You are on page 1of 10

UVA-OM-1560

Jan. 30, 2017

Connecting the Dots at Microsoft: Global Planning for a Local World (A)

PY
In the summer of 2013, Paul Garnett, then the director of the Technology Policy Group (TPG) at Microsoft
(MS) Research at the companys headquarters in Redmond, Washington, was in the process of reviewing a TV
white-space (TVWS) project in the archipelago country of the Philippines.1 Garnett and his entire team at MS
had long been hopeful about the prospects of this groundbreaking technology as a means of creating affordable
broadband networks, but their efforts to pilot the technology were anything but standardized.

CO
Despite the excitement surrounding the potential to develop a broadband network in a largely unconnected
country, a number of items remained open for MS. Garnett questioned whether MS was targeting the best
opportunity to pilot the technology in the remote Western Pacific nation. Did the value it could gain outweigh
the challenges? Beyond the prospect of an unknown radio supplier and a nonexistent database, Garnett was
keenly aware of the criticality of testing the technology in various environments, with new partners, to foster
the technologys global diffusion and to continue to gain greater regulatory cooperation from local
governments. If MS pulled the plug on the pilot, would it be prevented from collaborating with the Philippine
government, and others, in the future?
T
Microsoft Corporation - An Overview
NO

Despite its decades of dominance in the software products and services market (with household names like
the Windows Operating System and MS Office driving revenue), cloud-based services started to become a
growing source of revenue for MS after 2010.2 Whereas the sales of software and hardware products
traditionally hinged on the size of the computer market, the growth of cloud services was dependent on the
global proliferation of Internet access. Jeffrey Yan, Garnetts colleague in the TPG overseeing the Asia Pacific
region, explained this shift of focus at MS: For us to reach our customers, we dont distribute them a shrink-
wrapped package of software anymore, but, instead, we require them to be online, ideally anytime, anywhere,
so they can access the cloud services.3 By 2013, however, less than 35%, or 2.5 billion, of the worlds 7 billion
citizens4 had Internet connectivity, and any product or service that could fill this connectivity gap became
DO

critical for MS.

MS Research, the companys separate research arm and the largest of its kind in the technology industry,
was a crucial component of MSs innovation strategy and the success of its cloud services. It was conceived by
founder Bill Gates and based in a stand-alone building at MS headquarters. Since its founding, MS had invested

1 TV white space refers to unassigned or otherwise unused broadcasting frequencies; in essence, those channels that are allocated to TV broadcast

but not locally utilized. Wireless technologies can leverage these unused frequencies for a variety of applications including last-mile broadband access.
2 Services wherein online customers paid usage fees, advertising, and subscriptions for shared computing resources located in c entralized data centers.
3 This is a field-based case. All information and quotations, unless otherwise noted, derive from author interviews with company representatives.
4 http://www.carlsonwireless.com/tv-white-space-infographic/ (accessed Nov. 14, 2016).

This field-based case was prepared by Jeremy Hutchison-Krupat, Assistant Professor of Business Administration, and Case Writer Jenny Craddock.
Copyright 2017 by the University of Virginia Darden School Foundation, Charlottesville, VA. All rights reserved. To order copies, send an e-mail to
sales@dardenbusinesspublishing.com. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by
any meanselectronic, mechanical, photocopying, recording, or otherwisewithout the permission of the Darden School Foundation.
Page 2 UVA-OM-1560

heavily in its R & D efforts, but, as with any research institution, those investments did not always translate
into commercial success. Indeed, many outside critics derided the barriers that existed between researchers
working on experimental technology and their distant colleagues in product groups. In highlighting the unique
qualities of MS Research, Garnett described it as being somewhat divorced from commercial focus; they
were simply doing research for researchs sake, with the objective of resolving limitations on a certain
technology. Occasionally, Garnett noted, there was a discovery that could transition from something that was

PY
purely a technology research activity into something that also had commercial applications.

Garnett and Yans TPG bridged the gap from technical lab trials within MS Research to in-country
regulatory frameworks, thus ensuring that a technology that might soon be emerging from its experimental
phase would not be shut out by a countrys prohibitive legislation. Not all technology required regulatory
cooperation from local governments, but when it did, the TPGs focus was to ensure that selected countries
were on track to provide hospitable legislation that would eventually open up that market.

