Next gen cellular same as last gen - just cheaper, faster and better

Alcatel-Lucent isn't the only vendor busy miniaturising its hardware, as we will find out for sure next week in Barcelona at Mobile World Congress 2011. The reason for all this activity is fundamental  -  vendors have to move to a new architecture and technology set if they're to meet mobile broadband demand. So rather than just fulminate about Google and smartphone 'data hogs', operators have to get clever and get reinvesting to cope with the data tsunami. 

 

And while we're at it, why tsunami? Skyrocketing demand has nothing in common with the forced arrival of a tidal wave, It's the result of user requests and can be tapped and monetised on that basis. Most operators know this and have started massive network modernisations to keep up with demand, says Pal Zarandy of Rewheel, a Helsinki-based consulting firm specializing in mobile data.

 

"On the surface we're reading all the time about LTE, but the elephant in the room is that operators are swapping out their old 2G and 3G gears to new 2G/3G gears. Why do they do that? Because legacy 3G platforms (NodeB, RNC, Ps Core) are simply not "gigabyte ready". If you stick to the old platform you would need to purchase a lot of hardware upgrade units, e.g. so called base band units to the NodeBs.

In many cases it is not only a matter of CAPEX but you simply cannot push through more traffic because you've maxed out the hardware configuration."

 

Pal points out that the technology and the standards are not so relevant, because hardware is cheap to produce.

 

"The economics and cost structure of the networks boils down to the economics and "games" of the network equipment vendors. Up until now, telecom vendors were trying to stick to the classic "pay-as-you-grow" software pricing approaches (read PRAY as you grow), meaning capacity-linked pricing. "

 

"But their previously well-protected field of competition is now opening up and being disrupted, partly by new entrants and IT players. In the IT world, capacity-linked pricing has never been the norm. If you buy a router, they don't care if you push through 1Gbps or 100Gbps, but with GGSN and SGSN models operators are typically charged software licences per aggregate Gbps. Even though we are talking about nearly the same physical boxes and functionality (a GGSN is practically an IP router)."

 

Pal points out in his latest blogpost that The offload business case rests on the assumption that it is significantly cheaper to provide hot-spot coverage and capacity by buying wholesale access from WiFi clouds than by investing into the self owned cellular infrastructure."

 
"But cellular network platforms are now changing fast as new generations of previously refrigerator sized base stations now fit in the size of a DVD player. "

 

Operators are in a position to challenge this assumption and build out their networks to compete with wifi, says Pal.

 

Via Rewheel