Mobile data growth is a key reason Facebook is investing in a private fibre network in Europe

Mobile operators worldwide should be preparing for an impending surge in traffic over the next several years,  with mobile users in 2016 consuming an average of 6.5 times as much video, over eight times as much music and social media, and nearly ten times as much games than in 2011.

The statistics are drawn from recent forecasts from Informa Telecoms & Media, but with foresight of this curve, social giant Facebook is investing in its own European fibre network, to cope with similar increases in traffic on internal systems.

Erik Hallberg, president at TeliaSonera International Carrier, which is building the network for Facebook, explained that the infrastructure will be used to backhaul traffic between its newly-built datacentre in Sweden – the hub of its European operation – and datacentres elsewhere. The company has already set up long distance links to provide capacity between its European and US datacentres.

“Facebook is processing enormous amounts of data per user, and it needs to sort it and share it with everyone,” Hallberg told Telecoms.com. “This will be the main place for Facebook to aggregate data for European and Middle East users. It needs a network to take traffic back and forth and make data accessible to Facebook users.”

Ron Kline, principal analyst, network infrastructure, at Ovum added that resilience of the network is a key reason for Facebook to invest in its own private network.

“One of the tenants of Facebook and any other internet service providers is that the network can’t fail – the reliability and resiliency of the network are key,” he said. He added that latency is another consideration, because if it takes too long for a signal to transfer to the network, then Facebook will have issues with sessions timing-out, which would affect internal processes such as backup and mirroring.

“The other thing is they have huge amounts of data – it’s hard to imagine how much data is in these datacentres – just racks and racks of servers,” Kline added. “It’s a lot of bandwidth. To buy here and there from different carriers is virtually impossible – you need to have a private network that can be sized to the bandwidth requirements and give you the most reliable network you can have.”

Projections from Informa show that there will be a huge upsurge in traffic for most mobile data services over the next five years, largely driven by the spread of smartphones and a 23 per cent increase in the number of mobile users.

“The top three data guzzlers on mobile phones over the next five years will be applications, video streaming and web browsing – in that order of importance,” said Guillermo Escofet, senior analyst. He added that global mobile data traffic will grow from 3.89 trillion MB in 2011 to 39.75 trillion MB in 2016, amounting to a tenfold increase.

TeliaSonera International Carrier is building a fibre network for Facebook in Europe

Nordic carrier group TeliaSonera’s wholesale division and backbone operator, TeliaSonera International Carrier, has announced that it is building a pan-European managed optical network for Facebook. To provide the social network with connectivity between internet exchange points in multiple European cities and its newest datacentre in Sweden.

The carrier said that it is well placed to build and provide network infrastructure and services to Facebook, as it will be able to use its experience and expertise from operating one of the world’s largest fibre backbones.

“Our vision is to enable innovation throughout society at the speed of fibre,” said Erik Hallberg, president of TeliaSonera International Carrier.

The social network recently set up a datacentre on the edge of the Arctic Circle in Luleå, Sweden, in order to make  Facebook faster for users in Europe, and also because the weather conditions will help keep servers cool. Management of Facebook’s network will be performed by the operator’s network operation centre in Karlstad, Sweden.

TeliaSonera International Carrier owns and operates more than 43,000 kilometres of fibre network, covering more than 200 points of presence in major cities in 35 countries across Europe, North America and Asia.

The deal will see TeliaSonera acquire 49 per cent of Kcell from part owner Kazakhtelecom, for $1.519bn. The remaining 51 per cent of the carrier is currently owned by Fintur Holdings, a joint venture between TeliaSonera (58.55 per cent) and Turkcell (41.45 per cent).

TeliaSonera said that it has agreed, subject to certain conditions, to sell 25 per cent of Kcell in an IPO at some stage in 2012. When both transactions have completed, TeliaSonera’s effective stake in Kcell will be 61.74 per cent.

“This agreement is another step in the execution of our strategy of increasing ownership in core holdings. Kcell is a clear market leader in Kazakhstan, the largest market in Central Asia, and has shown remarkable growth over the years. The fact that part of the company will be sold in an IPO will make it even more attractive”, said Tero Kivisaari, President, TeliaSonera Eurasia.

