February 23, 2010

“The Rain in Spain…”

Last week’s Mobile World Congress in Barcelona was well attended with over 49,000 people making the trek through the many halls and meeting rooms at La Fira. And yes, it was rainy and cold in Barcelona!

SpiderCloud Wireless conducted many meetings with industry insiders, from operators to media, analysts and vendors. We were also fortunate to have our CEO (Michael Gallagher) speak on a panel with Cisco, Huawei and Telia-Sonera -- moderated by Chris Lewis from IDC, addressing network challenges as we bring cellular services inside to the Enterprise.

There were several themes that emerged during the days at La Fira. Regardless of our market focus, it’s safe to say that “network capacity” (or lack thereof, as a result of the emergence of iPhone, Android-powered and Blackberry smartphones) was the big theme and focus. As Deutsche Bank put it in their most recent report (Feb 22, 2010) – “…the industry is just getting to grips with what it will mean.” To back up this statement, note that out of 1.2B phones sold in 2009, smartphone sales reached 172.4 million units in 2009, which is a 23.8% increase from 2008 (Source: Gartner). Surely, 2010 is promising to be the "year of the smartphone.”

With greater functionalities on devices and capabilities of networks, the net result is consumption. Subscribers will consume all available bandwidth (we speak from experience). In some European countries you can purchase 5Gb plans for as little as $20-25 per month. But, that’s nothing compared to the “unlimited plans” for $65-75 where some subscribers may consume up to 60Gb per month. Yes, the 80/20 rule prevails. Or, in some cases, as little as 5% of subscribers consume 90% of all traffic.

Nokia Siemens Networks predicts that “mobile data from smart devices will increase 10,000% by 2015” -- which means that “network capacity” is a clear and present issue for operators and vendors alike for years to come.

Cisco research projects that annual global mobile data traffic will reach 3.6 Exabyte per month or an annual run rate of 40 Exabyte by 2014. This is a 39-fold increase from 2009 to 2014.

Furthermore, Cisco predicts “mobile video will represent 66 percent of all mobile data traffic by 2014.”

Peer-to-peer video and one-to-many video communication and downloads is sure to have a serious impact on networks in the coming year and likely the core theme for next year’s Mobile World Congress.

So what do we have to do (operators and vendors) to solve the capacity problem? Marketing terms like “data offload” is sure to get some attention. Wi-Fi will be of great help, but as the smartphone numbers outline, we still have a couple of years to go before we even reach 30% penetration of smartphones in the global marketplace (the predominant category where there’s embedded Wi-Fi). The way things are today, mobile networks built for voice will not scale to future demands for data and video applications. The constant 24/7 data application drain on networks built for voice “busy hour” -- requires a different RAN architecture approach to scaling, traffic shaping, as well as the demarcation of where the network edge and core begins and ends.

Deutsche Bank puts it very succinctly: “…for years, carriers built their networks around the concept of peak hour traffic, and busy hour attempts to make phone connections. That concept has been obliterated. Now mobile data is being driven less by voice and more by video or other data. One carrier told us that in major cities, they are seeing 70% of smartphone users on the network 20 hours of the day.”

In simple terms, the Macro RAN has to extend itself seamlessly with the use of smaller micro RANs for dense urban areas and for indoor deployments* (what we refer to as the “Enterprise RAN”). Wi-Fi and Cellular networks will have to work together without undue burden on devices and subscriber intervention, in a secure and seamless manner.

“Mobile data growth is creating significant network challenges across access, backhaul and edge/core networks for wireless carriers, but solving this is not a simple problem, and will require big changes to network architectures.” Brian Modoff, Deutsche Bank

As a final thought, we’d like to call your attention to the “1Goal” effort supported by GSMA and led by her Majesty Queen Rania Al Abdullah of Jordan. Mobile phones & networks can help play in big role in supporting the goal to provide education to the children of Africa. Learn more at www.join1goal.org

The best part of going to MWC is the many ad-hoc meetings that take place anywhere on La Fira. And, after attending 3GSM/MWC for almost 10 years, it is safe to say that this year’s congress was the best managed event in many years (but we still miss the restaurants in Cannes). We look forward to next year’s Mobile World Congress.

Ronny A. Haraldsvik
Vice President of Marketing