CO
Public-Private Partnerships

As the rapidly changing world of the late 20th century started to face increasingly complex environmental,
political, and economic challenges, organizations began reaching across sector lines to tackle societal needs
together. In these increasingly common public-private partnerships (PPPs, or P3s), partners across the public,
private, and civil-society sectors began to join forces to contribute their unique strengths and capabilities to the
partnerships shared goal, often with a deep focus on the developing world.
T
An especially popular type of PPP that emerged was one with a technology orientation; companies like
Cisco, Intel, and Microsoft all engaged in partnerships with a range of public agencies, including USAID, DFID,
and UNDP,5 and the beneficiary sectors ranged from health care to natural resource management and
NO

education. In the case of MS, even before the rise of the P3s, Garnett described the partnership model as an
integral component of its business and success. MS product sales in the small-business and consumer segments,
for example, were always transacted through hardware manufacturers or distribution partners, and such
partnerships were inextricably linked to scalability. Our mindset is that we only scale through partnership,
Garnett noted. Even when it comes to public-private projects, its been very much about partnering with key
stakeholders in the private and public sectors to make things happen, because otherwise projects wont work
or scale. Were not going to amplify our impacts on our own.

Garnett believed MSs frequent focus on education in its growing number of P3s was explained by the
DO

fact that those partnerships relied on government partners, whose top-of-list focus was almost always on
improving education. Even if connecting a school was the primary priority for the government, however, MS
and its private partners would be simultaneously viewing the P3 as a test of commercial viability for a new
technology. In Kenya, for example, MSs partner, Mawingu Networks, engaged in projects for schools, health
clinics, and government offices as a kind of corporate social responsibility activity, but its core business model
remained selling low-cost Internet access to people in the surrounding communities.

These technology partnerships were theoretically a good match in that the companies had technology
useful to a developing country, and the donor agencies had programs that put the technology in the hands of
local users. However, the results of the partnerships varied considerably. The challenges of working with
partners in other sectors were often overlooked, and the success of the P3 could be surprisingly limited. Despite

5 USAID = United States Agency for International Development; DFID = United Kingdoms Department for International Development;

UNDP = United Nations Development Program.


Page 3 UVA-OM-1560

mixed results, private sector firms continued to seek out growth opportunities in emerging markets, and as they
did so, the value of including social or environmental goals in the core businesses became increasingly clear.

TV White-Space Networks Early Days

PY
MSs pioneering research into the use of TV white space as a means to provide broadband connectivity
began around 2001. At the time, Garnett was a telecom lawyer in Washington, D.C, where he had extensive
experience overseeing regulatory frameworks in the telecom space. In 2009, he relocated to MS headquarters
in Redmond, where the research team increasingly sought his and other team members assistance in achieving
regulatory permissions to test nonbroadcasting uses of unlicensed radio spectrum.

The primary goal of MSs initial research into the use of TVWS spectrum was to solve problems with

CO
existing wireless technology in order to enable wireless devices to operate more efficiently and more flexibly in
available frequencies. Such problems also included the worlds persistent digital divide, which left billions of
people, particularly those in the developing world, unconnected to the Internet due to lack of infrastructure
and the prohibitive cost of broadband access. Developed countries were focused primarily on a different
problem, that of a looming spectrum crunch. The exploding demand for mobile broadband and data traffic
resulted in a limited supply of good licensed spectrum. And the quality of the Wi-Fi transmissions sent through
unlicensed spectrum presented problems, including a limited range and difficulty traveling through obstacles
like walls and trees.
T
After successful meetings with the Federal Communications Commission (FCC) in 2002, MS and other
companies received permission to investigate alternative uses of TVWS and then spent the next several years
refining the technology and building test networks comprised of two basic elements: radios and a database.
(For images and a network graphic, see Exhibits 1 and 2.) MS focused on prototyping its own TVWS databases
NO

and contributing to core technology developments, while sourcing the corresponding radio hardware from
partner suppliers. As the technology advanced and MS tried multiple test networks, it conducted a series of
radio bake-offs, wherein various vendors were called to the Redmond campus to give presentations and
demonstrations proving their radios reliability. Such bake-offs allowed MS to identify defective radios and
ultimately partner with suppliers whose radios were deemed the most reliable.