Tommy Ljunggren, SVP and head of system development, mobility services at TeliaSonera

TeliaSonera gained headlines in 2009 for being one of the first to deploy LTE in its home regions of Sweden and Norway. Ahead of the LTE North America 2011 conference, taking place on the 8-9 November 2011 at the Fairmont Dallas Hotel in Dallas, Texas, USA, we see what advice Tommy Ljunggren, SVP and head of system development, mobility services at TeliaSonera has for his US counterparts – and also get his views of how important Apple is to the LTE industry.

Some analysts have said that the industry moved to LTE too quickly. What do you think?

I would say we moved too slowly. One of the reasons why we moved so quickly was to make a statement that the industry has to move, otherwise there would be a problem. And I would say that I participate in news articles more or less everyday now because we have a capacity problem in Sweden – and the reason for that is that we don’t have enough capacity in 3G. We need something new and we need it now.

So I’m very happy that we have a 4G network that we can migrate the customers onto, as we simply don’t have enough capacity in 3G today.

What about the large investments that were made in 3G. Have they been adequately reaped?

I would say so yes. Of course it depends on what business model you have, but the major mistake that large portions of the industry made was to have too much of all-you-can-eat. The fierce competition to offer all-you-can-eat is what we’re all now suffering from.

Can you give me a snapshot of where TeliaSonera is and how many LTE subscribers you have?

We now have 153 cities in Sweden covered, four in Norway,  50 per cent of the population in Denmark and six cities in Estonia and five in Lithuania. We had 10,000 LTE subscribers one year after the first launch in the world. You can say it’s a low figure but we didn’t expect it to fly quicker than that. But we made a statement to get the industry moving and I think we managed to do that.

How has 4G changed the customer experience?

What we’ve seen from the first movers in 4G are some applications that we didn’t see before, and that’s really the media industry. I’ve given this example several times but a TV company can use the 4G as a replacement of their outdoor broadcasting buffers – the ones with satellite dishes on the roof – that cost a few million euros. They can replace that now with a HandyCam, a laptop and a 4G dongle – and they do that actually. The important part is the tremendous capacity that they get on the uplink, and the response times. They have said several times that they could not do this on 3G, because the uplink wasn’t good enough and not stable enough. But with 4G they use it during live transmissions.

Are you happy to call LTE 4G when the ITU says differently?

We strongly believe that it is the next generation. We have a totally new radio system. We have a totally new core system, so what’s that if not a new generation? Even the ITU actually changed their minds and agree to call LTE 4G.

Will LTE alone be able to solve this data crunch? Has it done that for TeliaSonera?

It will be a very important part but it’s not replacing 3G. It’s a combination of LTE, 3G, and in our case offload to wireless LAN. It’s really about the total capacity that you can deliver via the network. The extreme example there is that while the 3G coverage has increased so has the 2G data traffic – the increase in mobile data has affected the whole network. But I think that it will really help to ensure we survive. It’s not replacing anything else, it’s complementing it.

You mentioned 2G data traffic. Who is still using data on 2G?

Actually it’s all those smartphones, because if you look at them they’re still quite dependant on 2G in Sweden and certainly in the UK. If you look at the US market, the good integration between 2G and 3G isn’t really there because you have CMDA operators. But we really have that so our smartphones bounce back and forth between 2G and 3G. So that’s why the traffic has increased. And it’s about the user’s behaviour. The mobile data explosion on 3G has really taught people to use it in a different way. So when they go out to rural areas where there’s only 2G they will continue to use it in a similar way even though we can only deliver low speeds.

Why is VoLTE l taking so long to materialise?

I think the reason why there is no strong push for it is that the business benefit of VoLTE is quite vague if you’re running a 2G and 3G network because VoLTE will not save any money, at least initially, for the operator. Therefore, there isn’t a cost saving. It’s a new network and we don’t really have any capacity problems with voice on 2G and 3G. It’s very cost effective to run voice over 2G, for instance.

