Offload using femto and WiFi has to be an important part of mobile operator strategy if they're to avoid the dreaded scissors effect - that Micawberish nightmare where network costs exceed service revenues and misery ensues. By Ian Scales.
So says Juniper Research which, like many of us, has been mulling the essential problem facing mobile operators ever since Mr Jobs held up that little black slab to an adoring public in 2007. The iPhone and the fast-following hoard of smart Androids, Badas, Blackberries and, yes, Nokias, have essentially pulled the brains from the centre of the network out to its edge where apps on one side and cloud services on the other are pulling and pushing data demand. That's left operators in a permanent state of mobile broadband catch-up - Hamsters in the wheel, running just to stay upright.
And over the next few years that data demand is going to bite hard and mean huge network upgrade costs for operators. It's now becoming clear that whatever happens to improve the 'money in' side (new revenue sharing arrangements, different tiers and caps) mobile operators will still have to do some serious re-engineering of their access networks and business models if they're to keep up with data growth as smartphones continue to pour into developed - and soon - developing and emerging markets.
Like many others in the industry, Juniper Research has been pondering the problem and has just released a report. Juniper thinks data delivery costs may rise by seven times 2010's $53 billion, reaching $370 billion by 2016. That means that network operators' revenues could be overtaken by costs within four years unless something drastic is done. And while LTE and its much vaunted speed and efficiency increase will help, it won't be enough on its own.
Juniper offers the usual palliatives - developing new revenue streams through "machine to machine", producing some new business models and so on. But most importantly, the report focuses on what it calls data delivery costs.
Juniper says new base station designs and backhaul architectures will be needed it the numbers are to be made to add up.
In particular, serious attention must be paid to data offload and the incorporation of WiFi and femtocell networks into the whole scheme of things. Without serious changes in tack, mobile data demand will just overwhelm the existing cell networks.
And where WiFi offload is being tried, it seems to work well. Deutsche Telekom, for instance, reportedly hands just about all its iPhone data traffic over to WiFi in both home and hotspot. In the UK O2 has a successful WiFi hotspot strategy which has taken the strain off its iPhone-laden data network.
And there's evidence that if operators won't build WiFi in to the smartphone offer, users just use WiFi anyway to stay under their caps or simply because the quality is better - in the home and in hotspot areas.
All good, but for the most part WiFi is offered in an ad hoc way and usually requires some level of user intevention to make it work. My smartphone, for instance, is very happy to lock on to my WiFi at home and the WiFi available at TelecomTV's global HQ in London. Once connected it remembers and can reconnect whenever its hapless user wanders within range. But away from its familiar environment it requires its owner to do some fiddling to find some service that's free.
The fiddling problem has to be overcome and help may be on the way in the form of standards for 'seamless' roaming from one environment to the other and back (given the right commercial arrangements, of course).
A standard called WiFi Hotspot 2.0, backed by Cisco in particular, is being prepped to handle the WiFi roaming problem. It will also tackle authentication and security and is designed to generally provide a carrier-grade environment for WiFi so that it can be incorporated 'seamlessly' for handsets, tablets and notebooks and a certification programme is penciled in for the middle of 2012.
Whether Hotspot 2.0 will arrive in time to help mobile telcos avoid the data crunch is another matter.
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