Md7 Blog

Hand at 10 and 2?

March 28th, 2011

Apparently, since the time that I became a licensed driver in California, the proper position for steering control of a motor vehicle has been updated from the tried and true “10 and 2.” Drivers now have the choice of holding the steering wheel in the “9 and 3” or “8 and 4” positions. Unfortunately for most of us, you rarely see anyone actually holding their steering wheel with both hands anymore. If a driver is not eating or drinking (or both), applying makeup or choosing a song on an iPod, he or she most likely is reading or sending a text message.

According to a National Highway Traffic Safety Administration report, distracted driving-related crashes caused nearly 5,500 deaths and 450,000 injuries during 2009. A similar 2009 study by the Virginia Tech Transportation Institute found that the risk of a crash or near-crash event for users of heavy vehicles or trucks who were texting while driving was 23.2 times as high as non-distracted driving. The study noted, in part, that texting “…has the potential to create a true crash epidemic if texting-type tasks continue to grow in popularity and as the generation of frequent text message senders reach driving age in large numbers.”

Just what is it that has made all of us drivers think that it is okay to text while we drive? What is so important and urgent in our lives? Speaking for myself, I cannot think of any reason to text while driving. In so doing, one very likely puts oneself and the other drivers, pedestrians and cyclists on the road in grave danger.

The good news is that 30 states and the District of Columbia already have legislation in place banning text messaging for all drivers. In addition, wireless telecommunications companies like T-Mobile with its “DriveSmart Plus” application that blocks on-the-road texts and Sprint with its “Sprint Drive First” service that will lock a driver’s cell phone screen when driving is detected are addressing this very serious issue. We have the legal impetus to stop this problem and the technological support to save us from the texting while driving habit.

While I have not gone as far as to sign Oprah’s “No Phone Zone Pledge,” I will make a vow to not text while driving. I want to stand up for myself and my family and as an example to all those new teen drivers who do not know a world without texting. I urge you to stand up with me and go back to two hands on the wheel. Of course, in any combination of hand positions that you wish.

Verizon iPhone Starts the Race

February 8th, 2011

By Tom Leddo

After all the speculation, all the anticipation, it is official – Verizon began selling the CDMA iPhone last week and pre-orders were through the roof. While I am a loyal Blackberry guy, I must admit I was excited about the announcement. You see, if you listened closely around the time of the announcement, you may have heard the shot fired from the starting gun for the race for the next generation of wireless coverage. Actually it started long before that in the “war rooms” of each of the nationwide cellular operators but now the race is being run in public view.

What is generally being marketed as “4G” [we've blogged before about whether "4G" is 4G] will bring with it a massive expansion in the cellular networks – the largest infrastructure boom in the wireless industry since 1996 when the FCC auctioned off the PCS licenses releasing a lot of spectrum and networks began to upgrade from analog to digital. AT&T has publicly stated that they’re upgrading their network to meet the incredible data demands of the iPhone, and presumably Verizon is doing the same thing as they ready for their February launch. Regardless of your expectations or loyalties to one operator or another, one thing is sure – AT&T, Sprint, T-Mobile and Verizon all are in the process of upgrading their respective networks. And, these upgrades will have two large impacts on their respective networks.

First, each network will be substantially faster. WiMAX, LTE, and HSPA+, will take each system to another level and that is great for consumers. Whether you use the iPhone, Blackberry or Droid you are about to see an increase in speed which will in turn facilitate an explosion of even cooler apps and eventually machine-to-machine communication.

Second, the number of cell sites are about to significantly increase. At first they will be overlaid on top of already existing sites, and tower companies will see a big early bump in leasing revenue. This initial overlay will establish 4G coverage nationwide. But as the number of smartphones continue toy increase, consumers data usage will rise to match. These initial sites will not offer adequate capacity because you can’t shove ten pounds of data through a five pound cell site. While they can’t build ten pound cell sites, they can build two five pound sites. Or go even further to manage capacity by building ten one-pound sites – one on every street corner and cul-de-sac. All this because our appetite for data is about explode!

The Good, the Bad and the LTE

January 26th, 2011

By Sudeep Gupta

Two things happened to me recently reminding me of what I love and hate about the wireless industry.

