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In an industry where on-going price declines have become expected, mobile data traffic almost doubles every year. This means mobile network operators are struggling more than ever to deliver a world-class customer experience profitably.
There are a combination of factors that contribute to why the hype behind small cell volumes has not materialised.
Mobile network operators (MNOs) are experiencing significant growth in the volume of mobile data traffic on their networks following the proliferation of smartphones and new mobile devices which support a wide-range of applications and services. As a result, network capacity is becoming an issue in this age of increased mobility.
There is a general consensus that such growth will continue well into the future. Data traffic in dense urban areas such as train stations, stadiums and city centres is already high and its growth is expected to continue. This growth will also be accelerated by new types of communication services and involved devices; such as proximity services including device-to-device (D2D) communications, machine-to-machine communications (M2M), and the internet of everything. This is in addition to the general uptake of current 4G services that contribute to additional data usage.
We appear to be just at the very start of this unprecedented growth which promises to change the industry forever. We ask how are network operators managing this demand today and propose to deal with it in the future?
Broadly speaking, network operators can expand their network capacity through increased spectrum allocation and through densification of the network, by adding more cells. Small Cells promise to deliver a stepped-change to how networks are designed, built, and managed since the 1st generation of GSM as they form an important underlay network to the macro cellular network, adding much needed capacity in traffic hot spots.
Mobile network operators are struggling more than ever to deliver a world-class customer experience
Considering the problem further, macro cells are nearing their physical limitations – and with bandwidth scarcity – MNOs are turning to small cell deployments as an integral part of a holistic approach to finding solutions to their capacity needs.
Small cells will evolve into Heterogeneous Networks (HetNets) and expand the traditional approach by complementing existing macro cells with a layer of small cells. HetNets enhance the customer experience, improve retention, reduce cost, and unlock new revenue opportunities.
Large-scale small cell adoption has been long awaited and still appears to be 18-24 months from becoming a reality. So why has it been delayed, is traffic growth behind what was anticipated? No, but there are a combination of factors that contribute to why the hype behind small cell volumes has not materialised. Generally, at a time of declining or flat revenues at best, operators have had to become smarter at how they manage their network resources.
We will discuss a number of techniques that network operators are deploying in order to deliver more from their existing network asset, such as;
- Marketing Engagement
- Macro cellular rollout
Operators are getting smarter at managing their available capacity. Whilst network capacity was once the sole responsibility of the engineers in the planning and expansion departments, it’s now recognised to be a company-wide issue. Marketing departments now measure the impact their campaigns and promotions have on the network. The network is no longer seen as an unconstrained asset. Every promotion is carefully monitored, not only to measure its success, but also to ensure it has not brought any unforeseen demand/congestion onto the network.
Where once, network engineers and marketing teams would meet on the battleground for their weekly clash, there is now a mutual understanding in the value each side brings. It may not be the end of the unlimited mobile data plan just yet, however mobile operators are likely to fully assess the impact of such campaigns will have before they launch. Operators are turning this to their advantage through micro marketing campaigns. Identifying locations, time of day, or even specific content where it will drive value but not at the expense of customer experience.
Just two years ago, it was anticipated that small cells would be required for additional capacity on operators 3G network, yet we have seen very little deployment. Instead, operators have been getting smarter and incentivising customers to offload onto other networks.
Telefónica O2 has deployed extensive WiFi throughout London and has seen around 15% of its 3G data traffic being carried over WiFi. Meanwhile, in the last two months, EE has added 1.7 million customers to reach 7.7 million 4G subscribers. They are achieving this through offering very competitive deals for their existing Orange and T-Mobile customers to migrate onto its 4G EE network. This has been successful, and resulted in significant savings in investment on the 3G layer and improving the customer experience for those remaining on the legacy networks.
Cost pressures within the industry, as revenues decline, has forced mobile operators to re-organise and turn their attentions to outsourcing deals, network consolidation and sharing.
However, there has been a comeback for the macro. Deploying a macro cell is still one of the most cost-effective options to deliver additional capacity to the network. To that effect, operators are splitting cells and deploying new macro cells where possible in high-demand areas. Not only delivering additional capacity, this approach forms the foundation for the HetNet architecture.
With the introduction of bigger screens and faster data rates, the adoption of video services has increased and is expected to grow further over the next few years. Current mobile video traffic accounts for around 25% of the total traffic going across an operator’s network. This is expected to increase to around 70% by 2017. Managing increasing volumes of data is not always about adding bigger pipes, densification of the network or adding additional spectrum. Operators are looking at smarter ways to deliver video traffic.
EMBMS (Evolved Multimedia Broadcast Multicast Service) networks offers mobile operators an effective way to deliver the video traffic more cost-effectively when delivering the same content simultaneously to multiple end users. Although the eco-system still has a few years to mature, the technology looks to be an interesting way to preserve precious network capacity.
As more subscribers migrate to 4G networks, there will be a further uplift in data consumption as customers enjoy the enhanced speeds of the network. Vodafone reports that after an upgrade to a 4G subscription, data usage is 2.3x what it was prior to the upgrade. Additionally, a UK consumer’s data usage appears to lag behind what is being experienced in US and Asian markets.
Whilst small cells are a critical step to architecting higher capacity networks of the future, it’s not the sole answer. Mobile Network Operators need to continue to design price plans, educate the customer and ultimately ensure the desired customer experience can be delivered profitably.
Do you think MNOs are ready to prevent capacity issues? Let us know in the comments.