On the menu - data crunch followed by spectrum crunch

The Insider attended the Mobile Asia Congress in Hong Kong this week. It is supposed to be the Asian version of the wildly successful annual pilgrimage to Barcelona, otherwise known as the Mobile World Congress, but it pales in comparison. Not because of the conference agenda, per se, but mainly because it does not attract anywhere near the number of attendees, exhibitors or industry celebrities critical for successful networking.

It would be fair to say that the GSMA has struggled to establish MAC in Asia having tried may locations and formats over the years, so it should not come as a surprise that next year the event will move to the center of the eastern telco universe, China, and Shanghai specifically. China Mobile fronted this year as the key sponsor and was well supported by the two Chinese supplier powerhouses, Huawei and ZTE. Moving the dates to coincide with Asia’s biggest comms event, CommunicAsia in Singapore, will surely mean MAC will become a purely Chinese event and that may be a good thing.

Coming back to this year’s event, the predominant theme appeared to be quoting big numbers. Right from the opening keynotes featuring Anne Bouverot, the GSMA’s new Director General and the CEOs of Axiata, NTT DoCoMo, China Mobile and Testra, attendees were bombarded with uber-impressive numbers. 6 billion mobile subscribers, with 3 billon in Asia alone by early 2012. Of these, 1 billion will be 3G HSPA connections in 2012 and there will be 300 million LTE by 2015. Embedded mobiles supporting healthcare, transport, automotive and consumer electronics will account for 24 billon connected devices by 2020, etc etc.

Yes, this is a very clever and successful industry, no denying,  but it’s that same success that could lead to its downfall. The exponential growth of data traffic was raised by every CEO presenting as well as the challenges of maximizing the monetization of very limited bandwidth. Ryuji Yamada CEO of Japan’s NTT DoCoMo highlighted that one per cent of users account for 30 per cent of data volume and that his company had implemented traffic controls in peak times to limit them as well implementing data offloading to wifi and femtocells and the introduction of tiered pricing for LTE where usage in excess of 7Gb triggers speed lowering to 128Kb or an increased charged for subsequent 2Gb blocks.

Jamaludin Ibrahim, CEO of Axiata stated that OTT players and operators both bring value to customers but the challenge was how both could how to both benefit. He was critical of application and smartphone developers who did not seem to care what impact their products had on the network and network performance. “Devices,” he said, “were one of biggest factors in customer satisfaction, but we have no control over them.”

Highlighting the issues seems to be the norm these days but solutions seemed to be few and far between. The drive by the GSMA to foster new revenue streams in areas like mobile health, mobile banking, mobile payments, the connected car and other M2M areas are admirable but with the ever-increasing data traffic and limited spectrum availability you would think our priorities might need to change, and quickly.

Perhaps the surprise speaker, at least for The Insider, was none other than the harbinger of ‘net neutrality’ and constant subject of derision, Julius Genachowski, Chairman of the USA FCC. Despite his first twenty minutes of ‘big number quoting’ he finally got to the spectrum challenge and, surprisingly, outlined what his administration was proactively doing to address the problem. The spectrum ‘crunch’, as he called it has been brought about the 24 times data demand by smartphones over feature phones and 120 times for tablets. In order to release more spectrum, a national broadband plan has been put in place, ostensibly to buy back spectrum, with analog TV coming first. Voluntary incentive auctions were being proposed with spectrum being supplied by existing holders who would get a share of the proceeds from its resale. Up to 100 Mhz of good quality spectrum is expected to be recovered this way. Genachowski also advocated the sharing of spectrum and offloading traffic to unlicensed spectrum like wi-fi or ‘super wi-fi’ over larger areas from the release of more unlicensed spectrum.

All good stuff, but even the move to 4G LTE technology, which has a three-fold increase in bandwidth utilization over DC-HSPA, we should probably be looking for much higher spectrum optimization pretty soon. At the current rate we will either run out of wireless bandwidth or its cost will be too inhibiting. It may be premature to put down wi-fi with fixed line connectivity or even community Wi-Max, but who will make the money there? Certainly not the mobile operators!