The Good

First: the good. Advances in wireless technologies are making things that we used to only see on Star Trek (or in an overly hyped trade show demonstration) a reality. Recently, I was able to hold a three-way mobile call with my colleagues at work. Immediately after that, I videoconferenced with my son who needed some assistance with his science fair project. When I hung up, it hit me: things people dreamed about 20 or 30 years ago are now commonplace.

Several technologies had to mature to get us here. First, we must thank the greatly improved user experience that the iPhone has delivered, where making a three way call happens with the touch of a finger, instead of having to remember a complex string of DTMF key punches, like we used do with a landline phone. The iPhone was the first significant mobile device where the user experience was controlled 100% by the device manufacturer, instead of being specified by the wireless operator, and other mobile devices quickly followed suit. Second, videoconferencing with the iPhone uses FaceTime, which incorporates several open standards: H.264 for the compressed video codec; Session Initiation Protocol (SIP), which handles the “hand shaking” between the devices; and others. Pulling all these together means that easy-to-use videoconferencing is a reality today. Life’s come a long way, and the latest wireless technologies have helped us get here.

The Bad

Ok, now the bad. After all the futuristic stuff that my mobile phone can do, I had a plain, vanilla thing to do next: I had a rather important call with a customer. Right in the middle of it, the call dropped. Regular mobile call, standing in my office— boom! The call drops and everything gets interrupted. Two retries and a few choice interjections later, we’re finally back in business.

While I can safely say that while my mobile phone does much more today than the one I had 15 years ago, I also have a lot more call drops than 15 years ago as well. So what’s happening?

The reason the operator networks are having problems today isn’t coverage; it’s capacity. Today’s data usage is straining the wireless networks, and as usage goes up, interference and noise go up, data speeds plummet and everyone’s unhappy. The operators realize this, and they’re taking steps to keep up with user demand.

Help is on the Way

Long Term Evolution (LTE) is going to help. LTE will allow for peak data rates of between 150–350 Mbps. LTE is an all IP technology, instead of a circuit switched/IP data hybrid used in most wireless networks today. That means it allows for a more efficient use of wireless spectrum. All of this will help relieve capacity constraints and give us the wireless network today’s users demand. But change isn’t easy — there are changes to cell sites: new antennas, base station hardware and backhaul. Not to mention new mobile devices.

The industry is busy — we’re already talking to our customers about site modifications plans to help our customers around the world get ready for LTE. But once the LTE rollouts are complete, we’ll have a network that can once again keep up with its users. Then maybe a dropped call, like the days before instant video conferencing, will be in the past.

LTE: Keep the Change

January 18th, 2011

By Dion Joannou

LTE will once again mean a flurry of activity and spending by wireless operators. It is becoming increasingly difficult to keep up with network demand generated by the smartphones of today. The arrival of LTE is both timely and necessary for operators and their customers.

Nationwide deployment of LTE will mean once again installing equipment into thousands of existing sites, as well as building a great number of new sites. Doing this elegantly— with speed and with a focus on cost— is the challenge operators will face.

LTE was carefully designed to reinvent the economics of the network. For a mobile device, data usage— browsing the web or streaming video— is completely different from talking on the phone, previously the dominant use of the mobile devices in the last century. Therefore, operators had to change the way they addressed the new usage patterns of their customers.

Operators can’t just change the network technology; they will have to reinvent how they manage their cell site leases to complete the new paradigm. They must ask key questions:

• Are my existing sites built for a voice network the right sites for a new data-centric world?

• Do my sites have leases optimized for additions?

• How can I find cost-effective, innovative ways to attain new sites for LTE?

LTE represents a watershed moment for wireless operators, as they typically perform major network upgrades once a decade. The resulting cell site leases last for 20 years or more, so when it comes to optimizing their lease assets, there will not be another opportunity to do this in conjunction with a major network upgrade again for some time.

Md7 has the challenge to help operators answer these questions in a cost effective way. In the pursuit of new sites, we need to help operators attain market pricing in a timely manner for their new cell site rollouts using our new techniques. Our challenge is to stay close to our customers and really understand what specific way the implementation of our services will fit their unique needs. Every operator is different, and we need to become intimate with their plans to help them make the smart choices for the next few decades.

