The mobile data apocalypse, and what it means to you

The mobile industry is now completing a huge shift in its attitude toward mobile data. Until pretty recently, the prevailing attitude among mobile operators was that data was a disappointment. It had been hyped for a decade, and although there were some successes, it had never lived up to the huge growth expectations that were set at the start of the decade. Most operators viewed it as a nice incremental add-on rather than the driver of their businesses.

But in the last year or so, the attitude has shifted dramatically from "no one is using mobile data" to "oh my God, there's so much demand for mobile data that it'll destroy the network." A lot of this attitude shift was caused by the iPhone, which has indeed overloaded some mobile networks. But there's also a general uptick in data usage from various sources, and the rate of growth seems to be accelerating.

Extrapolating the trend, most telecom analyst firms are now producing mobile data traffic forecasts that look something like this:




The forecasts are driven by a couple of simple observations:

--Smartphones produce much more data traffic than traditional mobile phones. Cisco estimates that a single smartphone produces as much data traffic as 40 traditional feature phones. So converting 10 million people from feature phones to smartphones is like adding 390 million new feature phone users, in terms of impact on the data network. The more popular smartphones get, the busier the network becomes.

--A notebook PC generates far more traffic than a smartphone. According to Cicso, a single notebook computer generates the same data traffic as 450 feature phones. As notebook users convert to 3G-enabled netbooks and add 3G dongles to their computers, they dramatically increase the data traffic load on the network.

You can read Cisco's analysis here.

This becomes especially interesting when you look at the forecasts for growth of 3G-equipped netbooks and notebooks. Mobile operators in many countries have started subsidizing sales of those devices if you pay for a data service plan. It's an attractive deal for many people. Say your son or daughter is going off to college. Do you buy them a regular notebook computer and also pay for the DSL service to their apartment, or do you buy them a 3G data plan for about the same price as DSL and get the netbook for free?

The forecasting firm In-Stat recently predicted that by 2013, 30% of all notebook computers will be sold through mobile operators and bundled with 3G data plans (link). Notebook computer sales worldwide are about 150 million units a year, so that's 45 million new 3G notebooks a year -- or the data equivalent of adding 20 billion more feature phones to the network every year.

Jeepers.

These forecasts are producing a behind-the-scenes panic among mobile network operators. The consensus is that there's no way their networks can grow quickly enough to support all that data traffic. There are several reasons:

--They can't afford to build that much infrastructure.

--Even if they could afford the buildout, they won't have enough bandwidth available to carry all that data, even with 4G.

--Traffic-shaping techniques like tiered pricing and usage caps can't restrain usage growth enough to save them, because

--Fear of losing customers to a competitor will force them to continue to subsidize sales of 3G dongles and offer relatively generous caps in their data plans.

There are a number of projections that show the operators losing money on wireless data a few years from now, as costs continue to increase faster than revenue. The danger isn't so much that they will all go broke, but they're very afraid that they'll turn into zero-profit utilities.

Many operators now seem to be counting on WiFi as their ultimate savior. The theory is that if they can offload enough of the data traffic from their networks to WiFi base stations connected to wired networks, then maybe other measures like 4G, usage caps, and aggressive improvements to the network will let them squeak through.

It's an ironic situation. For a long time the mobile operators thought of themselves as the future lords of data communication. All devices would have 3G connections, the thinking went, and the fixed-line data carriers such as Comcast and BT would fade away just like the fixed-line voice companies are doing.

Instead, the new consensus is that we're moving to a world where the fixed-line vendors will be expected to carry most consumer data traffic for the foreseeable future. They'll provide your wireless connectivity at home and work, while the mobile network will fill in the gaps when you're on the move. The area of disagreement, of course, is who will get the majority of the access revenue. We'll let the fixed-line and mobile operators argue over that one; I want to talk about some of the other impacts of this weird new hybrid wireless world that we're heading into.

(I touched on some of this in my post on net neutrality a couple of weeks ago (link), but I want to go into more detail here.)


The brave new world of scarce mobile bandwidth

Built-in WiFi is now good. For a long time many mobile operators resisted selling smartphones with WiFi built in. They viewed WiFi networks as competitors for customer control, and wanted to prevent usage of them. Now that they see WiFi as their savior, the operators are suddenly encouraging its inclusion in phones. Don't be surprised if in the near future it becomes impossible to get a subsidized price for any smartphone that doesn't have WiFi built in.


