Telcos squeezed between rising traffic and declining revenues

The squeeze on the telecommunications operators is the rising demand for data and the falling revenue per megabyte, the Avren Next Generation Networks Conference in Bath was told earlier this week.

“Between 2008 and 2015 there will be a 10x increase in traffic and a 7x fall in revenue per MB. By 2015, 75% of traffic will be generated indoors, and 95% of traffic will be data”, said Terry Mason of Analysys Mason. “Traffic will grow because of: improved cellular services; 3G and indoor coverage; affordable pricing; increasing size of content; increasing cellular penetration and increasing indoor usage of cellular devices.”

He gave the following statistics for data traffic:

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Operators need to lower network carriage costs with a linear relationship between cost and capacity enhancement and no big incremental costs; an end-to-end IP capability; a cost-effective indoor solution via WiFi or femtocell.

Mason went on to evaluate the strengths and weaknesses of the various technologies involved: Evolved EDGE; HSPA. HSPA+, LTE, and Wimax.

Evolved EDGE has the advantage of being a low-cost software build on existing GSM sites using existing frequency plans. It is good for rural areas allowing the postponement of network upgrades in rural areas. However data rates are limited, WAP met with limited customer support, there’s “particularly poor device support”, and it can be replaced by UMTS900 and LTE900.

HSPA+ has the advantage of having, with MIMO, a comparable performance to LTE. Its weaknesses are diminishing spectral efficiency, limited capacity improvements, that dual carriers are not effective and that MIMO upgrades are not cost-effective use of site visit time.

LTE has the advantages of: reduced network carriage costs, access to 2.6GHz and associated bandwidth, improved spectral efficiency compared to WCDMA. LTE’s weaknesses are that it requires new hardware in both access and voice, it has no voice as yet, it has strong competition from fixed link, in 5MHz HSPA+ may be preferred, and local spectrum at 2.6GHz is delayed.

Lastly, Wimax. “Wimax might have had its day”, said Mason, “it has not been able to leverage its opportunity because of lack of devices and lack of spectrum. If 2.8GHz had been available we might be seeing a different landscape.”

As it is Mason sees the disadvantages of Wimax overcoming its advantages. A major disadvantage is the “huge installed base of UMTS, with LTE being a natural evolution” from that.

Other reasons given by Mason for the comparative likely insignificance of Wimax are the fact that, although positioned as a competitor to UMTS, it does not have voice capability, and because “unlicensed bands are inherently noisy”.

“LTE offers an almost identical capability”, said mason, “HSPA+ is also a threat in providing mobile broadband and the convergence of LTE and 802.16 may overwhelm Wimax”.

The choices will be business decisions. “In choosing which technology”, said Mason, “the trade off is between risk and capacity.”

Mason reckons that 90% of the 100 million Wimax customers in 2015 will be in developing regions where ADSL coverage at broadband speeds is poor.

See also: Electronics Weekly’s Focus on WiMAX, a roundup of content related to the next-gen wireless comms technology

See also: Mannerisms, the blog of David Manners. Updated twice daily, it’s the distinctive, entertaining, authoritative and never dull commentary on the semiconductor industry, from someone who knows. Sign up for the Mannerisms eNewsletter.

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