According to UK regulator Ofcom, we have become a ‘smartphone nation’, ultra-connected night and day via the magic of mobile technology. But the evidence suggests that the UK is falling behind the rest of the world in providing the kind of networks needed to support the explosion in mobile device usage and data consumption.
In October 2011, Ofcom announced that it has been forced to delay the UK’s 4G spectrum auction by six months, saying that a further round of consultation is required after receiving ‘substantial and strongly argued responses’ during the first round. As has been widely reported, the auction for spectrum in the 800MHz and 2.6GHz bands was initially delayed due in part to the change in government and the lack of agreement between mobile operators and Ofcom
Additional alterations to the original schedule have seen the timetable slip from the first quarter of 2012 to the second and, in light of Ofcom’s announcement, the auction will not take place until the fourth quarter. Ofcom claims that the deployment and launch of Long Term Evolution (LTE) services in the UK need not be delayed, as spectrum would not be released until 2013 anyway. However, as reported in the media, operators say that with an auction not taking place until the end of 2012, it is unlikely that LTE services will be launched in the UK much before 2014.
This poses something of a challenge for the industry as many observers, including Virgin’s CEO, believe that traffic levels will double; due to the rapid evolution of the smartphone and M2M markets and the resultant increase in demand for data-heavy applications and content. Cost conscious consumers are taking particular care when choosing mobile services; resulting in slower than expected adoption of newer, faster products. But as the smartphone market continues to make data-heavy consumption a de facto part of mobile contracts, this trend will only rise. And it’s not just Virgin that predicts such exponential growth. Luminaries such as ’father of the internet’ Vint Cerf predict exponential and continued growth of the internet and web services; all of which must be facilitated by already overstretched networks.
All this in the midst of a growing row over existing network speeds; the industry is now clamouring to find a meaningful solution to the issues of universal broadband provision and speed, and all eyes are turning to 4G / LTE to provide the answer.
The importance of ‘Superfast Broadband’
You can usually tell how significant a technology is likely to be by noting BT’s reaction. In October of this year, BT set out its superfast broadband intentions stating that its Everything Everywhere initiative (launched jointly with Orange and T-Mobile) would mean 4G trials would provide a viable broadband alternative for those in rural areas. 4G has now, undeniably, become a lynchpin in BT’s rural broadband strategy but delays to spectrum auction won’t see a launch any time soon.
4G not only helps support today’s technologies, internet, email, phone and video traffic but also allows higher quality consumption; something that consumers are demanding more and more of. As VoIP moves to deliver ISDN-grade calls, video conferencing moves into HD technology, emails support large photos and other big attachments and the internet is used for the download of large files and software, the networks are groaning under the strain. 4G alleviates this strain by allowing the provision of high-speed services, delivered over a wider spectrum.
At the time of writing, 3G coverage stands at approximately 75 per cent of the country but, as revealed recently by the BBC, coverage remains patchy in some areas and is by no means guaranteed.
The BBC study showed that, overall, people are getting 3G approximately three quarters of the time, but coverage is nothing like as good as the operators would have you believe. Most city-dwellers will have great coverage but there will be certain places, even near city centres, where some if not all the networks are just not providing a decent connection. The overall conclusion is rural areas, whilst struggling to obtain fixed-line broadband, are also suffering as a result of patchy 3G coverage.
The Business Case for 4G
According to a recently published report on mobile data consumption by Allot Communications, UK data consumption increased by 77 per cent in the first half of 2011, with video streaming increasing by 93 per cent overall. This increase makes mobile video streaming the biggest culprit in terms of data consumption, with a 39 per cent share. The report shows the majority of all video streaming comes courtesy of YouTube, with the video giant accounting for 52 per cent of that total. Not only does YouTube account over half of all video streaming, it’s responsible for 22 per cent of all mobile bandwidth usage, making it by far the most popular mobile destination. What this report shows is that mobile consumption is far exceeding expectations and there’s an enormous revenue opportunity here for networks, service and content providers alike.
4G is much more than high access speeds — it is a new network paradigm. Unsurprisingly, 3G operators are learning that future average revenue per user (ARPU) does not come from traditional services like voice services but data services such as mobile, video, music, games, Internet access, navigation and messaging (SMS and MMS) are the path to greater profits. The trend is unmistakable and leads to more services that exploit infrastructure offered by future advances in technology.
Faster is Better – Be Prepared
Broadband provision over FTTC or FTTH is suffering as a result of a number of factors: cost of tunnelling into hard-to-reach areas; perceived lack of funding; and low uptake in some rural areas. Network initiatives, such as the connection of 50,000 new build properties to Fluidata’s broadband network, which give inexpensive access to rural areas via existing networks, are providing the solution in some areas but, where a need is identified where networks can’t reach, alternative solutions are critical.
Satellite can plug some of the gaps and the Government’s rural funding pledge will connect more areas but, the reality is, mobile networks are amongst the more far-reaching and, therefore, offer the promise of ubiquitous coverage in even the most remote areas.
The reported delay to the spectrum auction and rollout of 4G networks in Britain is costing businesses an estimated £732m a year and so finding a solution is imperative.
When 4G becomes a reality in Europe, this should open the door for the industry to create a new breed of products and services but one final consideration should be its ability to deal with perennial problems of service contention. Will 4G deliver the same varying mobile broadband speeds depending on the time of day? Currently download speeds can vary by as much as 25 per cent at peak periods and in high density urban areas and with limited backhaul capability resulting in slower data delivery. It could be that the power that 4G possesses may remain locked if technology can’t deliver.
Piers Daniell is MD of service provider Fluidata