Traffic shaping is a fact of life, and a likely source of irritation. Many mobile operators are starting to limit the performance of applications that consume the most data bandwidth (today that's mostly video and file sharing). It's already being done today, and in most cases the operators won't even tell you they're doing it, unless the government requires them to. Certain apps will just communicate more slowly, or fail altogether, when the network gets busy.

There are a couple of exceptions where operators have been more public about their traffic shaping activity. The 3 network in the UK recently announced restrictions (link). And O2 in the UK has given details on exactly which applications it restricts in its home wireless data service (link).

Current traffic shaping hasn't generated a firestorm of complaints from the average customer (as distinct from net neutrality advocates), in part because it is very hard for users to tell why a website runs slowly on a particular day. But as mobile traffic continues to increase, operators are going to find that it's cheaper to ratchet up the restrictions bit by bit rather than pay for more capacity. Eventually people will notice, and I worry that we'll end up in a situation in which the operators carefully balance out how much they can piss off their customers without creating an outright revolt. It's a lot like the way the US airline industry operates today, and it's a miserable experience for everyone involved.

What to do. There are better ways to shape traffic. I think operators should give customers more information on how much data they're using at any given time, so they can manage it themselves. Then let them make an informed decision about which apps they'll use their bandwidth on. It would be relatively simple to create an on-screen widget showing how much data is being transferred at any time, just like the signal strength and battery life indicators on today's phones.

It's also possible to create some APIs that would tell a website how much bandwidth is available to it, so the developer could adjust its features accordingly. This idea is being tossed around between web companies and operators, but I don't know how much is actually being done about it.

Combine those changes with usage-based pricing (my next point) and customers will shape their own traffic. Then there won't be any need for covert manipulation of the network.


Say hello to capped data plans. Completely unlimited wireless data plans are not sustainable long term; the economics of them just don't work. And in fact, virtually no data plans today are completely uncapped; there is almost always some fine print about the maximum amount of traffic allowed before surcharges kick in or the user is tossed off the network.

Some people are saying that the operators should go back to charging by the byte, and in some parts of the world (particularly Asia), there is a long history of per-byte pricing. But the experience in most of the world has been that per-byte pricing makes users so nervous about their expenses that they won't use data services at all.

(DoCoMo in Japan has an interesting hybrid approach (link) in which it charges per-packet until the user hits a maximum charge of about $70 per month. Additional usage beyond that cap is free. So that's capped pricing rather than capped usage. This reduces customer fear of accidentally running up a gigantic bill, but I wonder how DoCoMo prevents power users from flooding the network with traffic. Maybe there's a second, hidden cap on total usage.)

What to do. I think the right answer in most of the world is going to be flat-rate data plans in which there's a clearly-communicated cap, with tiered charges beyond that. The cap will need to be set at a level that moderate users won't ever reach, so they don't become gun-shy about data. To alleviate the fear of accidentally running up a huge bill, there will also need to be an on-device meter showing how much of the user's monthly data allocation has been used (just telling them to go look at a website is not enough; it should be on-screen). I'm told that on-screen meters like this are already being offered on netbooks by some European operators.

Today most operators are pretty up-front about communicating the data limits when a computer is connected to a mobile network. But many of them are still deceptive toward smartphone customers. AT&T's Smartphone Personal service, for example, promises the following for $35 a month:

Included Data: Unlimited; Additional data: $0 per MB

Sounds pretty straightforward. No asterisks, no fine print. But if you click on the terms of service (link), you'll find a long list of banned application types, followed by this general provision:

"AT&T reserves the right to (i) deny, disconnect, modify and/or terminate Service, without notice, to anyone...whose usage adversely impacts its wireless network or service levels or hinders access to its wireless network... and (ii) otherwise protect its wireless network from harm, compromised capacity or degradation in performance."

In other words, if the network is getting slow, they can do anything to your service, at any time, without notice.

There is also a hidden 5G per month maximum:

"If you are on a data plan that does not include a monthly MB/GB allowance and additional data usage rates, you agree that AT&T has the right to impose additional charges if you use more than 5 GB in a month."

