by Peter L, Senior Technical Member of Telefocal
3G networks are now in operation in most countries around the world and have truly revolutionised markets with mobile broadband and other advanced services. Driven by the introduction of new devices such as low-cost smartphones and tablets, users are embracing the new possibilities and pushing the networks to their capacity limits. This is forcing operators to start planning the migration to 4G, the next generation of technologies and services.
However, the migration from 2G to 3G and 4G requires a number of important strategic decisions and careful business planning from the network operator. Questions that need to be answered include:
- What are the capacity limits of each technology, when does an upgrade become necessary?
- How can a network operator get the most out of the 3G investment before moving on to 4G?
- What are the different technology choices, their advantages and disadvantages?
- How much frequency spectrum will be required, and how much will it cost?
- How much additional revenue can be generated from 3G and 4G services for a faster return on investment?
- What are the right pricing and marketing strategies for a particular market?
Exponential rise of mobile data traffic
Cisco Systems estimates that global IP traffic will more than triple over the five years to 2016:
Fig.1: Global IP traffic forecast 2011-2016
The biggest growth will come from mobile devices as businesses ‘mobilise’ their workforce and business processes, as well as consumer broadband Internet access.
When is 3G no longer enough?
Mobile data traffic can rise sharply once 3G services are introduced, provided the pricing is right to make the services attractive. This can put huge strain on network capacity and performance. The example of Hong Kong shows an increase in mobile data traffic of over 1000% in the first year following the introduction of 3G services:
Fig.2: Total mobile data traffic in Hong Kong
When 3.5G technology (HSDPA) was launched two years later, offering higher data rates, data traffic tripled, and quadrupled the following year, forcing the operators to upgrade their networks to HSPA+ in 2009 and LTE (4G) in 2012.
International fiber bandwidth can make or break a market
Access to international bandwidth at competitive prices is a precondition for a high-speed broadband market to develop. In South Africa for example, like in many other countries, international bandwidth used to be limited and expensive, with only one relatively old (low-capacity) submarine fiber optic cable reaching the country – until a second cable landed in 2009 and a third in 2010. The introduction of higher mobile data rates followed (HSPA+ and LTE) and a broadband mass market with millions of users evolved.
Fig.3: International Internet bandwidth and pricing in South Africa
Some technology migrations are more costly than others
Upgrading a mobile network to a new technology generation is not always as simple as adding new equipment at existing base station sites. Additional backhaul capacity may be required to carry the increased bandwidth demand back to the core network, fiber optics may be required for some of these links, more tower space may be required for additional antenna systems operating in different frequency bands, additional spectrum licences may have to be acquired, and hundreds of millions of dollars of investment into additional base station sites may be required. A 3G cell operating at 2.1GHz for example will provide only about one sixth of the coverage area for mobile broadband service compared to a GSM cell operating at 900MHz for voice services.
Fig.4: GSM voice vs. 3G mobile broadband coverage
Competing and complementary technologies
LTE offers a well defined migration path to 4G for GSM-based operators. As of mid-2012, there were more than 60 commercial LTE networks in operation in 35 countries, with many more operators currently investing in the technology.
Fig.5: LTE deployment status worldwide 2012
LTE operators are facing competitors using WiMAX, ‘the other 4G technology’, and also the CDMA-2000 EV-DO family of mobile technologies has continued to evolve towards higher data rates. These o
ther operators are often able to offer very competitive pricing, although the pricing spread in many markets is huge:
Fig.6: Wireless broadband competition case study, Iraq
However, in a converging technology environment moving towards all-IP platforms, some of these technologies can be seen as complementary rather than competitive. Various mergers and acquisitions have taken place in markets around the world, some of which make more sense than others. Other interesting solutions for mobile operators to boost capacity of their networks include the femtocell concept and the integration of WiFi.