Surging data demand, proliferation of smartphones and the onset of high bandwidth mobile applications are revolutionising the wireless telephony space. With limited spectrum availability, operators and vendors across the world are faced with the challenge of monetising the additional data usage among customers.
In this regard, data offloading has emerged as a key trend globally. In fact, it is at the heart of fixed mobile convergence technologies such as femtocells and dual-mode Wi-Fi, which take voice and data traffic off the carriers? wide area radio access backhaul networks and move them on to private broadband connections. So far, it has been a successful strategy with operators able to handle huge data traffic on limited infrastructure.
Driving data growth ? products and services
Some of the key drivers of mobile data traffic growth are the availability of high speed networks; increased penetration of next-generation mobile phones (especially smartphones) as well as connected devices such as laptops, netbooks, notebooks and tablets; and higher bandwidth-consuming applications and services.
The mobile broadband segment utilises four primary methods for internet access ? USB dongles, mobile hotspots, embedded modules and embedded chipsets.
USB dongles are typically used in conjunction with notebooks and netbooks, providing flexibility for use on multiple devices. However, the arrival of media tablets and other consumer electronics with embedded Wi-Fi capability has led to the emergence of the mobile hotspot, a battery-operated device (usually a mobile phone) using a 3G or 4G network as backhaul for data traffic.
In comparison, an embedded module or chipset solution incorporates mobile broadband functionality at the board level, providing a solution that does not break or get lost or stolen while allowing for optimal performance of the mobile device in which the embedded solution is used.
Of the various ways to enable broadband access for consumer electronic devices, mobile hotspots and embedded chipsets are the fastest growing methods globally. Key to their growth is the capability of mobile hotspots to combine data access for multiple devices while staying at the forefront of technology, as well as the flexibility of design, enabled by chipset solutions in devices.
In India, currently almost all telecom operators have launched their dongles on both 2G as well as 3G networks. In the initial stages, dongles are going to be the primary medium of broadband uptake in the PC segment.
Currently, the mobile hotspot is a feature that is available in the high-end mobile handset category and is, therefore, restricted to a limited number of users. In the case of embedded module or chipset solutions, they are new technologies and will take time before being available in the mass market.
Expected capacity constraint
As per industry estimates, 3G will see 400 million connections within four years in India, effectively upgrading one in three wireless subscriber connections to 3G services. While operators are currently expecting the highest traffic from metropolitan areas like Mumbai, Delhi and Kolkata, 3G adoption is expected to escalate faster and may soon be outstripped by semi-rural mobile reaches in states like Punjab, Bihar and Andhra Pradesh.
Some industry experts are of the view that Indian operators would face a capacity crunch when 3G services pick up on a large scale. Globally, the average 3G spectrum per operator has been 10 MHz-15 MHz, while the average 3G spectrum with Indian operators has been 5 MHz. However, in most of the other countries, 3G spectrum was also used for backhaul. This is not the case in India as the operators already have backhaul installed in the form of microwaves. Hence, in the short to medium term, Indian operators are not likely to face a spectrum capacity crunch.
However, various issues may arise in the long run. In the US, mobile phone operators such as AT&T have had to face subscriber ire over the past year with the use of video streaming and other applications rising along with the increasing adoption of smartphones. With growing network congestion, instances of call drops have become common in the US.
Similarly, for Indian operators, bandwidth-intensive data can congest networks. Subscribers in Mumbai and Delhi are often faced with problems of clogged lines at peak hours with just voice and SMS traffic. The limited spectrum availability (5 MHz) for data downloads will further add to subscriber woes once services gain substantial scale and traction.
Meanwhile, at the time of launch, 3G had promised to deliver speeds of as much as 3 Mbps. However, in 5 MHz bandwidth, operators are unable to offer more than 400 kbps-500 kbps on an average. In contrast, 3G consumers in countries such as Japan and Korea could access speeds of 5 Mbps-6 Mbps when 3G was launched. Last year, Japanese operator Softbank announced 3G connections with speeds of 42 Mbps.
Data, video and internet browsing services require higher bandwidth in the downlink and much less in the uplink. 3G-paired spectrum (equal speeds in both downlink and uplink) is, therefore, not efficiently used for data services. The 2×5 MHz spectrum holders in India will remain inherently disadvantaged when it comes to data services and thus, will have a greater need to offload data traffic in the future.
