.

Now you may ask why? Why is this relevant to me and why is this such a big deal? The answer emerges from a few basic principles, some of which are governed by the immutable laws of physics.

• Limited “good” Spectrum – the basis on which all mobile communications exists is a finite quantity. While the “spectrum” itself is infinite – the “good spectrum” (i.e. between 600 MHz – 3.5 GHz) or that which all mobile telephones use is limited, and well – presently occupied. You can transmit above that (5 GHz and above and yes, folks are considering and doing just that for 5G), but then you need a lot of base stations close to each other (which increases cost and complexity), and if you transmit a lot below that (i.e. 300 MHz and below) – the antenna’s typically are quite big and unwieldy (remember the CB radio antennas?)

Courtesy: wi360.blogspot.com

 

• Increasing demand – if there is one thing all folks whether regulators, operators or internet players agree upon it is this; that we humans seem to have an insatiable demand for data. Give us better and cheaper devices, cool services such as Netflix at a competitive price point and we will swallow it all up! If you think human’s were bad there is also a projected growth of up to 50 Bn connected devices in the next 10 years – all of them communicating with each other, humans and control points. These devices may not require a lot of bandwidth, but they sure can chew up a lot of capacity.

CISCO VNI

• and as a consequence – increasing price to license due to scarcity. While the 700 MHz spectrum auction in 2008 enriched the US Government coffers by USD 19.0 Bn (YES – BILLION), the AWS-3 spectrum (in the less desirable 1.7/2.1 GHz band) auction netted them a mind-boggling USD 45.0 Bn.

One key element which keeps driving up the cost of spectrum is that the business model of all operators is based around a setup which has remained pretty much the same since the dawn of the mobile era. It followed a fairly, well linear approach

• Secure a spectrum license for a particular period of time (sometimes linked to a particular technology) along with a license to provide specific services
• Build a network to work in this spectrum band
• Offer voice, data and other services (either self built) or via 3rd parties to customers

While this system worked in the earlier days of voice telephony it has now started fraying around the edges.

•  Regulators are interested that consumers have access to services at a reasonable price and that a competitive market environment ensures the same. However with a looming spectrum scarcity, prices for spectrum are surging – prices which are indirectly or directly passed on to the customer
• If regulators hand spectrum out evenly, while it may level the playing field for the operator it does nothing to address a customer need – that the capacity offered by any one operator may not be sufficient… leaving everyone wanting for more, rather than a few being satisfied
• Finally, the spectrum in many places around the world remains inefficiently used. There are many regions where rich firms hoard spectrum as a defensive strategy to depress competition. In other environments there are cases when an operator who has spectrum has a lot of unused capacity, while another operator operates beyond peak – with poor customer experience. No wonder, previous generations of networks were designed to sustain near peak loads – increasing the CAPEX/ OPEX required to build up and run these networks.

In the next part of this article we will dive deeper into these issues, trying to understand how an AI enabled dynamic spectrum environment may work and in the last note point out what it could mean to the operator community and internet players at large…..

Friction-free: enabling happy customers

Last week, I had the good fortune to attend MBLT 2014, a conference all around the rapidly evolving mobile ecosystem. Among the many speakers at the conference, two which piqued my attention were those from Spotify & SoundCloud; both speakers were engaging, and interestingly enough – both talked about growth.

When we talk about growth here, it wasn’t all about entering new markets, or creating new products. It involved a lot of small elements; elements which when brought all together ensured that you gained a lot of users and who kept coming back. Although Spotify and SoundCloud operate in the music space, both (currently) focus on different aspect of this segment. As Andy @ SoundCloud succinctly put it; if Spotify was the Netflix of music, then SoundCloud was Youtube. However, each company seemed to have a common approach when it came to customer acquisition – to develop a friction-less sign up process.

At its core it simply meant reducing the number of clicks, mouse moves etc required to sign up a user and/ or a customer. Both agreed that if any sector was to be considered as “best practice” then it would be mobile gaming – and the king of the hill was… well, King.com. The makers of Candy Crush had got this bang on – all you had to do is download the game and you were good to go.

Their mantra was -> Number of clicks to sign up = 0. Number of users = millions!

Both SoundCloud & Spotify were always on the lookout to make the whole signup process, simpler, quicker and more efficient – fully aware of the fact that complicated processes turned away prospective users, and getting them back wasn’t a trivial matter. That point got me examining different websites to see just how much this mattered (a study done by Spotify as well).  After some pottering around, I couldn’t but wholeheartedly agree with the rationale of such an approach.