This is not just an American problem. Orange in the UK calls its iPhone data service "unlimited," but there's a footnote saying that "unlimited" actually means 750 megabytes a month, a surprisingly low cap compared to AT&T's.

If we're ever going to collectively manage mobile network overload, we'll all need to be much more up-front about the way it operates and what a particular service plan will and won't do.


Is residential 3G really a good idea? Especially in Europe, it's common for operators to tell people that they should ditch their DSL or cable modem at home and replace it with a 3G modem. That works out well only when the network has excess capacity. As soon as the networks start to get congested, the operators will need to offload traffic to residential WiFi routers connected to DSL or cable. If those residential fixed lines have been removed, the operators can't offload.

What to do. I think this one is going to be self-limiting. Once 3G bandwidth gets scarce, the operators will realize that they can get a lot more revenue feeding data to smartphones than to PCs. The math works like this: With a given amount of bandwidth, you could support a single notebook computer and charge about $50 a month, or support 11 smartphones at $30 a month each. Hmm, $330 a month versus $50, seems like a pretty easy decision.

But there are two circumstances in which it would make sense for the operators to keep subsidizing PC sales:

1. If smartphone sales plateau. If this happens, eventually the network will catch up with demand and then there will be excess capacity for PCs; or

2. If operators can route most of the actual data traffic from PCs through WiFi connected to landlines. In this case they could sell you data plans knowing that you won't affect their networks much. That brings us to the next point...


Operators have a huge vested interest in unlocking WiFi access points. Most WiFi access points today are encrypted and inaccessible to other devices in the area. I think there's a strong financial incentive for mobile operators to work with fixed-line access companies to get those access points unlocked. The benefit for the wireless companies is clear -- the more WiFi points they can talk to, the fewer cell towers they need to build. But the benefits for the fixed-line operators are much less clear. Why should they help the mobile operators with their bandwidth crunch?

What to do. The ideal situation would be a revenue-sharing deal in which the operators share some money with the fixed-line companies to encourage them to open up access to their networks. In this scenario, your DSL or cable provider would give you a WiFi router that has been pre-configured to automatically and securely share excess bandwidth with mobile devices in the area. Your own traffic would get priority, but any extra capacity could be shared automatically. The benefit for you as a consumer would be a free router, and/or a lower DSL bill as the cable company passes along some of the revenue it gets from the mobile operators.

The effectiveness of this sort of approach is going to depend on the relative cost for an operator of subsidizing a set of WiFi base stations in an area, versus the cost of installing more wireless capacity. I wonder about weird scenarios like a DSL provider auctioning off excess WiFi capacity to wireless operators in a particularly congested area.


Femtocells for the rest of us. Another very logical step for the operators is to start pushing femtocells aggressively. (Femtocells are radios that work like a short-range cell tower, but are the size of a WiFi router. You connect one to your DSL or cable line, and it offloads traffic from the wireless network. Link)

What to do. Today femtocells are generally sold as signal boosters in areas with marginal wireless coverage. But in the future I think it may make sense for operators to give away femtocells, or at least subsidize them, for customers who live in areas where the data network is congested.


What it all means: Fixed-mobile convergence with a twist

If you step back from the details, the big picture is that we really need a single integrated data network that encompasses mobile and fixed connections, and switches between them seamlessly. People have been talking about this sort of thing for years (check out the Wikipedia article on fixed-mobile convergence here), but the focus has generally been on handing voice calls between WiFi and cellular. That's hard to do technologically (because you can't interrupt a voice conversation during the handover for more than a fraction of a second). Besides, it doesn't solve a significant customer problem -- the voice network isn't the thing that's overloaded.

The place where we could really, really use fixed-mobile convergence is in data. I'm worried, though, that the intense competition between the wireless and wired worlds will make it difficult and slow to achieve the coordination needed. This might be a useful place for government to put its attention. Not in terms of regulating the integrated network into existence (that would be the kiss of death), but to grease the skids for cooperation between the mobile and fixed-line worlds.


Just one more thing...

Everything above is based on the assumption that those Cisco and analyst forecasts are correct. But Cisco has a vested interest in hyping fear of the data apocalypse (Emergency! Buy more routers now!!), and my general rule about tech analysts is that every time they all agree on something you should bet against them.

