Growth of Mobile Broadband Limited Without Investments in 4G Networks

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The Nomadic Virtual Lifestyle

We have read quite a lot lately about nomadic workers and virtual offices. 
Armed with notebook PCs and seeking Wi-Fi hot spots, many employees are leaving
their cubicles and using coffee shops, pool decks, and friends homes as their
new "anywhere" offices.

An article in Tuesday’s Washington Post truly captures this trend - 

Digital nomads ditch cubicles for diners and pool decks.   In the
article, Marilyn Moysey, an employee of Ezenia who sells virtual collaboration
software, often works at Panera Bread near her home in Alexandria, Va., even
though she has an office in the "boondocks."  Asked where her co-workers
were, Ms.  Moysey said, "I don’t know, because it doesn’t matter anymore."
Clearly, nomadic Internet access is becoming a way of life for many people – not
only for business use, but for entertainment and education as well.

The key takeaway from this phenomenon is that more and more people are using
Wi-Fi and (when affordable and available) 3G data cards to access the Internet. 
AT&T and VZW have accepted this fact – both are now offering free Wi-Fi hotspots
to premium wireline Internet customers along with 3G data cards for laptops (HSPDA
and EVDO respectively). 

As a result,
mobile broadband is expected to grow much faster than wireline broadband
(even with FTTP/ FTTH solutions such as VZ’s FiOS). 

A recent Cisco study is even more optimistic about mobile Internet traffic
growth -

Cisco Visual Networking Index:  Global Mobile Data Traffic Forecast Update

Here are a few of Cisco’s predictions:

- Globally, mobile data traffic will double every year through 2013, increasing
66 times between 2008 and 2013 and reaching over 2 exabytes per month by 2013.
- Mobile data traffic will grow from 1 petabyte per month to 1 exabyte per month
in 7 years – half the time it took fixed data traffic to do so. 
- Over 60 percent of the world’s mobile traffic will be video by 2013 and will
grow at a CAGR of 150 percent between 2008 and 2013.  Mobile video also has
the highest growth rate of any application category measured within the Cisco
VNI Forecast at this time.

While impressive, there are several challenges with existing Wi-Fi and 3G
networks that could limit this explosive growth and limit the ability to scale
to higher speeds and larger number of subscribers:

- Wi-Fi hot spots are not always available and often are not free, e.g. 
airports.
- Wi-Fi networks have dificulty scaling with heavy traffic loads, e.g.  ppt
presentations, videos, photos, etc.
- 3G pricing is too expensive for the small amounts of bandwidth given to each
user.
- Low cost per bit is difficult to achieve on a cellular network because its
design was based on carrying TDM voice.  For many operators, 3G data is an
overlay and a stop-gap solution.
- Cellular operators have imposed data caps on 3G data traffic.  Typical 3G
data pricing is $60 USD per month with a data cap of 2GB to 5GB transferred per
month.  Additional data transferred is usually priced in 1GB increments.
- 3G networks are already saturated from iPhone traffic, according to the CEO of
AT&T.  Cellular network infrastructure (possibly augmented by femtocells)
will need to be significantly upgraded to support the coming tidal wave of
mobile data. 
- Data rate usage will increase with time.  More and more people will begin
using smart phones and data cards for mobile broadband Internet access. 
Video will be the primary driver of bandwidth, as it has been for the last
several years since YouTube became popular.  Neither 3G or Wi-Fi will be
able to keep up with this increase in data traffic.

Many experts predict a minimum of 100% per year growth in mobile data, but that
won’t be achievable without huge investments in CAPEX – both in the RAN and
backhaul networks, including new network management and maintenance software. 
What’s the solution for true mobile broadband Internet access?

Mobile WiMAX and LTE

Mobile WiMAX is available for deployment now and is the only available
technology that can meet the current and future bandwidth demands of heavy-data
users.  The WiMAX deployment roadmap points to a future upgrade to IEEE
802.16m (Advanced WiMAX or WiMAX 2.0), which is now out for IEEE 802,16 Working
Group letter ballot. 

The compelling features of Mobile WiMAX are the following:

- OFDMA combined with MIMO technology for RAN spectral efficiency
- TDD – which is very efficient for asynchronous traffic
- Flat (non-hierarchical) all IP network
- An open network with reasonable or free patent licensing (Open Patent
Alliance)
- No special IP Network Management equipment needed
- Reasonable device costs – less than 3G modems with much more bandwidth

But there are several challenges of Mobile WiMAX:

- Roaming and handoff issues have not been completely solved
- Dual mode 3G/WiMAX modems are needed and are just starting to be deployed
- WiMAX MIDs (mobile internet devices) remain in hiding.  (Yes, we know
about the Samsung Mondi, but more choices are needed). 
- No smart phones/handsets have been announced yet (Samsung where are you?)
- VoIP over WiMAX must inter-operate with voice over cellular networks and the
PSTN.  Voice has been severely neglected as a "killer application," in our
humble opinion.
- Most Tier 1 carriers have not adopted the technology. 
- Image problem: WiMAX is perceived as a fixed technology only for emerging
countries and rural areas where broadband is not available.

Nonetheless, the big cellcos have cast their lot to LTE.  Here is a
check-list that explains their rationale (Source: 
Business
Drivers for Selecting LTE Technology at AT&T)

- HSPA, HSPA+ provides great data speeds with impressive improvements over next
2-3 years
- HSPA, HSPA+ is already the mobile broadband technology of choice worldwide
- LTE will be adopted by >80% of the world’s wireless carriers
- Incredible economies of scale will be created with LTE through the GSM
community as well as the CDMA community

AT&T’s intends to deploy LTE in 2011.  Their LTE targets include:

- High data rates- average user throughput: 3-4 times (Down Link), 2-3 times (Up
Link) HSPA reference
- Low latency- < 10 ms (RAN RTT)
- High spectral efficiency- 3 X HSPA R6 spec baseline
- Improved performance for broadcast services
- Simplicity – less signaling, auto-configuration of network nodes
- Spectrum flexibility – deployable in a wide range of different spectrum
allocations of different sizes

We are not going to comment about the seemingly never-ending WiMAX vs LTE
comparisons.  This is because WiMAX is available now and LTE is not and may
not be for a long time (much longer than many think).

Conclusions

Mobile data traffic continues to grow exponentially and that growth is
unsustainable based on existing networks.  There are a lot of factors that
will impact the trajectory of mobile broadband traffic and subscriber growth. 
Here’s one view form AT&T:

Unless carriers significantly upgrade their network infrastructure, they will
continue to have to resort to data caps and blocking of high throughput traffic
(e.g.  AT&T currently blocks Sling box video on its 3G network). 
These types of actions will increasinly lead to dissatisfied users and the
promise and potential of mobile broadband will not be realized. 

Pico-cells, more cell towers, self -organizing- networks (SONs), and other
network topology tricks have been proposed to alleviate the mobile bandwidth
crunch.  We don’t believe any of those will be cost effective (although we
do like femto-cells as a way of getting traffic off cellular networks and onto
the wireline broadband network at home or a small office). 

The bottom line:  Mobile data growth will slow unless 4G- like technologies
(Mobile WiMAX and LTE) are deployed in a very significant way.  If and when
that happens is anyone’s guess.  So take the forecasts with a grain of salt
and don’t bet the ranch on them.

Professor Alan J Weissberger
Wimax360 Moderator