If you now compare this mentality with IT solutions at traditional corporations you realize how far behind the curve they are in this respect. Many systems there are built more with the paranoia of security and little consideration for user engagement.  These are what I call “push systems” – where employees have no choice BUT to use these services mandated by IT. The direct result is that either personnel shy away from using these services, or doing so becomes an irritating chore (especially since they use better designed services on a daily basis). Rather than a full scale rebellion, we are seeing services which simply assist existing ones services such as Brisk.io gaining traction because continuously updating SalesForce is tedious.

A takeaway would be for IT personnel to closely work with  end users in deciding how they would like to engage with the services they use on a daily basis. Focusing on small but important elements such as “clicks to complete entries” etc will make employees more enthusiastic on using such services making these more an aid (which was the purpose) rather than a chore!

Partnering at large corporations – secrets to succeed!

In the era of consolidation following the economic crises, many firms turned towards a ‘protect the core’ approach. One often adopted approach was the slashing of R&D budgets and consequently a diminishing pipeline of new products. These now lean companies are facing a new problem – what do you do when your core itself is shrinking! This is being fueled by rapid technology changes which allows substitutes to enter the market, many with a compelling service offering, and many times free of cost!

Given an option to either make (i.e. reinstate the development that you just fired), buy (who knows if this is a hype or will work?) – many large firms are turning to the third, the partner option. At the highest level this would seem simple – there are no integration headaches, no large in-house development costs; but many are realizing this is not as easy as it seems. This is best illustrated by a simple analogy, ‘have you ever seen an elephant dance with a mouse?‘. Nonetheless, rather than give up on what is and should be a clear cornerstone of new products offerings to keep customers happy, large companies can make some concrete steps in this direction.

• Make sure that the partnering and venturing team has the full backing of the management. This simply boils down to the fact that partner products should always be evaluated on par with similar internally developed offerings – no step-motherly treatment here.
• Ensure that the team understands the partner mindset. At best this would also mean that a few members if not all have past experience in such an environment. It is quite difficult to understand the challenges, needs and wants of small firms if you haven’t quite done it yourself.
• Do not subject your partner to the internal functions, realpolitik and bureaucracy in your organization. Instead work hard to make your own internal processes lean, efficient and less cumbersome. Best way to look at it – treat the partner as you would a customer; keep him happy! It is amazing how beneficial this could be to other divisions in your organization as well.
• Invest in being able to effectively manage multiple partnerships. Managing the first 3 – 10 are easy, managing 50 is another story altogether. This does not imply additional layers of complexity – but recognize the need to be abreast of and manage partner needs. The Microsoft way – i.e. categorize partners based upon a few select KPI’s (e.g. revenue, strategic interest etc) and then accordingly assign resources to them is quite effective in this respect. Have to give them credit here – they do know how to manage (without strangling) their partners to a good extent.
• And with all partners – do not be afraid of failure; monitor the progress, recognize if and when it is failing – and move on. Do not throw good money after bad.
• Finally – be patient. The above points may sound simple but do need some time to fall in place and for you see tangible results. Give yourself the time, and make management aware of the same. Last thing you need is the fruits of your labor falling apart halfway through because unrealistic short-term expectations have been set!

Necessity – the mother of innovation

For those that follow the Tech buzz, the year 2012 was not kind to the likes of Nokia, RIM and Yahoo. These firms, for long the stalwarts of outstanding products seem to have fallen by the way side. One immediate repercussion of this downfall was a steady loss of talent. You first lost those who were poached away by firms on the upswing, and then perhaps had to further cut back by slashing staff (and in some cases whole units) in order to meet quarterly figures. What remained was a skeletal staff, often with lower morale and ever lower future expectations – not something which would foster development.

However, today’s muse is of those who were terminated – not because of their own (direct) doing. This would seem even harder in places such as Finland where Nokia had to let go of many talented (and long serving) personnel from among its ranks. Given the size of the country and limited opportunities under normal circumstances spell gloom and doom.

But much to my surprise, when relating this to a Finn, I got an answer which turned my hypothesis on its head. Contrary to the doomsday scenario, although there was a short period of bewilderment, this mass layoff have actually spawned what may only be called a grass roots entrepreneurial movement. Firms which were formerly fighting a losing battle in trying to attract workers away from powerhouses such as Nokia now find available a good pool of talent to choose from. Furthermore, many of those very employees who are highly skilled are actively involved in developing and fostering their own ventures – an act wisely aided by the government. In short – the death of a tree has sparked the growth of an entire grassland!

One may argue that many of these will not survive, but well – even if a few (like Rovio) do, it could ignite a new generation of Nokia’s to take over the old guard. Perhaps, this kind of change – a purposeful slash and burn, albeit painful in the short term – could truly stimulate the revolution in the long term. Maybe necessity – however harsh, is indeed the mother and stimulus of innovation