There is a genuine crunch in mobile data capacity going on at the moment; you can read about network outages caused by the iPhone even today. And I can assure you that for every network failure you read about, there are dozens of other failures and near-failures that don't get reported. Many wireless data networks are very stressed.

And the situation will get worse.

But there's no such thing as infinite demand. At some point the growth of mobile data will slow down, and it's very important to try to estimate how and when that'll happen, so we as an industry do not overshoot too badly. The question isn't whether the growth forecasts are wrong, it's when they will be wrong.

I'll write about that next week...

23 comments:

Euroclie said...

Very interesting and enlightened article, as usual.

I do confirm that here in Europe it's nearly impossible for the end user to track its data use on the device itself or sometimes even on a website, which is a real pain for those who do not want (or can't get) unlimited data plans.

One other gray area is of course roaming: as soon as you leave your national operator's network, it's a jump into the unknown, and you'll often have an unpleasant surprise when receiving your next phone bill.

About convergence: here in France we're starting to see fixed-line operators (Free, for instance) opening up the residential routers to wireless WiFi users. So far, it's mostly customers of the same operator in a mobile situation, able to connect for free via WiFi using another router than their own, which is already a nice thing.

There are also attempts like the Fon (virtual) operator that sells you routers to connect to your DSL/fiber landline and share bandwidth with other Fon users - for free if they happen to have one such router and are actively contributing to the bandwidth sharing, or at a cost if they are passive customers. This may be part of the solution you mention...

One last question I'm pondering: if/when the bandwidth gets too scarce, won't the operators start increasing the price of data plans? I know that the first one to get against the expected trend (new technology = more efficient = same service for cheaper or better service for the same price) will fear losing its customers, but isn't this going to happen nonetheless? In that case, users would adjust their demand accordingly and the growth would certainly slow down and help operators keep up with the demand, right?

Gary Gale said...

It's good to see someone calling out the way that the cellco's play fast-and-loose with the English language in their ever changing definition of what the word "unlimited" actually means, without the usual hand waving, stamping and shrill language.

It will be interesting to see how long this practice continues until the cellco's are finally called to task over it. Comparisons with the shrink wrapped EULA for software packages immediately spring to mind.

My hope is that "but it's plainly written in the small print" will cease to be a corporate defence as consumers show greater interest in what they're actually paying for and why they don't receive a promised level of service.

danio said...

Really interesting & well put together piece.

I had wondered a few years ago why it was so hard/expensive to get a wifi enabled smartphone and now they are much more common and more subsidised.

Sharing excess wifi bandwidth would be great. Most places I go I can see a handful of wireless routers: it seems so wasteful to not be able to use them.

I'm amazed that the operators can get away with such blatant contradiction between the 'unlimited' product offer and the terms & conditions. It's like they sell you a 100 minute voice plan and then in the small print mention that if you use >50 minutes/month you will get an additional charge. I don't mind that they are selling a capped service - just that they should state it as such. I really hope they get brought to task on this through some existing consumer legislation.

Anonymous said...

Looks like Clearwire is posed to reap benefits from the apocalypse. I'm sure other network providers not on the LTE bandwagon will try the Clear route, ofcourse sprint, intel, comcast and others willing.

David Evans said...

Of course data plans are going to be free, it's totally sustainable. We just haven't figured it out the model yet.

Some ideas:

Embedded pre-download ads have been used on free file sharing sites for years. Same thing can happen via push on phones. Must click on something/do an action to get access to downloaded data.

Giving up your location to your carrier (opt-in) or apps like FourSquare and BrightKite and Loopt? That's worth a dollar or two to a marketer for the opportunity to sell you something from a store nearby. Lot's of middlemen along the way to pay for access as well.

Location-based offers will participate in a Google AdWords style marketplace. Just watch brands bid up locations (keywords) auction-style to be able to flash an offer to a person walking by a store.

Marketers will pay dearly to put their offer in front people who's marketing profile exhibits impulse-buying behavior and makes over $100k and walks in front of a Best Buy/liquor store/whatever.

It's really more about permission-based marketing than it is metered data.