White-Space NetworksA Wider Technology Ecosystem


DO

In addition to the radios and the databases, equally critical elements were at play behind the scenes of every
active TVWS network. The base-station radios functionality required underlying power and Internet
connection, as provided by the local power company and telecommunications partner, respectively. Many of
the telecommunications companies that MS relied on as partners, especially those suppliers with business
models disproportionately dependent on traditional mobile technologies, viewed TVWS-enabled connectivity
as a threat, and for good reason. As the new networks were repeatedly tested, they would eventually earn
themselves the nickname Super Wi-Fi due to their expansive range and strength. Because of its higher power,
TVWS broadband could travel a hundred times the distance of traditional Wi-Fi (about 10 kilometers in radius
from a single base-station radio to end devices), all while penetrating obstacles and barriers. Super Wi-Fi also
had the advantages of being able to travel over hills and water and to operate with minimal infrastructure and
power consumption, making it cheap and environmentally friendly.
Page 4 UVA-OM-1560

TVWS NetworksEarly Trials

In 2008, after years of trials and research, Microsoft Research won an experimental license from the FCC
that allowed MS to get TVWS out of the lab and into a trial deployment on MS shuttle buses at the Redmond
headquarters. This achievement was notable from a regulation standpoint, and its ensuing success served as
proof that the radios could function on moving MS shuttles, allowing employees to work with uninterrupted

PY
broadband access. In 2007 and 2008, MS also participated in early lab and field trials with the FCC, along with
several other technology companies, including Motorola and Google.

As greater regulatory support was achieved in the United States, MS started to consider pilot opportunities
in other countries. However, the TVWS technology required additional pilots before it would be tested for
commercial use. For such pilots to take place, Garnett wanted to ensure that a few essential requirements were
fulfilled in any potential pilot location: first, the relevant regulator needed to be supportive and willing to

CO
cooperate with the telecommunications partner. This was, as Garnett pointed out, the requirement that often
makes or breaks a project. Second, the telecommunications partner providing the connectivity needed to be
competent and experienced with wireless technology, while also agreeing on what a business model using
TVWS might look like down the line, including questions regarding potential customers and adoption of the
service. In addition, if the pilot were to run in a challenging geographic area (sub-Saharan Africa, for example),
the power source would have to be adequate. Finally, Garnett looked for seed funding at an early stage of a
pilot and, if successful, a high likelihood that the telecommunications partner could raise further funding to
scale up the network.
T
The first two technical pilot locations that fulfilled these requirements were in Cambridge, England, and
Singapore in 2011 and 2012, respectively. The Cambridge pilot proved that the technology was capable of
supporting a range of applications, including rural wireless broadband, urban pop-up coverage, and emerging
machine-to-machine communication, while the Singapore pilot exhibited the technologys ability to travel
NO

across the rolling terrain and dense forests of the island. Having proven the technologys technical capabilities
in a range of contexts, Garnett turned his attention to validating the technologys use cases and commercial
feasibility for real-world users. By the first half of 2013, MS had initiated two commercial pilots in Kenya and
South Africa in order to deliver high-speed broadband to underserved communities.

Microsoft Philippines

Dondi Mapa joined the subsidiary MS Philippines in 2010 as the National Technology Officer (NTO). In
DO

this role he acted as a high-level adviser to the Philippine government on the use of technology, whether that
of MS or a competitor, to solve national problems. Along with his work in the cyber-security and cloud-
computing spaces, Mapas first year on the job also introduced him to the governments keen focus on
expanding the penetration of Internet connectivity across the largely unconnected country. Theres a school
of thought that the more people are connected to the Internet and broadband, Mapa explained, the higher
the productivity and economic output of the country. Short-distance propagation rates of traditional wireless,
however, provided distinct challenges to the disparate regions of the country (see Exhibit 3). In fact, around
this time 90% of public schools in the Philippines lacked any access to the Internet. So in July 2011, when Mapa
attended a global MS conference and heard a presentation by a director of MS Research on TVWS as a solution
for far-ranging, affordable broadband transmission, he latched on to the idea. After approaching Yan about the
possibility of piloting the technology in the Philippines that year, Mapa learned that the Singapore pilot was the
immediate focus in Asia due to the countrys friendly regulatory environment and the likelihood of turning the
pilot there into a commercial one; therefore, a pilot in the Philippines would have to wait.
Page 5 UVA-OM-1560