Cloudy with a Chance of Outsourcing

January 5th, 2011

By Mark Christenson

In 2003, Md7 had one computer server—used for email and our website—that sat under a desk. For several years we had a part-time contractor who supported that server remotely and never had to come on site.

As our business grew, so did our technology requirements. Over time, one server and one part-time contractor grew to over twenty servers being managed by a team of people.

If we were a server-management company this would all make sense and be a key part of our infrastructure. However, as we grew, we made the mistake of confusing “mission-critical” with “core”. Although we develop and use cutting-edge technology in the conduct of our business, managing hardware that supports that technology, although definitely mission-critical, is not core to our business. Yet for a season we found ourselves in the position of needing to make larger and larger investments in servers and their management. When we started discussing the kinds of decisions that a server-management company would make—such as raised floors for data centers and back-up cooling systems—it became clear that we were letting our context crowd our core.

To keep from being sidetracked from our core business, we decided to take the advice we give our customers: we would continue to focus on building our core service offering, but we would outsource the context to appropriate business partners who understood the mission-critical aspect of what we were handing over. For our customers, this means outsourcing cell site lease activities to Md7. But in our case, it meant outsourcing our server administration to a third party.

The team managing the servers was initially not supportive. While they believed that “their” servers are mission critical (they are) they also believed that managing those servers onsite was core to our business (it is not).

In the end we moved nearly all of our servers to the ubiquitous “cloud” (we reduced the servers we have onsite by 90%, and outsourced the management of the few remaining servers). We did this through partnering with a company whose core business is ensuring critical business applications hosted on their servers are delivered with the industry-standard “five nines” availability. And we have taken the resources formerly managing the servers and re-deployed them to help accelerate the building of our core business applications. All of which means that we can serve our customers with more reliability and higher quality.

Cell Towers and Starbucks

December 27th, 2010

By Mike Fraunces

There are very few things at which I consider myself an expert, but one of them is moving. In my first 25 years of life I moved 18 times. These do not include temporary moves such as spending the summer months away from home. I am only counting moves of my permanent residence where furniture, clothes and all my other worldly possessions went with me to the new location. So I do know a bit about moving. I know what moving entails. I know how much work it is and how disruptive it can be to one’s life. Over the years I developed a strong bias against moving best evidenced by the fact that I have lived in the same home for the past 11 years and the same city for the past 20 years, nearly quintupling my longest previous stay in any one place. So not only do I know a bit about moving I also have a great antipathy to it.

Last week Md7 moved offices for the first time in four years. I did not want to move. I liked our offices. I liked the location, centrally situated at the intersection of two major highways and a relatively easy commute from all parts of San Diego County. I liked the short walk to assorted restaurants and the local Starbucks. I liked that our employees enjoyed our office space and were comfortable there. I also knew how disruptive a move could be to a company’s operations. And I know how much work it is. And still we moved. Why?

In our case, it made financial sense. The rent on our previous location had steadily escalated over the years, and we found that it was much cheaper both in the short-term and the long-term to re-locate to another building. The 40% in annual savings we will realize over the next seven years made it an easy business choice. And yet even with the savings, the ten unpacked cartons stacked against the wall of my office remind me how much I hate to move, as do the several hiccups we have experienced in our phone system these past couple of days.

In a way, it’s a scaled down version of what our customers, wireless operators, have to weigh in managing their networks— move a cell site because the rent is less expensive or continue to pay higher rent but avoid the disruption in operations inherent in any move. Or move a site in light of changed circumstances or market conditions, such as when a higher elevation cell tower is no longer needed because surrounding lower elevation cell towers now provide the needed coverage. Or move a site because the building across the street offered better usage and access rights as part of its lease terms. Whatever the reason, the benefits of a move must be weighed against all of its costs. There are obvious costs for operators such as decommissioning the old cell site and moving the equipment to the new location. But also less obvious ones such as the potential for disruption in network operations where traffic has to be reengineered, coverage has to be adjusted, etc. to accommodate the new location.

For me, maybe in time the need to jump in my car to make a Starbucks run, rather than walk as I could before, will grate on me. I can’t say for sure. But early indications are that we will be much better off for the move not just in saving money, but also with more favorable lease terms and a much better relationship with our landlord who has been great in accommodating our needs and welcoming us to our new home.