I worked at a firm that assisted IDT Spectrum with it's business offering, radio-based cell tower back-haul. I'm sure lots of things happened behind the scenes that I wasn't aware of, but running up to the IPO, which was pulled the day before it was supposed to happen, I remember thinking that mobile data usage was going to spike tremendously, just wasn't sure when.

Mark Cameron said...

Michael, this is great as always. Your posts are infrequent but always worth reading, which sure beats a constant stream of useless information. I completely agree with your position, and I look forward to the next installment.

Jared Evans said...

This was a quality post and thanks for taking the time to write it!

Symbian Guru said...

Another option that I don't often see presented is throttling bandwidth after the cap, rather than cutting off service altogether.

For instance, for $35/month I may get 700MB of 3G data, after which my connection would be throttled down to EDGE speeds (which thus makes it more difficult for me to suck down more data as quickly).

My friend Stefan Constantinescu (who will likely comment here shortly) has also wondered before why mobile operators don't offer data like the landlines do - tiered speeds. Why automatically give everyone the same HSDPA? If someone's only checking email, let them pay a little less and limit them to EDGE. Conversely, I would be happy to pay more for true HSDPA all month long (assuming the system is weeding out other users, and thus increasing the reliability).

Tamas Simon (Sic) said...

As someone who recently had to pay 450$ using an an "unbeatbale 30$" plan on a mobile phone... I'm just wondering are these kinds of contract legal?
I mean can you say it's unlimited and then in the fine print mention that charges apply when your usage exceeds 5Gb ?
Isn't this purposefully misleading?

ASG said...

I'm curious if you might have any thoughts on the assorted implications of an operator increasingly offloading data traffic to WiFi access points.

For example, it seems that getting customers habituated to utilising services via WiFi might represent an advantage to non-cellular operators and a source of risk for cellular operators, in that the advantage of holding a spectrum licence becomes less valuable.

bioteacher31 said...

i'm not sure if anyone mentioned it yet, but aren't there mini-towers that ATT/Verizon have been releasing for beta (for lack of a better word) testing?

i remember reading about it. surely if there are mini-towers all over residential areas, the cell providers will have less traffic to worry about and customers will get better coverage.

the only problem with this idea is how a business model for such technology would work.

Anonymous said...

10 to 15 years ago it was very common to talk about the day when there would be wireless access points on every light post. what happened to that conversation? it does not matter if they 3g/4g or wifi. but that is the solution.

if offloading traffic from 3g to wifi is the answer than it does not need to be that home residents have a router connected to there own DSL connection. the router belongs out on the street owned/managed by the telecom company and built into the subscription.

people do not need/want both a fast wireless connection and a second connection in the house. one should be enough.

Michael Mace said...

An excellent crop of comments, folks. Thanks very much!

Stefan at Intomobile sent me a link to his post on mobile data plans in Finland (link). It's interesting -- you can pay a flat fee for a certain transmission rate, but the amount of data you send over the connection is unlimited.

That would encourage phone and app companies to use bandwidth more carefully. In particular, a BlackBerry-style architecture, that queues messages and then transmits them in the background, would work well with this sort of service.

Some thoughts on the comments...


Euroclie wrote:

>>About convergence: here in France we're starting to see fixed-line operators (Free, for instance) opening up the residential routers to wireless WiFi users.


Cool! Thanks very much for sharing that info.

In the US, the fixed-line operators generally don't provide your router, so it's almost impossible for them to do something like that (unless or until they start distributing routers).


>> if/when the bandwidth gets too scarce, won't the operators start increasing the price of data plans? ....In that case, users would adjust their demand accordingly and the growth would certainly slow down and help operators keep up with the demand, right?

Good question, and I think that if you look at the really big picture that's what will eventually happen. After all, any operator that sells data plans at a loss will eventually go out of business. But saying that some operators will survive isn't much comfort to those that die in the process.

Besides, there are a lot of uncertainties in the details. The risk of commoditization is very high. The operators are faced with making huge investments in upgrading their data networks at the same time as price competition for data plans is rising. If they spend too little they'll lose customers to the operators who have more capacity. But if they spend too much they could end up losing money on their data services.