The following year, however, things changed when John Cann, director of International Organizations at
MS, who was based in Singapore with Yan, spoke with Mapa about the potential to present a demo TVWS
network at the Asian Development Banks (ADB) annual meeting, which was to be held in Manila that May.
The prestigious meetings registrants included high-ranking government officials, business leaders, and
academics from around Asia. Agreeing that the conference could open important doors for the regulatory
environment in multiple countries in the region, Garnett and Yan approved Cann and Mapas proposal to

PY
conduct a demo there, and the next step was to make arrangements with the Philippine Department of Science
and Technology (DOST) to secure regulations for the importation of a TVWS demo kit.

Although Mapa was excited and believed it was important to get the TVWS demo in front of the right
Philippine government officials, he had some reservations. Because TVWS let anyone use available spectrum
for no charge, officials from the Department of Finance, who were hosting the conference, would see a
successful demo of TVWS as a threat to their revenue-driving auction system that sold spectrum to the highest

CO
bidder. On the other hand, a successful demo would also introduce the regulator and executives of the DOST
to the technologys potential as a solution for providing connectivity to the country. The ADB demo ultimately
proved a success, and regulatory representatives and DOST employees alike were equally intrigued.

In the months that followed, Mapa enjoyed the full cooperation of the DOST, and the two partners joined
efforts to organize a workshop for multiple stakeholders, including the regulators, TV broadcasters, and
telecommunications companies, in an attempt to win regulatory permission to pilot the technology on a larger,
longer-term scale. Despite the presence of broadcasters and the rising concern in the TV industry that any
secondary use of TVWS might have adverse effects on customers using licensed channels, MS and the DOST
T
received regulatory permission to extend the use of the demo license for a full year. The next step was to find
a pilot location and, most critically, ensure that potential end users would be on board.
NO

The ApplicationAddressing Filipino Biodiversity

While these efforts were underway, the Manila Office of USAID partnered with the Philippine Department
of Agricultures Bureau of Fisheries and Aquatic Resources (DA-BFAR) in 2012 to collaborate on their shared
Ecosystems Improved for Sustainable Fisheries (ECOFISH) initiative. The projects aim was to support
municipal governments legal mandate to maintain a registry of local fishers, or fisherfolk, active in their area.
Registering the fisherfolk was designed to combat the countrys unsustainable fishing practices that for decades
had threatened local fish populations, coral reef safety, and marine biodiversity. But the missing link to an
exhaustive list of registrations lay in the Philippines connectivity problemthe countrys Internet framework
DO

prevented access from reaching remote fishing communities, thus forcing many areas to rely on paper
registration systems or, worse, not to register their fisherfolk at all.

A Perfect Fit

As the ECOFISH team grappled with these issues, their consultant and implementing partner, Steve
Schmida, managing director of development-focused consulting firm SSG Advisors, serendipitously learned
about MSs work in TVWS from his friend Cann. Sensing the utility of the technology for registering remote
fisherfolk, Schmida connected the ECOFISH team to the MS PhilippinesDOST collaborators, and the group
quickly realized the advantages of a joint partnership. For MS, ECOFISH guaranteed end users would be using
and testing its pilot network, while also allowing the company to make a significant environmental and social
contribution to local communities; for ECOFISH, the MSDOST partnership already had regulatory support
to test TVWS and its potential connectivity solution for its registration efforts. In mid-2013, all the stakeholders
Page 6 UVA-OM-1560

signed a Memorandum of Understanding, officially kicking off the partnership. The goal was set for an April
2014 network launch in the province of Bohol, an island in the southeastern region of the country containing
six local-government municipalities and an anticipated need of 22 TVWS sites, each containing a radio base
station.

During the pilot-preparation phase that summer, the partnerships first order of business was to ensure

PY
that the radio equipment was brought into the country as quickly as possible so that site selections and
installations could commence. Unlike past pilots, where MS had validated its radio supplier through the bake-
off process, the selection for the Bohol radios was made by the DOST, which accepted an offer by a Singapore
entrepreneur to donate his radios to the partnership at no cost. By October, 100 of the free radios had arrived
in the country.

