Andrei Dulski, marketing manager, Radio Networks at Ericsson, looks at the ways in which 3G is now providing a viable alternative to fixed-line broadband speeds, and how operators can capitalise on developments in the broadband market
The internet revolution has created huge demand for broadband access around the world, and has made it one of the fastest-growing telecom services — with an estimated 175 million subscriptions worldwide today and an anticipated growth rate of more than 20 per cent per year over the coming years.
The residential broadband market in Western Europe has exploded in recent years, driven by falling prices and a strong supplier push. Forrester Research predicts that 41 per cent of European households (72 million households) will have broadband access by 2010.
This rapid take-up of broadband is good news for operators and online businesses. On average, broadband users spend twice as long on line as dial-up Internet users and, more importantly, they spend more — being more likely to shop or bank online — according to Forrester. The most popular activities are e-mailing, researching and booking travel and holidays, and downloading music.
In parallel with the growth in broadband, laptops represent the fastest-growing PC segment — indicating a strong end-user desire for mobility — while 3G mobile networks are being rolled out on all continents.
There are now 82 WCDMA networks serving customers in 37 countries, according to the Global Mobile Suppliers Association (GSA). By the end of July 2005, there were approximately 31 million WCDMA subscribers, with two million being added each month, according to Informa Telecoms & Media.
Despite these high growth rates, the European Commission (EC) is concerned that many Europeans may miss out on the broadband revolution. In a recent statement, the EC said that as many as five million would-be users could still be without access to broadband services in 2013.
With affordable broadband access critical to the EC i2010 strategy for boosting economic growth and jobs, the Commission is focusing on how to get the technology to rural, remote and other under-served areas. According to the EC, around 15 per cent of the population is currently excluded from broadband deployment in the relatively advanced EU15 countries – this figure is likely to be higher in the ten new accession states. What’s more, broadband service coverage is concentrated in built-up areas: only 62 per cent of the rural population in the EU15 countries has access to broadband, compared with 90 per cent access in urban areas.
Evolved 3G networks could hold the key to bridging this digital divide.
Everyone, everywhere
With 3G technology, it is possible to bring broadband connectivity everywhere for everyone over wireless networks. Mobile broadband provides a fast, always-on Internet access to laptop users wherever they are over 3G technology, at a cost comparable to that for fixed services.
New developments in 3G mobile technology will enable mobile broadband services to be delivered with bit-rates comparable to ADSL (Asymmetric Digital Subscriber Line). Such services will help enterprises increase productivity by making all kinds of information and applications available wherever and whenever mobile workers need them. Consumers will be able to access Internet-based information and entertainment services wherever they desire.
3G already offers data speeds similar to some fixed broadband access service offerings. With evolution towards HSDPA (High Speed Downlink Packet Access) for WCDMA, we shall see peak downstream data speeds of 14Mbit/s, mainly through software upgrades to existing networks. What takes minutes to download today takes seconds with evolved 3G networks. For example, at 2Mbit/s, a one-minute audio file takes four seconds to download, while a 200KB presentation file takes less than two seconds, and a 30KB JPEG image takes just a fraction of a second. The next 3G development, HSUPA (High Speed Uplink Packet Access) will make broadband data rates available in the other direction – enabling fast e-mail and file uploads and high-quality videoconferencing. In May, Ericsson and 3 Scandinavia demonstrated HSUPA for the first time in a live WCDMA network based on commercial products.
The first commercial mobile broadband services in Europe based on HSDPA are expected in 2006.
Ericsson believes the first user terminals for HSDPA will be PC cards. This is natural, since PC cards are easy to implement and give consumers high-speed Internet access from their laptops wherever they are. Initial HSDPA PC cards, supporting data rates of up to 3.6Mbit/s, will be available in the second half of 2005. Early 2006 will see the introduction of HSDPA into smart-phones, as well as the availability of second-generation PC cards. We are likely to see HSDPA integrated into laptops in 2007.
