Analyst Angle: Solutions for the Broadband World

In the last column I talked about setting the goals and defining mobile broadband. While we are still a ways away in defining what constitutes broadband, another key debate has emerged in the past few weeks and that is how do we go about the solving the increased capacity problem. FCC Chairman Julius Genachowski has done a masterful job of outlining the principles, of holding public hearings in an open and transparent manner, of creating the urgency of dealing with the broadband issue, and of embarking on a practical national broadband plan, and of getting support of his fellow commissioners and industry leaders, the four key principles being:
1. Most importantly he described the spectrum shortage as a looming crisis and that additional spectrum capacity is needed to handle the demand of data traffic from data cards and smartphones (something we have illustrated in detail in the paper “Managing growth and profits in the Yottabyte era”)
2. Removing red tape to allow wireless carriers to build their network faster, for example, the work with cell towers
3. Codify and enforce net-neutrality policies
4. Open Internet
To some in the industry, the broadband capacity problem equates to the lack of spectrum. In fact, the Chairman has spoken out about the “looming spectrum crisis” in great detail on several different occasions. It is apparent that to achieve 50-100 Mbps, new contiguous spectrum is needed. However, it will be a mistake if the dominant solution for the broadband capacity crisis is more spectrum, for the following reasons:
1. There isn’t enough spectrum, especially the right spectrum
2. It takes 7-10 years to procure the spectrum for wireless use
3. By focusing on spectrum only, we will be just postponing the current crisis
4. By giving out spectrum too soon, industry won’t have the opportunity to learn to thrive within its means and let new technology and business innovation show the way to handle the increased data consumption.
Like with all tough problems, to find an effective and a lasting solution, one has to break down the problem into smaller bits and find solutions that address not only those individual pieces but the problem as a whole. We know the following for a fact:
1. Broadband data cards (external or internal) account for over 73% of the data traffic (2009)
2. Smartphones esp. with full browser and media capability account for roughly 24% of the traffic (2009)
3. There are a small percentage (< 3%) of heavy users who regularly have very high data consumption
4. Majority of the data usage takes place in an indoor environment (60-80%)
5. Video and browsing are the two biggest application categories for data consumption (accounting for over 70% share)
6. Consumers launch full applications (or browsers) to get minor updates because that’s the only way to get access to those updates on the mobile devices. Alternate strategies like the one implemented by INQMobile series of devices and Motorola Cliq are good examples of rethinking applications
7. There is no incentive for the user to change behavior on content consumption
8. To cope with the data congestion issue, all three major elements of the network need to be upgraded – RF, core network, and the backhaul. Only RF portion of the network is predominantly dependent on the spectrum allocation (while some backhaul solutions require spectrum, the direction of the industry is towards laying fiber or adopting solutions that don’t require any additional spectrum)
9. Competition breeds innovation, legacy spectrum allocation regimes might have an opposite impact
10. Doing broadcast video over cellular is not economically feasible
11. Number of devices/user is increasing, however, not all connections need high-speed real-time availability
12. True 4G bandwidths (50-100 Mbps) are not possible without additional spectrum
13. Backhaul requirements for LTE will increase in the 200-500 Mbps range within the next 5 years
14. LTE is not going to have a major impact on the data consumption problem in the short-run (2010-2013)
15. LTE smartphones might not be in the market until 2012-13
To address the data consumption issue in light of the above facts, one has to figure out a set of solutions that work in concert with each other. Just focusing on one solution only gets you so far, however, a range of viable solutions that address each of the above problem elements are likely to prepare the industry much better for the long haul. Some of such solutions are discussed below:
1. Offloading traffic without impacting the user experience or requiring user intervention. Leverage existing WLAN footprint and invest in femtocells and WLAN expansion.
2. Congestion management through caching and intelligent buffering
3. Incentivizing users to shift consumption to fill the network troughs
4. Implementing network optimization across all media and application types, especially, video and browsing
5. Adopting broadcast mobile video solution
6. Tightly integrating highly used applications like Facebook and Twitter into the handset
7. Introducing tiered pricing plans so that light users pay for broadband connectivity relative to their consumption. This will also bring in a new set of users into the broadband fold who have been sitting on the sidelines due to pricing
8. Upgrading of the backhaul capacity irrespective of LTE
9. Investing in analytics to better understand user consumption behavior at a micro level to plan appropriate strategies, solutions, and pricing plans
10. Creative bundling of data plans to bring more users into the data ecosystem.
By considering such solutions in parallel, the industry will be better off in the long-run. It is the only way to tackle the problem in the short-term since neither the additional spectrum nor the announced deployments of LTE are going to make any meaningful dent to the data usage costs and margins. Wireless is one of the industries where policy can have a significant impact on the direction of the industry. By focusing too much on the spectrum, we will miss the opportunity to cultivate a better network and business ecosystem and to invent new technologies and revenue models that will have a far stronger impact on the evolution of the mobile industry.
Chetan Sharma is President of Chetan Sharma Consulting and is one of the leading strategists in the mobile industry. He has served as an advisor to several Fortune100 companies in the wireless space and is probably the only industry strategist who has advised each of the top 6 global mobile data operators. His client list includes NTT DoCoMo, China Mobile, AT&T, Sprint Nextel, KDDI, Reliance, KTF, Sony, Juniper, Alcatel-Lucent, Qualcomm, Comcast, HP, and Disney. Chetan is also a leading authority and IP expert in the wireless industry, testifying in cases such as ITC – Qualcomm vs. Broadcom as well as the author of 5 best-selling books on wireless including co-author of Wireless Broadband: Conflict and Convergence (IEEE Press/John Wiley). Chetan has assisted many leaders in the global ecosystem in devising effective broadband strategies. He is interviewed frequently by global media and his research is widely quoted in respected publications such as NY Times, WIRED, Business Week, Fortune, WSJ, Reuters, AdAge, and MIT Technology Review. Chetan serves on the advisory committees of several startups. http://www.chetansharma.com