The opportunities for wireless communications are outstripping the networks' ability to carry the resultant traffic. How is the industry tackling the problem?
The future of wireless communications will be shaped by a struggle between supply and demand. Demand there's plenty of. Supply - not so much.
The demand side of the equation has been widely discussed. There are five billion mobile connections on the planet, and analysts predict that there will be 50 billion devices connecting to mobile networks by 2025. Ericsson says global mobile data traffic has nearly tripled in a year. ABI Research says that the amount of data offloaded from mobile networks will grow 100-fold in five years.
Smartphones are being blamed for the dramatic growth in mobile data traffic that has seen operators scrambling to invest in enough capacity to keep up. But there are new applications, such as telehealth, which are also creating demand. However, meeting that demand, especially given the limited capacity of mobile spectrum, is going to be difficult.
Stirling Essex, director of business development at spectrum monitoring company CFRS, told a recent Cambridge Wireless conference: 'The expectation is that everything will be wireless, and we are becoming increasingly dependent on it. Spectrum is a key enabler of economic growth. We must make sure we have enough spectrum - like power or water.
'Buy spectrum - they're not making it any more.'
Robert Crow, vice president of industry, government and university relations at BlackBerry maker RIM, said: 'Too many people are competing over too little resource - it's the tragedy of the commons over and over again.'
He argued that when resources are scarce you can either get more, use less or do a better job with what you've got. Getting more involves reallocation of spectrum, which is underway in some countries. Using less could mean peak demand management, which is 'very interesting and very controversial - will operators even be allowed to do it?' given the net neutrality debate. Doing a better job with what you've got means better modulation schemes, or greater reuse of spectrum.
'Tomorrow's network is basestations every 500m,' he said.
William Webb, head of R&D at UK telecoms regulator Ofcom, said that the extra spectrum that is being made available isn't going to solve the problem of skyrocketing demand.
'When we release the 800MHz and 2.6GHz bands it will approximately double the amount of spectrum available for mobile communications currently using the 2G and 3G bands,' he said. 'If we miraculously managed to clear all the spectrum below 3GHz (which is impossible because it's already fully used) then this would give about a five-fold further gain.'
Ten times more spectrum will only satisfy demand that is tripling every year for so long. Webb added that Wi-Fi spectrum, seen as a useful way to offload traffic from mobile handsets, is also coming under pressure.
'It is possible that that may become as much of a pinch-point as cellular,' he said.
Essex argued that one way to tackle the problem is to better manage the available spectrum, through more dynamic, complex and shared usage schemes. The downside of this approach is greater complexity and a greater risk of congestion, interference and even litigation: 'Imagine if the wireless point-of-sale terminals at the 2012 Olympics failed, with consequent loss of business.'
Simon Saunders, chair of the Femto Forum, brought his own scareware to the conference. He said that Cisco was predicting that mobile data usage in Western Europe would grow E F 106 per cent a year between 2009 and 2014. Worse, analysis company Informa predicts that while mobile data use is set to grow 20-fold in that time, mobile revenue will only double.
'For many operators today there wouldn't be revenue growth at all unless there was growth in data,' he said.
Saunders argued for a three-pronged approach to the mobile data squeeze, using spectrum, technology and topology.
The spectrum issue is being addressed through liberalisation, but can only have a limited impact.
'It's welcome, vital but not sufficient,' Saunders said.
Newer technologies are available, but the costs are high and the gains aren't large.
'LTE and advanced WiMax [modulation schemes] come impressively close to the [theoretical] limit of the number of bits you can squeeze into each Hertz of spectrum,' he said.
That leaves topology, or how you lay out a network's basetstations, to do the heavy lifting.
According to one analysis, over the past 50 years, making more spectrum available enabled a 25-fold increase in capacity; greater use of frequency division a fivefold increase; modulation and coding improvements a further five-fold increase; and the use of more cells a 1,600-fold increase. So although there is a way forward, with 'basestations every 500m', as Crow said, each of the new cells will have to be much cheaper than current macrocells because there will be fewer customers per cell.
Saunders also argued that network planning will have to move from two dimensions to three - from the flat hexagons used to lay out traditional cellular networks to 'truncated octahedrons' as the basic unit of a 3D network.
Unsurprisingly, Saunders sees femtocells, the smallest basestations yet, as a key solution to mobile data capacity issue. These self-organising, self-managing mini-basestations use licensed spectrum and mature cellular technology, connect over secure Internet tunnels, and can be managed by the operator. Commercial deployments, such as the SureSignal box Vodafone is offering in the UK, are underway.
For the future, Saunders sees evolutions of the LTE standard to squeeze the last drop out of the available spectrum.
To some extent the mobile operators are victims of their success, bundling unlimited dataplans with smartphones as they attempted to move their customer base upmarket to what they thought would be lucrative new contracts. Unfortunately, the rise of the mobile app meant that customers used much more data than operators predicted.
As Crow put it: 'Wireless networks were brought to their knees by customers running mostly free and inefficient apps at zero marginal cost.'
For operators, the trick now is to work out how they can start making money from customers again, enough money to cover the costs of enhancing their networks to meet the demand.
Houston Spencer, vice president of sales and marketing for network equipment maker Alcatel Lucent Northern Europe, said: 'We need to be making more money making new stuff faster.'
He said that 20 years ago, making the technology work was hard and making money was incredibly easy: 'Now it is the opposite way around. The idea of the industry being profitable is not a technology problem - just doing technology innovation won't get us there. If all we focused on was selling kit then we would be in the middle of an unwinnable arms race.'
Spencer argued that telcos can achieve more by cooperating with app developers and device makers.
'Everyone wants a piece of innovation and everyone wants a piece of the value that innovation brings,' he added. 'Now we get 86 per cent of our revenue from 31 per cent of traffic and we're all saying 'Let's sell more of the unprofitable stuff'.'
Spencer called for a 'two- sided' business model where telcos make money from both of their business relationships, that is with both app suppliers and app users, and apps developers work with telcos to make use of features in the network.
'People can do the big blinking-light infrastructure but can't get apps developers to work with telcos,' he added.
Jean Louis Fuccellaro, CEO of Orange Labs, added: 'I don't think this is a lone player industry any more. We need to collaborate at the beginning for the end customers.'
David Cleevely, chairman of Cambridge Wireless, added: 'Putting a man on the Moon is nothing compared to making these devices work together.
'The problem of changing business models so consumers take decisions based on the utility and cost of providing the services are as complex as making the network work.'