There is some business sense in it [VoLTE], and that will be for those 4G operators that don’t have a voice service, such as the former WIMAX operators. For them it’s very important to get VoLTE to be able to compete by offering a voice service, and that will drive the [VoLTE] market. There is also a quality benefit of VoLTE, but it’s not so much that it will fly on its own. There are some countries where the voice quality is bad, but not in the Nordics. My expectation is that we will have support in the 2013/14 timeframe.

When we have it in place we will have new services based on IMS services in general. When it’s integrated with something else – it won’t fly on its own. IMS is also a lesser component but when you offer IMS, VoLTE and some fancy rich communication services together it will be a lot easier to sell.

What’s your situation with LTE enabled smartphones on TeliaSonera?

There aren’t any yet and the prediction is that they will come early next year. They will be true LTE smartphones – not the ones that the US has right now with two radios. These drain the batteries flat very quickly as they have one LTE terminal for data and a CDMA voice terminal. It’s basically a dongle and phone that they glue together. They work – just not for long! We’ll see mature LTE smartphones and tablets but the volumes will probably not be there for a number of years.

Will the LTE iPhone, when it arrives, be the tipping point for LTE?

That’s a big question in the industry – what’s the importance of Apple moving forward. I think if you asked me two years ago I would have said it would be very important. But now it will be a bad mistake not to include LTE in the iPhone 5 as otherwise they will really be run over by the others. I think the others are catching up really quickly so the importance of Apple is going down. They are not unique enough and there is disappointment over the 4S – it was too small step for them. So I don’t think Apple will decide if LTE will fly or not. My expectation is that in 2013/14 we will really see low-end smartphones having LTE as well. The big question is what frequency bands they will put in for smartphones.

What frequencies does TeliaSonera employ?

We will not buy terminals that don’t support, 800, 1800 and 2.6 as we need that to ensure that we can have roaming within our own group. In Lithuania it will take a while till we have 800 and 2.6 – and we have 1800. In Finland we have 2.6 and 1800 but won’t have 800 for a while. In Sweden we expect to have all three bands, and so on – but we really need all three. I guess Apple will target the US first and if they miss out any of these they will limit their ability to sell here.

It’s an important consideration for the industry to make – what do we consider roaming bands? For a lot of people falling back to HSPA will be enough, but if you get used to LTE, it won’t be. One of the customers that we have now that uses LTE is a big logistics company that are active in the whole of Europe (Schenker) and they have actually replaced all of their mobile broadband with 4G. Their lorries go across borders and they have put their applications into the cloud so it’s important that their lorries have good connections.

And roaming charges will go down. For us there is a maximum figure per day, which is 69 Swedish Kronas (US$10.38) – the maximum you pay if you roam in the EU/EFTA on TeliaSonera.

How would you encapsulate the lessons learnt in deploying LTE to your US counterparts?

I would say to the operators that are still doing tests to stop and launch. Because it is stable enough and it works – don’t be afraid. The other thing is to be careful about the business model. You can make a very good business case out it this, but avoid this all-you-can-eat thing. I mean, it’s worth something, so why should you give it away? Customers come to us and say, as long as you promise this (speed), we will actually pay a lot more. And of course they will negotiate, but they are willing to pay more as they see with 4G that they will be able to do business better and they will gain out of it.

The LTE North America 2011 conference takes place on the 8-9 November 2011 at the Fairmont Dallas Hotel in Dallas, Texas, USA.

TeliaSonera brings a Nordic element to the partnership

Nordic and Baltic carrier TeliaSonera has joined the collaborative M2M programme announced by Orange and Deutsche Telekom in February 2011. The project was put in place to create seamless international M2M services across the portfolios of the German and French incumbents. At launch the agreement covered France, Germany, Belgium and Luxembourg, with the Netherlands and the UK joining subsequently. The addition of TeliaSonera adds Sweden, Norway, Finland, Denmark, Estonia and Lituania into the mix.

While many current and proposed M2M applications involve the connection of static devices, some of the most advanced are international in nature. Fleet management and in-vehicle systems in particular will benefit from the availability of consistent cross-border services.