Then there are all sorts of potential structural barriers. To give one example, the Register reported recently that when T-Mobile and Orange merge their operations in the UK, they'll own about half the available spectrum in the country (link). Theoretically, that ought to give the combined company the ability to underprice any other operator for mobile data. If you're one of the competitors, what do you do?


Gary wrote:

>>My hope is that "but it's plainly written in the small print" will cease to be a corporate defence as consumers show greater interest in what they're actually paying for and why they don't receive a promised level of service.


I agree.



Anonymous wrote:

>>Looks like Clearwire is posed to reap benefits from the apocalypse.


Sure does. It'll be interesting to see what alliances they build (in addition to the one with Sprint).

Michael Mace said...

More thoughts on your comments...


David Evans wrote:

>>Of course data plans are going to be free, it's totally sustainable. We just haven't figured it out the model yet.


Interesting ideas, and I'd love to see it happen. Google has been arguing for a while that mobile phone service should be free. I'm not sure, though, that ads and the other approaches you listed can generate the revenue necessary to pay for all that infrastructure.


Mark wrote:

>>Your posts are infrequent but always worth reading, which sure beats a constant stream of useless information.


Wow, thank you very much.


Symbian Guru wrote:

>>Another option that I don't often see presented is throttling bandwidth after the cap, rather than cutting off service altogether.


Very good point, and yes that's a kinder way to implement the cap (as long as the operator tells the user what's happening). A big fear of web companies is that users will call them complaining that their sites are running slow, when in fact it's the operator throttling service.


>>If someone's only checking email, let them pay a little less and limit them to EDGE.

Hold that thought. It's one of the things I want to discuss next week.


Tamas wrote:

>>As someone who recently had to pay 450$ using an an "unbeatbale 30$" plan on a mobile phone


Yikes! Reminds me of the time I made the mistake of using a 3G card with my notebook computer on a trip to Canada. Never again!


>>I'm just wondering are these kinds of contract legal?

Maybe someone with a law degree will comment, but my very cynical thought is that it doesn't matter if something is illegal if the government doesn't enforce the law.

Verizon was sued by New York state for calling some of its broadband plans unlimited. The total penalty was $1 million, which is pretty much chump change to a company of Verizon's size (link).


ASG wrote:

>>it seems that getting customers habituated to utilising services via WiFi might represent an advantage to non-cellular operators and a source of risk for cellular operators, in that the advantage of holding a spectrum licence becomes less valuable.


It sure does! This is why they were so unfriently to WiFi for a long time. The fact that they're now embracing it tells you how scared they are of the growth in data usage.


bioteacher31 wrote:

>>i'm not sure if anyone mentioned it yet, but aren't there mini-towers that ATT/Verizon have been releasing for beta (for lack of a better word) testing?


I think you're referring to picocells and microcells (definition here).


>>Surely if there are mini-towers all over residential areas, the cell providers will have less traffic to worry about and customers will get better coverage. The only problem with this idea is how a business model for such technology would work.

Exactly. The operators are worried that it'll cost them more money to add all that capacity than they'll get back in data service fees.

Simon Hardie said...

One of the ideas that you talked about has been implemented here in the UK.

O2 have done a deal with The Cloud that allows O2 iPhone users whose plan to use The Clouds WIFI spots for free.

Leslie Grandy said...

"That's hard to do technologically (because you can't interrupt a voice conversation during the handover for more than a fraction of a second). Besides, it doesn't solve a significant customer problem -- the voice network isn't the thing that's overloaded."

I read your post after it was included in a Tweet from someone I follow. (As a fellow blogger, I thought you might find this insight helpful.)

I wanted to address the extracted quote above. I worked at T-Mobile where I managed a product team which supported mobile phones that used UMA for seamless handover from wifi to cell and vice versa. The technical part was actually not hard. The problem was converging business agendas of wireline phone, cellular and cable providers. And simplifying the consumer's ability to connect the dots across the various providers they might wish for different services or electronics.

Fixed mobile convergence is not a technology problem. It's a bundling problem. And, yes, it's a business problem. A la carte choices for consumers are hard to support across service providers. Integration for a seamless service experience across multiple vendors is costly - for companies and for consumers. However, without a seamless service experience across hardware, software and network, the effort to convergea consumer's brand or product choices is aggravating and difficult for most average families. Everything's a piece of cake for the consumer if there is an installer, or if you buy all your products from one manufacturer. But even with UPnP, DLNA, UMA, wifi as standards, there are consumer experience hurdles to connect the dots that have prevented convergence from accelerating.

