Wireless Operators Facing Data Capacity Issues
A scramble for network capacity to accommodate the explosive growth in mobile data traffic was a common theme at this year’s Mobile World Congress in Barcelona, Spain.
Indeed, many wireless network operators are struggling to manage network congestion as they seek to profitably harness the added traffic driven by a boom in mobile Internet usage. Â
In many cases, data revenues for these network operators are growing slowly at best despite the added usage, making effective data traffic management a high priority.
A Reuters report cited data from research firm Informa that forecasts a 50 percent rise in mobile data traffic in 2010, driven in large part by the increasing popularity of devices such as Apple Inc.’s iPhone and netbooks. However, during the same time the industry saw only a 13 percent increase in data revenues.
The problem has intensified pressure on network operators to find ways of using fixed line networks, such as the Internet, to relieve some of the burden from wireless network facilities.
"Offloading is crucial for us," said Olaf Swantee, who leads mobile operations for France Telecom-owned Orange.
"In many countries where we have a fixed network we try to offload directly," he added.
The challenge is that shifting data from wireless networks to local hotspots costs money, and operators are scrambling for solutions that will not raise their overall capital spending, according to industry executives.
"To address the smartphone challenge they are investing again," Rajeev Suri, CEO of Nokia Siemens, told Reuters.
It is not certain whether these investments are supplementing or replacing other investments, he said.
But Bruce Brda, head of rival Motorola’s networks business, was clear that network operators are not increasing their spending.
"Carriers have been very consistent — they do not increase capex," he told Reuters.
However, Motorola saw higher than expected equipment demand late last year as some network operators bolstered their existing networks to manage additional data traffic, Brda added.
"In early 2010 I am seeing the same trend. The indication is there is incremental spending,” he said.
Network equipment suppliers such as Nokia Siemens, Ericsson and Alcatel-Lucent also demonstrated their new LTE (Long Term Evolution) equipment in Barcelona, which provides operators a step toward managing additional wireless data traffic.
Operators are expected to spend billions converting their networks to the LTE standard, which enables high-speed mobile broadband access for services such as viewing movies on mobile devices.
But some critics say the new standard offers only a temporary solution should wireless data traffic continue its current growth trajectory.
"LTE will buy a carrier two to three years of relief, but then it runs out," Brda said.
Some analysts say that network operators’ sales in more mature markets are not growing fast enough to justify significant investments, which could spur demand for alternate technologies such as Wi-Fi or femtocells.
Femtocells are localized phone network base stations that reside in homes and offices where traditional wireless signals might be weak. The traffic is then taken onto the telecom company’s network via the customer’s broadband Internet connections.
"The biggest problem is that everybody is expecting these huge amounts of data but nobody is willing to pay much extra for it," Stephen Rayment, chief technology officer of Belair Networks, which provides Wi-Fi services, told Reuters.
"Operators started offering ‘all you can eat’ data and now that’s coming back to bite them.”
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