“With this agreement, now three groups are significantly pushing the boundaries of the M2M ecosystem,” said Anne-Marie Thiollet, EVP Enterprise Line of Business, Orange Business Services. “Global availability and reliability will spur the commercial adoption of M2M services and will stimulate new innovations. We are happy to welcome  TeliaSonera as a member of our partnership and look forward to other carriers joining us in this endeavour; only by working together can we make the great promise of M2M a reality.”

M2M is an area of increasing importance to the operator community, particularly in advanced markets where traditional subscriber bases have become saturated. The prediction from industry leading infrastructure and services vendor Ericsson that there will be 50 billion connected devices by 2020 has become almost accepted thinking among many industry players.

“M2M has a very large economic potential and this cooperation with three of the strongest brands in the market enhances our international offers,” said Håkan Dahlström, president of Mobility Services, TeliaSonera. “We know that the services connected to M2M communication in many cases is vital for business and puts clear requirements on us as a communication operator.”

After lengthy speculation on its future, Polkomtel has found a buyer

Poland’s second largest carrier, Polkomtel, has been sold to media mogul and Forbes rich-list regular Zygmunt Solorz-Zak for a reported €4.5bn. The sale brings an end to what’s been a fairly lengthy saga; the telco’s multiple shareholders have been looking to sell the company for several years but opportunities for a clean sale were regularly marred by in-fighting and disagreement over how the sale should proceed.

The company was owned by a mix of Vodafone and Polish mining/energy companies Orlen, Polska Miedz, Polska Grupa Energetyczna and Weglokoks. The value of any potential deal had been estimated in the region of €5bn, but many observers had pointed to the fragmented nature of the telco’s ownership as a potential roadblock to achieving a smooth sale. Nordic carriers TeliSonera and Telenor and Turkish operator Turkcell had been among the shortlisted bidders for Polkomtel at one point this year.

Vodafone had a 24.4 per cent stake in the company that gave it the right of first refusal to buy out the other shareholders, but it had been clear for some time that the operator would not be taking that route. Last year, it separated its Polkomtel shareholding shareholding out from the rest of its European division, indicating that a sale was imminent. According to Vodafone, the sale will net the company in the region of €920m before tax and administration costs.

Solorz-Zak owns a television channel as well as controlling stakes in energy and financial companies in Poland. One of Poland’s wealthiest citizens, he was an early bidder for the telco, giving rise for concern among the political classes in the country, who feared for their electoral fortunes as they struggled to raise funds to fill a €13bn-sized hole in the country’s budget.

Polkomtel, which operates as Plus in Poland, offers voice and 3G wireless services to a customer base in excess of 14 million. The sale will now be subject to approval from the Polish competition authority and is expected to be concluded by the end of this year.

Mobitel in Slovenia will launch LTE at 800,1800 and 2600MHz

Eastern Europe is to gain another LTE player with the news that Mobitel, a Slovenian mobile network operator, has deployed a test network based on the next generation mobile technology.

Mobitel said that it was able launch an LTE network for internal testing just a few days after receiving additional test frequencies. It said that it was able to achieve speeds of 100Mbps, with latencies that were half that of its HSPA+ network. It characterized these initial test results as “excellent” and promised users a “state-of-the-art” experience.  Once fully deployed the  network will operate at a trio of frequencies, taking in 800Mhz, 1800Mhz and 2600MHz, which should enable it to provide the right balance of coverage for densely populated and more remote areas at the greatest network efficiency.

The network is at the pre-commercial launch stage and Mobitel said that it would look to gradually expand the network alongside its existing GSM and HSPA network. The latter currently offers theoretical speeds of 21.6Mbps and it intends to offer dual carrier HSPA delivering top speeds of 43Mbps.

The operator said that the network is the result of two years of technology investments that have been made with an eye on implementing LTE and LTE Advanced further down the road.

Mobitel’s use of 1800MHz will go down well with major European players Deutsche Telekom, France Telecom and TeliaSonera who all called for the frequency to be used worldwide as a standard for LTE. In a recent interview with Telecoms.com Mike Wright, director of networks and access technologies for Australia’s Telstra’s explained that re-farming 1800MHz made a lot of sense for many networks looking to roll out LTE. “If you look around the world, many operators actually own 1800. Our view is that it actually makes sense for a lot of operators to look to re-farm and use it more efficiently”.

