By: Adlane Fellah - Maravedis, Inc.

November 7th, 2006

The primary challenge all operators face is satisfying the growing expectations of users for ever more capable, easier-to-use and more universally available communications and broadband services. Whether the customer is a corporation or an individual user, the challenge is to make capital-intensive buying decisions to deploy wireless networks that will meet not just current demand cost-effectively but the needs of targeted customers for a reasonable return on investment.

DSL operators need to provide increased bandwidth, coverage and packaging of services including wireless mobility. Although a subset of customers will be satisfied with the features of basic DSL combined with regular phone service, increasingly users are migrating to mobile service as their primary or only phone service. DSL providers can package cellular phone service, but since this is a profit-share with the wireless carriers, it delivers lower profits and is subject to migration to competitive broadband services. The definition of what makes up a competitive broadband offering is shifting: a still small subset of broadband users require higher bandwidths than DSL typically can offer. This usage pattern is expected to grow as DVB, IPTV and multi-cast video services become increasingly popular. A DSL operator faces the challenge of providing service to outlying areas that can be cost prohibitive for DSL extension.

Operators face increased competition from wireless mobile broadband. WiMAX and cellular broadband provide a pathway to "personal broadband." The ultimate vision is for the ability to always be connected with a sufficient level of broadband service and simplified billing. Deploying and managing diverse wireless networks that deliver increased numbers of media and other services is complex. Both corporate and individual users have shown a willingness to pay for simplicity over more complex or multiple services. Several well understood factors fit into this equation, including ease of use and productivity: less time spent dealing with buying, paying for and learning how to use services and devices results in greater commercial benefits and user satisfaction.

Multiple-service packaging and user satisfaction are the goals of providers because it is relatively easy to switch broadband services from DSL, cable or wireless broadband. When services include common interfaces and simplified billing, their "stickiness" increases. Customer turnover helps determine profitability of all communications services today. A provider does not realize profitability from new customers until they have stayed with a service for more than a year.

Implications for WiMAX

WiMAX ushers in the opportunity for DSL, cable, and cellular operators to provide a single, extensible IP/SIP platform for delivery of wireless communications that include triple play IPTV, Internet access, and VoIP phone service. As WiMAX evolves to full 4G mobility, it will be capable of providing a full set of services when combined with local area DSL, cable, or fiber optics.

User satisfaction and evolving usage factors compel the industry to consider deployment of networks that can evolve over several years. Increasingly, the decisions for 4G wireless broadband come down in favor of the mix, if not the exact prescription of platforms based on MIMO-OFDMA. WiMAX is the first major effort to develop a framework for the long-term evolution of 4G technologies.

DSL usage patterns have hit a level of saturation: the easier deployments have been reached and packaging of services now becomes increasingly an issue in the marketing and provisioning of service. Although higher bandwidths have been achieved in areas with good conditions for transmission, DSL has been unable to reach into outlying areas or provide a degree of mobility beyond that provided by Wi-Fi. DSL sales are being affected by migration to wireless cellular and will increasingly be impacted by higher bandwidth requirements that favor cable and fiber optics.

WiMAX operators providing DSL replacement will face the same challenges as current ISPs providing broadband Internet access. It is therefore important to review the kind of usage pattern that is eating up operators' bandwidth. Users don't care about the technology; they care that the application runs smoothly and provides a satisfying online experience - whether as a productivity tool or for entertainment. Each operator has a different set of customers, either business or residential/SOHO. Therefore, WiMAX must offer a tier of services to satisfy multiple classes of users.

Applications Used in a Fixed Environment

Optimizing network traffic and load balancing is key to ensuring adequate capacity across the network. Broadband-aware applications like Peer-to-Peer (P2P) are complicating the load, performance and capacity equation. Initial P2P traffic, such as music downloads, resulted in megabytes of always-on traffic and dramatically strained network capacity. The growing popularity of Internet movie downloads is generating gigabytes of 24x7 P2P traffic, further impacting network capacity and convoluting planning for network operators. P2P traffic is exploding and represented 60% of all Internet traffic in 2004. P2P outstrips every other communication and distribution protocol and continues to grow.

Operator Challenges

The implications of those P2P applications are numerous for broadband service providers. P2P applications will increasingly take a significant portion of their bandwidth. Further, P2P is symmetrical in nature, consumes an average of 80% of the upstream capacity and will affect QoS for all subscribers, even those that are not active in P2P. Therefore ISPs, including WiMAX service providers, will have to manage P2P wisely because they cannot afford to block or restrict P2P traffic.

The importance of managing P2P and maintaining QoS is evidenced by a recent study of Australian internet users, which implications can be generalized to other broadband users globally.

Australian Internet users most often left ISPs because they were overpaying (53%), their download speeds were too slow (44%), or due to poor customer service (33%). Today, users are most concerned with avoiding long contracts and attaining faster download speeds. While over half of the respondents said they were not comfortable committing to a contract for longer than six months, speed was the most compelling reason to choose a new provider, with 47% of those surveyed citing "constantly fast speeds" as their top consideration. Speed was also a big reason why users stay with a provider. It trailed reliability by less than 3 percentage points and led pricing, which came in third by a large margin in the list of reasons to remain with a provider. VoIP is becoming an important consideration, too. Nearly 30% of those surveyed reported that they use their broadband connection for VoIP service, almost double the number of last year. Of those, 20.6% use it as their sole telephony service.

About the Author:

Adlane Fellah, MBA, is CEO and founder of Maravedis In a world-leader in market research and analysis, specializing in WiMAX and broadband wireless markets. He is leading industry analyst who authored various landmark reports on WiMAX, broadband wireless and Voice over IP. He is a frequent speaker at leading wireless events and a contributor to various prestigious portals and magazines covering the broadband wireless industry including: Telephony Magazine, WiMAX Trends, WiMAX.com, etc.. He is member of the Program Advisory Board for the World WiMAX conference since 2004 and a member of the Word Communications Association International , and Broadband Wireless Association. Prior to founding Maravedis, he held various positions at Harris Corporation in charge of market intelligence and business development for several product lines.