By: Adlane Fellah - Maravedis, Inc.

November 14th, 2006

Last week, I have provided some insights about fixed broadband application and traffic trends and some of the challenges that current and future WiMAX fixed service providers will have to deal with.

This week, I will address the more complicated topic of applications and challenges facing current broadband mobile operators which will provide some hints about future WiMAX mobile challenges.

Although 3G users account for a low percentage of mobile phone users overall, current 3G users are more likely to use the multimedia capabilities of handsets, with increased levels of messaging, gaming, watching video and downloading new content for personalization of handsets. Those "early adopters" provide interesting insights about what mobile usage patterns WiMAX service providers will need to address and the network challenges associated with them.

Siemens surveyed over 5,300 mobile communication subscribers in eight countries about innovative wireless applications and their expectations with respect to the content and functionality of these applications. A few trends are clear: mobile music and e-mail access on a mobile handset are among the most popular applications as evidenced by the exhibit below.



Not surprisingly, subscribers to 3G services are significantly more likely to capture and transmit video with their devices than their counterparts on 2G networks. This is reflective of the superior transmission capability of 3G networks and that video capture is a standard feature of 3G devices.

Higher consumption of data services is also reflected in proportionately higher propensity to download ring tones and games. Survey data from the fourth quarter 2005 shows that 3G subscribers are about twice as likely to download a ring-tone and between three and four times more likely to download a game.



Since the first launch of 3G networks, data services such as multimedia messaging, ringtone and wallpaper downloads, and web connectivity have flourished in the market place. 3G subscribers using Vodafone's Live! service spend almost twice as much as non-Live! 2G subscribers (Source: Vodafone Group, 16 March 2005). Sprint's wireless data ARPU rose from US$4 in 2004 to US$6 in 2005, accounting for 10% of total ARPU (Source: Sprint Nextel, 23 February 2006). More recently, new services such as location-based services, mobile TV and mobile commerce, which require high-speed data network capabilities for satisfactory user experience, are also gaining traction in the market place. Verizon launched Child Chaperone very recently, using gpsOne technology to help parents keep track of their children with their phones. At the end of 2005, Vodafone UK launched Vodafone Live! Mobile TV - offering a wide variety of popular TV channels. KDDI launched EZ Felica, a mobile commerce service that allows users to make e-payments, pay for tickets, and board airline flights. These types of services are now offered by many of the operators with 3G networks.

Considering that mobile operators are faced with decreasing ARPUs, those new value-added services represent a crucial revenue stream. In fact, data services already represent 20% of mobile operators' overall revenues. Maravedis believes that proportion will continue to grow.

However these new opportunities come with new challenges. Bandwidth-hungry and real-time applications such as VoIP will require the optimization of mobile networks to sustain quality of service.

Operator Challenges

Quality of service is determined by both physical and market characteristics. On the physical side, connection quality will be related to numerous factors including the distance of the terminals from the transmitter, speed at which the user is traveling, and the amount of traffic on both the up and down links. As Internet applications have evolved, so has the need for data streams that offer a higher level of quality than simply best effort. Certain data such as digitized voice require near-instantaneous transmission, while e-mail can encounter short delays with negligible effects for the consumer.

Network engineers have struggled to improve the reliability of voice and data services on the Internet by using protocols such as User Datagram Protocol (UDP) or developing solutions to create dedicated channels on the existing infrastructure such as Multi-Protocol Label Switching (MPLS). The end result is a network where certain transmissions can be given priority over others.

As pointed in various articles, one of the challenges of UMTS is that the data rates only approach the theoretical maximum close to the cell site. One solution is to deploy many cell sites to blanket an area in high signal levels. But this approach, obviously, is very costly.

An alternate approach is for the operator to facilitate access to Wi-Fi hotspots. The operator may not benefit from the airtime revenues but the operator can still maintain the relationship with the customer and provide the billing and authentication services. As Information Management System (IMS) becomes available this will become a critical strategy and the operator that refuses to support alternatives risks losing the customer.

Each of the techniques outlined below improve the utilisation of the 3G spectrum by manipulating the traffic before it crosses the RAN (radio access network). Traffic shaping includes the following four techniques:

Time-sensitive rate plans are an old but effective tool to shift traffic to less busy periods by charging more during times of high demand. Data filtering systems include traffic prioritisation that has a similar effect on a real-time basis; they inspect the contents of data packets and then apply various combinations of data compression and prioritisation. Data filtering can be applied at the network level but greater efficiencies can be achieved if software is installed on the mobile terminals. When data filtering software is installed on both ends of a wireless link, needless handshakes may be detected and so avoid the associated delays and excess load on the network

It is no surprise that WiMAX service providers privilege the performance of the access network when considering equipment from vendors. The following table summarizes the results of a survey of WiMAX service providers. Even though these carriers identified lower equipment cost as top priority, more throughput and increased coverage were very important selection criteria, more so than interoperability.



Respondents were also asked whether they would offer mobile services if current systems were mobile-capable. Most answered yes, but expressed concerns about their country's regulations as well as additional capital expenditure required. To support mobility would require increased infrastructure. The priority is to offer limited mobility and portability. Operators will need to deploy this infrastructure prior to offering mobility.

There is still a long way to comprehend fully the ever evolving trends in mobile applications from location based services to file sharing. The WiMAX industry will benefit from the lessons learned among early 3G adopters.

About the Author:

Adlane Fellah, MBA, is CEO and founder of Maravedis, 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.