A Siesta for My Smartphone

December 21st, 2010

by Romy Loseke

Passport? Check. Bathing suit? Check. Flip flops? Check. No cell phone coverage? Check!

This week, my family and I leave for a vacation on the coast of Mexico. Fifteen of us, including my parents, my siblings, our spouses and a collective seven children are staying in a beachfront home in a secluded village in Puerto Vallarta. Sound relaxing? Yes, actually. My cellular provider does not have a tower or antenna in the vicinity of our vacation home. For seven blissful days and nights, I will not have cell phone coverage.

As an industry attorney who negotiates cell site leases for a living, I consider my Droid smartphone to be part of who I am. I spend all day (and sometimes most of the night) on calls, texting, sending emails, surfing the Internet and using my favorite applications. I love being in touch and only turn off my smartphone when I go to sleep. When I come home from work, my children want to play Angry Birds or record their voices with Talking Tom. My six year old daughter recently has discovered the calculator function. She told me yesterday that the calculator is the best “app” of them all. We would rather play on my Droid than watch TV. I do have to admit, though, that I am suffering a bit from technology burnout.

In this day and age of wireless access on airplanes, trains and now even cars, there rarely is an excuse for being out of touch. During this super busy time of the year, I am thankful for a break from the action. I truly will have “limited access to phone and email” on this vacation, and cannot wait to set my out of office email message. Of course, at the end of the week, as we head towards the airport for our flight home, I will be shaking with joyful anticipation as I wake my smartphone from its siesta and get to check my emails and voicemails and update my Facebook status.

Why Five Years Makes a Difference in Real Estate

December 15th, 2010

By Michael Gianni

Four and a half years ago we signed a sub-lease with our current landlord with business terms that were fair for the real estate market at the time. Fast forward to today, our rent has increased every year by 4% while market rates have dropped making our rent too high. How do we know? When we looked at the market comps (comparables) the average rent for the same space and amenities runs about 60-80 cents per sq ft lower. So we took the opportunity to review our lease and determined we had a termination provision that allowed us to exit the lease early. But we liked our current location and did not want to move. All things being equal most business owners would prefer to avoid the headache and expense of moving, not to mention the disruption to ongoing business operations. So before we thought much about delivering a termination notice, we called our existing landlord and asked for a rent reduction for the remaining term of the lease. Now we did not ask for a reduction to market but to a rent rate that was still above market rate to make the discussion with the landlord more palatable. It wasn’t our intention to gouge the landlord, but to get some relief based on market changes. Unfortunately, our landlord’s response to our proposal was “no thank you.”

Weighing Alternatives

Knowing what we did about the market we called our broker and explored what was available in the market. We visited and toured many offices over several weeks, saw good space and not-so-good space. We had conversations with several potential landlords and began to understand what was out in the market and what would meet our needs.

Once we found a couple of locations we began to have more detailed conversations surrounding the business terms; rent, parking allocations, term, etc. One landlord began to demonstrate increased interest by throwing out an offer that intrigued us. We began discussions at $1.70 per sq. ft. and finished our discussions at $1.85 full service on 24,000 sq. ft, which means utilities, janitorial, etc were included in the rate. We were offered a very healthy tenant improvement allowance as well which has allowed us to design and construct the space to our specifications and needs, and it includes signage as well. In addition, we were able to get seven months of free rent.

Happily Ever After

When it was all said and done we were able to reduce our office spend by 40%. Did we achieve this rate because we negotiated hard? The answer is “no.” Hard or aggressive negotiations are rarely effective or necessary. In my opinion, the key to obtaining a good lease has much more to do with investigating options to determine which are viable and then pursuing those options in parallel until one of them reaches a satisfactory conclusion for both parties. Our broker spent much more time educating landlords about our needs and alternatives and less time “negotiating.” Once the landlords understood who we were, what we needed and our alternatives, the landlords either dropped out or decided they wanted to try to get something done with us.

In the end, it was “win-win-win” for our current landlord, our new landlord and us. Once we exercised our termination right, our landlord offered our space to another existing tenant in the building which turned out well for them. Our new landlord is happy to have us in the new space. And no one got hammered in the process. The conversations were always respectful business discussions with each party making decisions in their best interest. In my opinion, all parties got what they wanted. It may not always work out this way, but in most successful lease negotiations “cooler heads prevail,” allowing all parties to act in their own best interests based on the information available to them at the time.