Once the radio supplier had been selected, Mapa turned his attention to the telecom element of the equation

CO
in order to determine who the ideal local partner to provide the Internet connectivity might be. Mapas first
experience with a potential telco partner occurred shortly after the radios had arrived from Singapore. He
selected an upcoming annual meeting for C-level execs outside of Manila as an opportunity for a second in-
country demo, and he managed to get two radios from the Singaporean supplier sent to the meeting location.
The first few hours of the demo went smoothly, but shortly thereafter the network shut down due to Internet
failure. It made it look to some people like it was the TVWS network that was no longer working, Mapa
recalled, when in fact it was an Internet problem. Through this experience he understood the importance of
having the full cooperation of the telco partner, because if we bring in someone that is not invested in the
project or would like to see it fail, thats a red flag, as the second demo showed us.
T
As the bulk of the radios were routed to Bohol, it was clear that a more supportive telco partner was
needed. Mapa soon learned that the DOST had a telecommunications agency under it, which ran a small
network into Bohol. In agreeing to the DOSTs preference to utilize its in-house partner, Mapa knew there
NO

would be limitations, simply due to the fact that the partner could only provide a link supporting 56-megabits-
per-second throughput, as opposed to a more robust partner supplying 1 gigabit per second of fiber
connectivity. Mapa described ultimately feeling comfortable with the compromise because they were on our
team, and we felt we would have the network operating close to 100% of the time.

With a cooperative telco partner selected, MSs next dilemma was to produce the key missing link to its
TVWS network in the Philippines, a geo-locational database. The government regulator relied on a paper-based
account of TV channel allocations, and MS determined that the task of building live-channel usage information
into a database would take around six months. Considering the timeline and the troublesome delay, Mapa
DO

relayed the group decision to build the network without waiting to program a database:

We decided to just go ahead and use the listed channels. Bohol being a very rural, isolated part of the
country, the paper records were probably correct that said, for example, go ahead and use channel 38,
because nobodys using it. But the risk is that there is someone that is making unauthorized use of
these channels, and that would cause interference with the network, and people would blame it on the
technology, when actually, its a fact of the environment, of someone else using that channel.

During the pilot-preparation phase of 2013, the MS team spent an entire day on a buildings roof installing
a base-station radio and antenna. After repeated failed attempts, Yan, Mapa, and their puzzled team had nearly
replaced the radio until they decided to do an automatic scan of the channels in the area and identified a number
of illegal transmissions. Even though on paper the channel should have been empty, it had accidental or illegal
transmissions going on all over the place, Yan explained. The white space in the spectrum was not white at
Page 7 UVA-OM-1560

all; it was really gray. Without the ability to detect, avoid, and report these illegal transmissions such
breakdowns would not be uncommon.

In addition to the challenges surrounding channel availability, decisions about the locations for each of the
22 base-station radios were difficult to coordinate across the multiple stakeholders. Because the radio
installations required the support of local government units and the mayor, tension between those units and

PY
the fisheries project emerged when local governments realized they were supporting a network that would
exclusively benefit the national fishery teams. In order to alleviate this tension, many radio installation sites
sought to achieve a compromise between the objectives of ECOFISH and the local government units, meaning
a radio was frequently installed closer to a school or health care facility than to end users in the fishing areas.
Bohols unique terrain made it unclear whether such distant radios would serve ECOFISHs registration teams
at all.

CO
One solution that Mapa and his partners considered was placing the radios on patrol boats in order to
provide an uninterrupted mobile-network experience for the registration teams visiting different coastal hubs.
Mapa knew a mobile network had been successful on the Redmond shuttles, but the constant undulation of
the boats and radio devices added an untested complication. At the same time, Mapa realized the networks
impact would be limited without a handheld solution for collecting and storing fisherfolk data in real time, so
MS decided to donate 50 tablets to the partnership. Accounting for the risk of the TVWS networks failing, MS
also collaborated with BFAR to develop a tablet-based application that allowed for the offline capture of
registration data, storing it until it could be uploaded during the next Internet connection.
T
As the installation of radios near registration hubs commenced, the payoff of the potential network was
especially unclear to those outside the initiative, and cooperation from local government players suffered.
Local government employees were not always cooperative, Mapa explained. To get someone to sign a
release form saying that a $1,000-dollar radio was now in their custody was difficult, and some people said they
NO

