Tuesday, February 9, 2010

Multiple Tools Needed to Preserve Mobile Bandwidth

Chetan Sharma Consulting forecasts that if left unchecked, the costs of delivering mobile data will likely outstrip incremental revenues by the second half of 2011 in the U.S. market and become unsustainable by 2013.

The rapid growth in mobile data costs has prompted operators to look at more sophisticated network congestion management strategies that fall into four categories: policy control, data traffic offload, infrastructure investment, and network optimization.

Shifting data traffic off a congested mobile network and onto another access technology fundamentally changes the economics of delivering that data. Offload is being implemented by operators globally, including offload to Wi-Fi and offload to femtocells.

Operators deploying a mixed multi-access offload strategy can expect savings in the range of 20 to 25 per cent per year. In the US market, operators will save between $30 and $40 billion per annum by 2013 through an offload strategy alone.

More-efficient new networks will help as well. Infrastructure evolution to 3.5G (HSPA) and 4G (LTE ) lowers the cost-per-bit for data throughput on the network, thereby reducing overall costs.

Chetan Sharma Consulting forecasts that evolving to HSPA and LTE will result in cost savings of just under 20 per cent or almost $25 billion per year in the U.S. market by 2013.

Network optimisation, through techniques such as compression and caching also adds incremental
savings by reducing the total number of bits traversing the network. Typically, Sharma reports,
operators can generate savings of five to 10 per cent by 2013 through this strategy.

Anecdotally, operators have reported that 80 per cent of the traffic in urban centers is being
generated by 10 per cent of the cell sites. So policy control (how, when and under which circumstances subscribers can access networks) can contribute annual cost savings of over 10 per cent, equating to over $15 billion in annual cost reduction by 2013 in the US market, Chetan Sharma says.

But cost reduction is only one side of the equation. Tiered and usage-based pricing also is required. Such policies need not be heavyhanded, top-down service provider rules but rather flexible, dynamic, and personalised pricing models that reflect subscribers’ preferences and context.

Taken as a whole, all the optimization techniques and new pricing models will be needed as the whole mobile business changes from a voice revenue model to an "bandwidth-based" business.

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