The deluge of demand for mobile data has been much discussed and talked about. News is abounding with figures, quotes and graphics of the increasing consumption (about doubling every year) and its projection to the future (anywhere from 10-25 time increase within the next 4 years). On the other hand, there has not been much discussion on what this mean from an operational perspective for the network operator. So, what is going on and what do we see?
Let’s consider first where operators stand and the tools that are available at their disposal. To address the data demand, operators have to adopt one or more of three approaches: increase the network capacity (acquire spectrum, migrate to LTE, deploy outdoor small cells, DAS systems, etc.), throttle traffic (tiered pricing, data caps & limits, policy enforcement and content optimization functions, etc.), and finally to offload traffic (femtocells, WiFi offload). In short, there’s a complex set of functions that can be implemented either separately or in conjunction. Each approach has merits and demerits. Nevertheless, many of these options represent radical departures from proven and tested network operational models. And in this lies a fundamental challenge facing the mobile network operator (MNO). In fact, this challenge is happening at a time where operators are facing stalled (if not declining) ARPUs and are forced to look at new services and revenue streams.
Let’s consider an example to clarify. MNOs are experts at scalability. In the United States, a Tier 1 operator can count upwards of 50,000 cell sites. In the UK, which has about 1/40th the area of the US but much higher population density, MNOs have upwards of 15,000 sites, each. Such large numbers of cells were built over the past twenty or so years during which operators developed streamlined processes to acquire, build, and operate a site. But today, several important processes and operational management of the network have been migrated to systems integrators that include the large telecom equipment manufacturers (case in point: Sprint and Ericsson). This happened as operators pushed for greater efficiency and focused their attention on searching for higher value activities to increase revenue. Thus, many operators lost a good part of the staff and capability to undertake complex and large scale operational functions, such as the one required for small cell deployments which becomes a real challenge from a practical perspective. In fact, some of our customers have raised this as a major issue they face if small cell deployments were required today.
Another example is that of WiFi offload and residential femtocell deployments. In the case of the former, spectrum is unlicensed and user experience cannot be guaranteed or even ascertained. This is a departure from the standard carrier model where licensed spectrum and orderly cell design is replaced by unlicensed spectrum and deploy-where-needed model. The case of the latter, femtocells, leaves the base station in the hands of the customer, a model similar to fixed network operator with home-based cable or DSL boxes. These technologies require the operator to develop new capabilities.
Yet another example is that of machine-to-machine communications which market research firm Frost & Sullivan forecasted will bring in more revenue to mobile operators than the traditional mobile phone service. The tremendous revenue opportunity is not without a major operational challenge associated with network and IT infrastructure integration and operational management.
In short, technology is getting more complicated with a multitude of options none of which is solely sufficient. Additionally, there’s a structural transformation in the value chain driven by new business models and the pressure to maintain if not increase revenue. The challenge to the network operator has never been greater!