didnt want to be accountable. In cases where there was more cooperation, the person looking after the radio
had to be somewhat committed in order to monitor several aspects of the network, including the antenna
staying up, the power staying connected, and the backhaul link running smoothly, and this wasnt easily achieved
without a compromise on the location of the radio and the non-BFAR end uses it could support. Furthermore,
the many players involved in the P3 made it difficult for the radio supervisors to know whom to reach out to
when there was an outage, whether it was the DOST, BFAR or other stakeholders. Due to this lack of clarity
and incentive, Mapa knew there was the risk of a local network dropping and not being reported at all as an
outage. Even local registration teams could continue their registrations using the offline form on the MS tablets
without having to raise a network-outage issue.
DO

Conclusion

With a host of complicating factors specific to the terrain, local partners, and technological limitations
within the Philippines, Garnett felt especially removed from the pilot that his colleagues were pushing forward
in Bohol. Although much of MSs past work in other TV white-space deployments required adapting to local
frameworks and contexts in order to inspire regulatory cooperation from local governments across the globe,
Garnett was keenly aware of the setbacks his global vision for TV white space would face if the technology
endured a high-profile failure or shutdown within the framework of the ECOFISH partnership. Was the
technology ready to be put to the test within such a unique framework of complicating outside factors, or
should the PPP push forward with more-traditional broadband options, while issues relating to the untested
radios, a missing database, and untrained ground teams at each of the base stations were resolved?
Page 8 UVA-OM-1560

Exhibit 1
Connecting the Dots at Microsoft: Global Planning for a Local World (A)
TV White-Space Radio

PY
CO
L: Adaptrum Radio ARCS 2.0, measuring 8.5 x 7.5 x 1.5in
R: Installation of radio, as if on a roof, along with accompanying antenna

Source: MS Research, http://research.microsoft.com/pubs/241879/main.pdf.


T
NO
DO
Page 9 UVA-OM-1560

Exhibit 2
Connecting the Dots at Microsoft: Global Planning for a Local World (A)
TV White-Space Network Architecture

PY
C ustomer Premise
Equipment Radios

Base Station Data-


Radio base

CO
TVWS Wireless
(up to 10km)

Base Station
Radio
Internet

Wi-fi
Access Base Station
Points Radio
T
NO

Technology Components (from right to left)

Database Cloud-based, programmed software that acts as a traffic controller by receiving location
reports from nearby radios and then informing them which TV white-space channels are available at each
location.

Backhaul Fiber (or microwave) connection to the Internet, provided by a local telco partner.
DO

Radios Devices that rely on built-in antennas to receive signals identifying unused local spectrum, which
the radios then opportunistically jump into. Radios receiving location instructions from the database are termed
base-station radios, whereas radios that receive information from base stations and in turn transmit a network
to consumer devices are termed radios with customer-premise equipment. Each radios technology allows it
to be switched on to function either as a base-station radio or customer-premise equipment, depending on the
presence of users at the location.

Source: Adapted from MS Research documents.


Page 10 UVA-OM-1560

Exhibit 3
Connecting the Dots at Microsoft: Global Planning for a Local World (A)
Philippine Geography and Infrastructure

PY
Islands 7,000+

Population (2013) 97.6 Million1

Rural Population (2013) 54.0 Million2

Forest Area (as % of Land Area) 25.7%3

CO
Conventional Wi-Fi Limitations:
Blocked by trees and obstacles
Line-of-sight transmission only
Limited beyond 100 meters (MS Research)

Map Showing ECOFISH sites and the pilot area


T
NO
DO

Source: MS documents.

1 http://data.worldbank.org/indicator/SP.POP.TOTL/countries/PH?display=graph (accessed Nov. 14, 2016).


2 http://data.worldbank.org/indicator/SP.RUR.TOTL (accessed Nov. 14, 2016).
3 http://www.tradingeconomics.com/philippines/land -area-sq-km-wb-data.html (accessed Nov. 14, 2016).