Operators will aim to control subscriber behaviour using two tools: price and data limits. Yet, when network capacity starts getting exhausted, operators will have to look at offloading some amount of data traffic on their Wi-Fi networks.
Planning ahead
While 3G services have only recently begun in India, operators are trying to ensure they do not reach a stage where they will be unable to handle the traffic. Idea Cellular, which has launched its 3G services in 2,300 towns in 20 service areas (inclusive of roaming agreements), is witnessing around 20 per cent data growth per month. The company has been taking several steps to tackle backhaul challenges.
It has moved its TDM microwave link to IP. In order to increase its backhaul capacity, the operator has decided to install fibre-based backhaul at more of its sites. Currently, 12-15 per cent of the company?s sites in the main cities where Idea has launched 3G services are fibre based. Idea intends to increase them to around 20 per cent in 2012, and extend its fibre network to smaller towns. It plans to move to an all-IP domain in the next two years, at least in the top 50-60 towns. The company is also considering a number of data offload strategies like femtocells and Wi-Fi offload. 3G repeaters are being considered for increasing Idea?s in-building coverage.
In February 2011, Aircel launched 50,000 Wi-Fi hotspots around India and has formed partnerships with Wi-Fi specialist O-Zone Networks and wireless internet service provider company Tikona Digital Networks to offer public Wi-Fi services to its subscribers. The operator has also initiated the installation of macrocells for 3G rollouts and intends to move to femtocells for in-building coverage. It further plans to use picocells (larger and more powerful than femtos) for addressing the enterprise segment.
Bharti Airtel too has tied up with O-Zone for setting up a Wi-Fi network. It is also evaluating the use of mini base stations in its 3G and long term evolution time division duplex (LTE TDD) rollout plans.
Indian operators providing wireless broadband in unlicensed frequency bands (2.4 GHz and 3.8 GHz) are also expected to play an important role in 3G data traffic offload. For instance, Tikona intends to capitalise on the 3G offload opportunity both through its Wi-Fi offering and through the LTE TDD network it plans to deploy in India. Zylog is another player waiting for the offload opportunity, and has a Wi-Fi infrastructure that it can offer to 3G players for offloading data traffic.
The way forward
Wi-Fi is not new to India and has been deployed in the enterprise, campus and small office/home office segments for several years. With the growing popularity of Wi-Fi-enabled smartphones, and the increasing number of Wi-Fi-enabled tablets and handsets in the country, the technology has started picking up, especially in Tier 1 cities.
O-Zone, which offers Wi-Fi service on a white-label basis to operators, airports, coffee shops and other retail outlets, claims it has recorded a 400 per cent year-on-year growth for the last three years. It is now preparing for the next wave, with plans to increase its national Wi-Fi network from 5,000 to 50,000 hotspots by 2013.
Another Wi-Fi equipment specialist, Ruckus Wireless, Inc., has witnessed a compound annual growth rate of 1,043 per cent in India in the past three years. While currently, the growth of Wi-Fi is being driven by increasing 3G rollouts, further Wi-Fi use is likely to be fuelled by the launch of broadband wireless access (BWA) services in 2012 and beyond, with industry experts expecting Wi-Fi to play an integral role in the LTE TDD rollout plans of BWA licence holders. Meanwhile, femtocells will also become popular to provide network coverage inside buildings such as homes and offices. Initially, however, the use of femtocells in India will be restricted to a few metros and urban areas, within enterprise campuses/building environments.
A key challenge facing the development of the femto market in India is the high retail cost of end-user products. However, prices are likely to decrease as production volumes grow and vendors enjoy the resulting economies of scale. A femtocell is available for around $100, but in India, it is likely to gain traction when the price comes down to $30-$40.
However, from a broader perspective, mobile data offload is an inexpensive way to provide the extra capacity needed to support the expected traffic growth. The mobile operators? only cost is that of subsidising the dual-function (3G/4G and Wi-Fi) devices sold to subscribers.
For mobile subscribers, data offloading provides increased coverage and faster downloads, and costs less than mobile service alone. Mobile data offloading, consequently, makes residential broadband more attractive to consumers and, therefore, increases service stickiness and improves broadband subscribers? willingness to pay.