Lars Nyberg, CEO of TeliaSonera

TeliaSonera has revealed that it is planning to invest over SEK 8bn (USD 1.25bn) in its fixed fibre networks in the Nordic and Baltic countries by 2014.

Describing TeliaSonera’s fixed networks as a “key strategic asset”, CEO Lars Nyberg said that the company aims to expand the coverage of its fibre networks to 2.3 million homes, of which almost one million will be in Sweden, for which it has allocated SEK5bn of the total budget.

Mr Nyberg added that rollout will be done on a selective basis to ensure a good return on investment.

Polkomtel's proposed sale looks set to hit troubled waters

The $6bn Polkomtel sale saga looks set to take an interesting turn this week with reports that last-minute squabbling between shareholders could derail the whole process. When news of the impending sale was first announced, many observers pointed to the fragmented nature of the telco’s ownership as a potential roadblock to achieving a smooth sale. On Tuesday, Reuters  reported that sources close to the deal are saying the involvement of state-owned shareholderrs with differing views on how the transaction should go ahead are putting the whole venture at risk.

Political concerns surrounding the involvement of Polish media mogul and Forbes rich-list regular Zygmunt Solorz-Zak are also said to be creating controversy; needing to raise funds to fill a $13bn-sized hole in its budget, government politicians are said to fear for their chances in forthcoming elections should Solorz-Zak be successful.

Polkomtel, which operates as Plus in Poland, is owned by five shareholders, among them Vodafone. The latter’s 24.4 per cent stake in the Polish telco entitled it to first-refusal on the remaining shares, but the company is keen to divest; last year, it separated its Polkomtel shareholding out from the rest of its European division. In addition to Solorz-Zak, TeliaSonera, private-equity firm Apax and a joint venture of Telenor and Bain capital are bidding for the telco. The companies have until June 10^th to complete due diligence but there is speculation now that at least one of the current shareholders will seek to retain its holding, meaning that bidders will only be able to compete for a controlling stake in the company. Should talks be protracted, bidding costs are likely to rise, and, with them, the likelihood of at least one of the bidders walking away. It is understood that while Vodafone and heavily-indebted shareholder PKN Orlen are keen to sell, KGHM Polska Miedz, which holds 24.4 per cent, wishes to retain its holding, which it views as a stable source of income.

With each of the selling and bidding parties having their own advisors and negotiators, the deal looks set to become increasingly complicated.

European carriers have called on vendors to support LTE devices using the 1800MHz band

In a major shift in operator preferences for LTE spectrum, three of Europe’s most influential carriers have joined together to encourage vendor support for LTE devices operating in the 1800MHz spectrum. Making their announcement at the LTE World Summit in Amsterdam, Deutsche Telekom, France Telecom and TeliaSonera earmarked the soon-to-be-re-farmed 1800MHz spectrum as their preferred choice for rolling out LTE networks.

The 1800MHz band was initially used for extending GSM (and later EDGE) capacity beyond its original 900MHz allocations, but a recent announcement from the European Commission mandated the re-farming of the band, calling on all operators to make room on the spectrum by the end of this year. The Commission also released guidelines for ensuring that UMTS, LTE and WiMAX can co-exist on 1800MHz, paving the way for LTE roaming.

According to Nokia Siemens Networks, licence allocation on this band tends to be less fragmented than, for example, 900MHz. Research undertaken by Informa indicates that there are currently 19 distinct frequency bands in which LTE has been commercially deployed, creating something of a headache for handset and chip manufacturers, not least because ongoing support for voice on 3G networks also has to be included.

European networks have, to date, focused on the 2.6GHz and 800MHz bands; Deutsche Telekom launched its commercial LTE services in the latter, digital dividend, band, while TeliaSonera looks for device support in the 800, 1800 and 2600MHz bands. Despite its ability to pick up the slack in the capacity department, many operators view the 2.6GHz band as inefficient and expensive, however. 1800MHz is generally well regarded in terms of both coverage and capacity for LTE.

If 2.1GHz is included, Europe will now be offering four designated or preferred spectrum bands for LTE.