For a while, 3 screen service bundles have made fixed mobile convergence a challenge. Those providers need to mobilize.

With Cisco's help we launched several low cost wifi routers to facilitate the convergence with UMA and home wifi for low cost VOIP and seamless handovers between home and mobile usage. As much as everyone slams carriers for being walled gardens, the home has been a business fortress protected by soft bundles and non-integrated consumer services. Routers came back, because the wireline providers made the unbundled service price without voice calling too costly for consumers to break.

Anonymous said...

A lot of enterprise process flows will move to mobile. Many consumer processes would be invented on mobile. Also, entertainment on mobile. The article is spot on. For a change, the mobile companies would have to delver quality and would have to dramatically change their managers and staff to reorient them to the emerging reality.

Dan McBride said...

Good work Michael. This is a sober and thorough account of what is occurring in the mobile industry and what we at Stoke have been trumpeting throughout 2009. In fact, back in January, Stoke dubbed 2009 the 'Year of Offload' because of rising data traffic and the economic crunch.

In response Stoke has tackled some of the tougher challenges in offloading data traffic from 3G networks. For example, you mention handover between networks must be fast to ensure voice calls are uninterrupted. Together with Korea Telecom in June, Stoke announced performing seamless data session handover between 3G, Wifi, and WiMAX networks from a car traveling at 60kph in under 300ms. That is, uninterrupted streaming video while moving between networks in a moving automobile. Solutions for a seamless user experience in a multi-radio world are available today.

Another offload innovation from Stoke is the bypassing of mobile core network elements for Internet traffic. At more than 85% of overall mobile data traffic, and nearly 100% of laptop/netbook traffic, Internet traffic is a special case and should be handled differently than mobile services data traffic. There is no reason this traffic should suffer the latency added by SGSNs and GGSNs, nor should an operator have to deploy additional capacity of these outmoded network elements these to meet rising demand. Stoke has shown that bypassing these elements can reduce network core capital expense by almost 90%, and Opex nearly as much, and the user experience improves! With an ability to reduce Capex by this much, is it any wonder that large incumbent equipment suppliers have not already solved this problem?

Operators will be living with their 3G networks and its user base for years to come. While the large incumbent operators and the industry press focus on the next thing (LTE), MNOs need offload solutions for 3G networks today.

Ahrjay said...

Great article, and some valid points.

Here in Australia when the iPhone first launched the network offering the best deal at the time, Optus, was having major network overload issues to the point where internet usage would be essentially shut off as it was affecting sms and voice data reliably getting through the network (there was a lot of complaints of constant call dropouts). They also stopped advertising their 3g usb dongles on tv for a while, in the hopes this would help curb their data woes.

The solution for swapping between wifi/3g is well and good in countries like UK and USA where wifi points are abundant. But in Australia they are quite scarce and usually always locked down. There would need to be some massive infrastructure changes to not only the phone networks but wifi point also to cater for this 'apocalypse' of data.

internet-consultant said...

i'm not sure if anyone mentioned it yet, but aren't there mini-towers that ATT/Verizon have been releasing for beta (for lack of a better word) testing?

Tim Carter said...

Mobile IP is a potential solution in this area as it will allow operators to switch users' connections (data, video, VoIP)seamlessly from a 3G to a Wi-Fi network. This removes the need to build extra network capacity and provides users with a better QoS when an alternative network is available (eg. in their home or office). At Birdstep Technology we are working with a number of operators on this challenge.

Pavels Romanovskis (Павел Романовский) said...

why go through cell towers, when mobile handsets can communicate directly to each other within couple of km radius? And even make connections through several hops? then abundance of sets on the network would make it stronger, not weaker. Ok, it is complicated technological solution, but it can be a game changer, capacity and capex/opex saver. Somehow, I think that Wimax is better suited to take advantage of self-organizing and self healing p2p mobile networks.

learn Reiki said...

Normal internet is struggling with video but when video conference hits mobiles this is only going to get worse.