Cell Site Leases: Brick to the Future

December 1st, 2010

by Tom Leddo

I remember the first time I saw a mobile phone. It was circa 1987 and it belonged to a sports agent that was visiting a couple of friends of mine who happened to be college athletes. I drove them to the airport in my Honda Prelude to pick him up for lunch. As he stepped off the private plane into my back seat I remember asking him “why he had two brief cases?” He replied “oh no, the second one is my phone.” At that moment I knew my buddies were going to sign with him.

The cellular industry has come a long way since then. The briefcase phone became the bag phone which evolved into the famous Gordon Gekko brick phone, then the flip-phone, the camera phone and now the smartphone. Just as the handset has evolved so has the network – from analog to digital to 2.5G, to 3G… And cell sites have evolved too. From the first one at Soldier Field in Chicago and remote mountain top sites, to tall towers and the tallest building in town, to monopoles and lower roof-tops to light poles. Shelters at cell sites have become cabinets and even suit-cased sized boxes.

Cellular Future

If we look forward we will see that the iPhone is just the beginning. The embedded wireless device is about to change it all again. We are rapidly approaching a world where we’ll have hidden wireless devices inside everyday items such as HVAC, appliances, medical devices, even our dogs. Farmers will remotely control their irrigation systems with apps on the smartphones, heart-monitors will notify you and your doctor before your heart fails. Disposable, one-use-only devices will automatically reorder household items when packages are empty. We are limited only by our own creativity.

But this post-modern technology won’t run on the current networks. 4G networks and beyond require more cell-splitting and lower rad centers. Cabinets and boxes are becoming remote radio heads. And, while we will still have a lot of towers in rural and sub-urban areas, DAS and picocells on the side of buildings and light poles will sustain capacity in urban and dense urban markets.

What about cell site leases?

You can’t have a technological explosion like this without updating the underlying cell site leases as well. We are already seeing a large jump in the number of modifications to existing sites – many of which require amendments to the underlying leases. These requests are coming at a more rapid pace than we have ever seen. And the number of cell sites – particularly in urban areas – is about to significantly increase.

Let’s be smart about how we negotiate new and amended lease documents! These deals need to be flexible and cost effective to sustain this rapid growth. Expansion and modification rights must be ongoing, rents must be manageable for the long haul. And cellular operators should rethink how they manage their massive real estate portfolios. As we enter into the age of outsourced network administration, lease administration is a non-core function that should optimized too.

In short, as we approach 2011, let’s keep up with the times and rethink how cell site leases are negotiated and managed.

Can Opex Reduction Solve the Digital Divide?

November 18th, 2010

by Sudeep Gupta

AT&T announced that their mobile subscribers used a staggering 30 billion MB of data in the third quarter of 2010. That’s a massive 30x increase over 2009 and an explosive 3,000% growth over the past three years. Moreover, 57% of AT&T’s postpaid subscribers have a device with some sort of smartphone, up from about 23% from two years ago. Clearly mobile data has gone mainstream.

However, there’s still a digital divide in this country, where a significant portion of the US has no Internet access at all. The technology website Ars Technica published an article called, “Why Don’t Americans Want Broadband,” which cited a new study issued by the US Commerce Department stating that 23% of US households have no Internet accesst. What drives this disparity? Not what many people think.

Only 4% of the non users said they didn’t have Internet access because it was unavailable in their area. That’s good news for everyone if Internet access is close to ubiquitous. So what is driving this lack of access? Fully a quarter of the non users said that Internet access was just too expensive. That’s not surprising. According to a US General Accounting Office (GAO) study, broadband prices in the US are higher than in other countries which they say is depressing Internet adoption.

Wireless operators are doing all they can to reduce the price of mobile broadband Internet access. They’ve been putting pressure for years on their infrastructure vendors (the companies that make base stations, routers, backhaul and other equipment) to deliver lower cost equipment, and they’ve been outsourcing many internal functions that they didn’t perform as well — all in the name of reducing costs.

Cell site rent costs are the latest to be scrutinized. Cell tower rent costs can be between 20 and 60% of the operators’ network operating costs, and historically they’ve increased by 3% per year. It’s no wonder that wireless operators are looking for ways to get those costs under control.

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