Back in the early 2000s mobile network operators were clamouring to sign up new subscribers to “unlimited” data plans to offset what they correctly perceived to be a steady decline in mobile voice revenues.
But, in a startling validation of the adage “be careful what you wish for,” mobile operators in the U.S. in particular are now scrambling to keep pace with a smartphone and tablet PC-driven mobile data tsunami that threatens to overwhelm their networks.
The twin issues of the data overload and spectrum crunch have been key themes at the wireless industry’s CTIA conference in New Orleans this week.
“There is no debate over the fact that there is a looming spectrum crunch,” says Dan Mead, chief executive of Verizon Wireless, in a keynote session at the conference.
Mobile data traffic on the networks of both Verizon Wireless, the largest U.S. mobile network operator by subscribers, and its closest rival, AT&T Mobile, has been doubling every year for the past five years, amid the growing popularity of data-hungry mobile video streaming and downloads.
But wireless spectrum – the basic raw material needed by network operators to expand their capacity – is in short supply. Without additional spectrum, U.S. operators warn that mobile data traffic will exceed capacity by 2014, driven mainly by the growth of mobile video.
The U.S. Federal Communications Commission has set a target of freeing up an additional 500Mhz of spectrum for mobile operators over the next decade. Julius Genachowski, the FCC’s chairman, warned ominously: “If we don’t act, the costs of not addressing the spectrum crunch – dropped connections, congested airwaves, lousy service and rising prices for data – will get higher every day.”
But the process of freeing up new spectrum and auctioning it off is too slow, say some of the operators, including AT&T, which has been a vocal critic of the FCC since its spectrum-driven $39-billion bid for Deutsche Telekom’s T-Mobile USA was blocked six months ago by U.S. regulators. With minimum new wireless spectrum available, at least in the short term, the leading U.S. mobile operators are all being forced to come up with new tactics and technologies to manage mobile data growth and make better use of the spectrum they already own.
These strategies range from accelerating the rollout of new, more efficient 4G technologies such as LTE and building denser wireless cells using new “small cell” technology and antenna, to offload data on to WiFi networks.
Perhaps most controversially, they have also begun “throttling” data download speeds for the heaviest users, including those on legacy “unlimited” plans, in an apparent attempt to persuade these users to curtail their download habits, or switch to potentially more costly monthly metered data plans. Such a move by AT&T was met with a storm of online abuse.
AT&T announced explicitly a few months ago that it would begin actively throttling the download speeds of unlimited data plan users one they hit the 3Gb mark each month – even though most of the other major U.S. carriers operate similar policies.
AT&T and Verizon have been making secondary market spectrum acquisitions while also investing in new technologies to help manage data traffic. AT&T initiated 18 small spectrum deals in 2011. Verizon is seeking FCC approval for a controversial deal under which it would acquire spectrum from a group of cable TV companies.
Together with Sprint Nextel, the third-largest U.S. mobile operator, and T-Mobile USA, both telecom companies are also investing in technologies designed to mitigate the risk of data overload on their networks. This will enable them to offload data from their cell networks on to unregulated WiFi connections and hotspots.
“WiFi is a very attractive option for offloading data traffic,” Dan Hesse, Sprint Nextel’s chief executive, told the CTIA conference.
All the main network operators are also deploying small cell and so-called Distributed Antenna Systems in heavy traffic areas such as sports stadiums and downtown urban areas. These devices – some of which fit in the palm of a hand – are making much more efficient use of wireless spectrum than the traditional big cell towers.
“AT&T is using innovative network technologies to help maximize existing capacity,” says John Donovan, AT&T’s chief technology officer.
AT&T has turned to self-optimizing network (SON) technology developed by Intucell, an Israeli start-up, which uses software to monitor for congestion. It then adjusts the transmission power of each cell in the network to deliver the optimum coverage.
Industry executives warn that such initiatives provide only a partial solution as demand for mobile Internet shows no signs of slowing. They say that unless more spectrum is made available over the longer term, the rise in smartphone use, the expansion of mobile Internet services and the economic benefits the industry generates could be checked.
“The mobile Internet has reached a tipping point,” said Ralph de la Vega, AT&T Mobility’s chief executive. Like his colleagues, he warns that the industry desperately needs more spectrum, and soon.