U.S. wireless carriers ultimately want to get every American on their networks. In this utopian dream, everybody would be a paying customer. Subscribers would make all their voice calls from their mobile phones, they would gobble up services like downloadable music and mobile TV, and surely they would connect their laptops to the Internet using wireless. Profits would roll in, and wireless would become the life link of the culture.
This idealistic dream may never come to pass, but wireless carriers continue to work toward it. Indeed, their successes during the past few years have shattered even the most cheerful expectations and offer evidence that such reveries are not the stuff of total fantasy. As the U.S. mobile penetration rate soars past 60 percent and carriers continue to score millions of new subscribers every month, it’s clear that wireless has a long-term future.
Indeed, research and consulting firm The Yankee Group reported that personal calling on wireless has exceeded residential landline use even though 35 percent of the U.S. population doesn’t have a wireless phone.
Thus, will such growth eventually put a strain on the finite power of wireless? If wireless voice and data catch fire, is it possible that carriers’ networks could groan with the weight of everyone’s communications? It’s a scary question, and one that industry takes seriously.
“Sprint Nextel is very proactive in managing both the voice and data networks,” said Tom Crook, vice president of access technology and architecture for Sprint Nextel Corp., the nation’s third-largest wireless carrier.
Such concerns are nothing new. Wireless started as an analog technology that covered large areas but could support few customers. Analog by its nature was spectrum hungry and largely inefficient; carriers quickly became conscious of the need to upgrade their systems to a more suitable technology. Luckily, carriers found significant successes with their services, which made funding network upgrades much easier.
In the late 1990s, wireless entered the digital realm with the introduction of TDMA, CDMA and GSM technologies. Such offerings replaced analog networks with more efficient digital technology. The result was that carriers could cram far larger numbers of subscribers on their networks using the same amount of finite spectrum. The second generation of wireless was born.
Digital technology greatly eased capacity concerns. Instead of holding a single channel open between two callers for the duration of a conversation, digital technology broke up the conversation into bits and bytes. Networks eased on the flow of digital information, and carriers sighed on the knowledge they could support more paying customers.
But 2G wasn’t enough. Pricing wars ensured wireless voice profits eventually would ebb. Carriers began searching for ways to entice additional revenues from their complacent customer base, while at the same time providing sufficient capacity for the future. Such concerns briefly were met by 2.5-generation technologies like CDMA 1xRTT and GPRS/EDGE, but didn’t quite live up to the dream.
Enter 3G.
With super-fast data rates and flashy new services, third-generation wireless technologies like CDMA EV-DO and W-CDMA/HSDPA promise to keep users enthralled for years to come. And perhaps more importantly, 3G technologies arrived with even more spectrally efficient designs than 2.5G technology-ensuring that carriers would be able to add more paying subscribers.
“It’s more about monetizing their network now and not worrying about overloading their network,” said Rene Link, vice president of marketing for research and consulting firm inCode.
Although carriers generally don’t provide concrete metrics, most agree that the industry’s nascent 3G networks are nowhere near overloaded. This partly is due to carriers’ pricing strategies, ensuring that only the most affluent users will take advantage of unlimited voice and data access. But it also could be a factor of users’ apparent disinterest in high-powered data services. For example, only around 3 percent of U.S. mobile subscribers downloaded games to their phones during a three-month period ending in June, according to research and consulting firm M:Metrics Inc.
Nevertheless, carriers constantly monitor the use of their networks to keep ahead of the capacity curve. This is true for both voice and data usage.
“Data capacity is managed the same way as voice capacity,” wrote Ritch Blasi, a spokesman for the nation’s largest carrier, Cingular Wireless L.L.C. “We have to ensure that we have enough spectrum, cell sites, channels and core capacity to serve our customers’ needs. We are constantly measuring our data accessibility, retainability and speeds to ensure we are meeting our performance objectives. As we offer more robust data services, we are implementing technologies such as UMTS HSDPA to give our customers the data throughput they need to use the applications.”
Verizon Wireless offers similar comments.
“From a business-planning perspective, we take into account all relevant factors prior to ever launching a new service, including our current spectrum holdings and network buildout, potential availability of spectrum and resources to increase capacity and coverage, as well as market forecasts,” wrote Verizon Wireless spokesman Jeffrey Nelson. “Because our business is growing significantly, we are always weighing marketplace options, but are convinced that we have-or will have-access to the resources that make Verizon Wireless the operator of the best, most reliable networks available.”
Sprint Nextel’s Crook said the carrier aims for a 1-percent “grade of service,” which means that only 1 in 100 calls is blocked due to network loading. This measurement-an accepted industry standard-hails from the wired world’s metrics.
“That’s what you size your network to,” Crook said.
Sprint Nextel’s data services have a similar measurement system-1x users need to have data speeds around 50 to 70 kilobits per second, and EV-DO users need around 400 to 600 kbps. If the numbers for either voice or data usage go down, Crook said Sprint Nextel can take one of several options to boost capacity in the affected area. Such options include adding cards to the base station, adding more spectrum capacity with additional RF carriers, adding additional backhaul and otherwise tweaking the network.
Interestingly, Sprint Nextel’s capacity metrics-1-percent call blocking and the 1x and EV-DO data rates-are outlined specifically in the carrier’s service level agreements for corporate wireless contracts. Such SLAs carry penalties if Sprint Nextel’s network drops below those promised parameters.
“We do keep on top of all that,” Crook said.
Although networks appear to be holding up under current usage, what does the future hold? 3G networks can support blazing-fast Internet surfing from laptops, and carriers are working to roll out a variety of data-heavy applications like full-song downloads and streaming video. Indeed, research and consulting firm Strategy Analytics Inc. predicts that the “video infotainment” area alone will grow from a $76 million business this year to a staggering $1.7 billion by 2010. Such growth could strain unprepared networks.
Sprint Nextel’s Crook said the carrier’s network-planning team works with its marketing department to get best-guess estimates on customers’ usage. If the marketing department expects millions of users to embrace a new, data-heavy application, the network folks will adjust accordingly the network.
“I’m sure they’re well prepared … to accept a potential demand,” said inCode’s Link. “I think it’s just an issue of watching demand.”
Regardless, capacity and loading remain concerns. For example, carriers now are evaluating technologies like MediaFLO, DVB-H and even WiMAX as a ways to supplement and fortify their own networks. Even now, carriers like T-Mobile USA Inc. and others essentially are offloading some of their data traffic onto Wi-Fi hot spots. A WiMAX system would perform the same function over a larger area. Further, video-broadcasting networks like MediaFLO or DVB-H specifically are intended to get data-heavy applications like streaming TV off carriers’ wireless networks.
As wireless networks evolve, network planners will continue to evaluate and appraise the condition of their systems. Capacity and loading will remain concerns, and some carriers may decide to offload to WiMAX or DVB-H networks. But at least for the meantime, it looks like everyone who wants a wireless connection-and is willing to pay-won’t have much trouble finding one. RCR