Extending the reach of mobile services
The significant increases in data rates and system capacity enabled by HSDPA and HSUPA mean mobile operators can expand their service offerings, even to include low-revenue-per-megabyte services. Such broadband services already have proven mass-market appeal in both the enterprise and consumer segments, and offer significant new revenue potential to mobile operators.
In the past, technical limitations have restricted capacity and pushed up costs. This has led mobile operators to focus their attention on a variety of data services that generate high revenue per megabyte of traffic. Evolved 3G networks with their broadband data rates and improved capacity will greatly reduce the cost of delivering data services. A key attraction of 3G is its ability to mix services of different characteristics — helping operators ensure that spectrum and network capacity are always being used profitably. Mobile broadband successfully creates permanent ‘background’ data traffic that uses operator assets to generate revenue. Prioritisation mechanisms provide operators with the means to allocate capacity instantaneously to high-revenue-per-megabyte services, such as voice, while also ensuring that spare capacity in the network is utilised.
Expanded offerings
Mobile operators will be able to expand their broadband offerings in the same way as fixed operators have. A range of add-on services that are directly linked to the broadband service can be used to generate additional subscription-based revenue. These services might include e-mail, web hosting, virus protection and network security. For small and medium-sized enterprises, operators can offer hosted and managed solutions, including security and authentication services needed for accessing corporate networks, for example.
In all likelihood, the fastest growing, most price-tolerant — and most profitable — segment for mobile broadband services will be corporate users. Mobile broadband is seen to be an important driver of productivity: IT departments are keen to have access to the higher speeds that will enable workers to access corporate networks wherever and whenever necessary. Ericsson expects to see a wide range of industries adopt mobile broadband for their workforces.
While the corporate segment values mobility, it also welcomes flat-rate pricing schemes that enable costs to be predicted and managed. In a recent study performed in Sweden, it was found that Swedish IT and manufacturing companies are willing to pay more than EUR660 per employee per year for mobile broadband services.
Driving mobility
Consumers also want mobility, but their need is not as pronounced as that of enterprises. The increasing popularity of laptop computers will fuel demand for mobile broadband. There is already considerable interest in the short-range micro-mobility enabled by technologies such as WiFi. Mobile broadband will transform this micromobility into true mobility, relying on 3G for connectivity in every situation — whether at home, on the move, indoors or outdoors.
Consumers are also less willing to pay a significant mobility premium. But some segments — such as one-person households, students and mobility-oriented consumers — will appreciate the mobile operators ability to offer bundled mobile telephony and broadband service packages. Combined offerings of this kind, which address an individual’s total communication needs, will also enable mobile operators to seek a bundling premium – justified by the increased simplicity, ease-of-use and combined invoices that appeal to consumers.
Evolved 3G networks will not only enable mobile operators to offer enhanced mobile broadband services to enterprise and consumer customers. They will also enable operators to address the ‘traditional’ residential broadband market using 3G fixed cellular terminals.
As far as the residential customer is concerned, there is no difference between broadband access delivered over copper and one delivered over a cellular network. The fixed wireless broadband access service — terminated in stationary customer premises equipment (CPE), or 3G modem — is comparable to any conventional broadband service based on DSL or cable.
Because they are stationary, and not mobile, fixed 3G modems can deliver high output power and be equipped with high-gain antennas to significantly improve bit-rates and radio efficiency in both the uplink and downlink over wide areas. Today, many fixed network operators have great difficulty delivering ADSL services in rural areas, where the length of the local loop means DSL services cannot be supported, and the cost of bringing fibre closer to the customer is prohibitive. By contrast, mobile operators relying on 3G can successfully deliver broadband connectivity services with high bit rates over wide service areas. In rural areas, this approach might actually be the only cost-effective solution to offering broadband services.
A similar approach can be used in urban and suburban areas to deliver broadband to the home or to the small office. High site density makes it easy to handle capacity limitations using additional carriers or increased antenna sectorisation. In this way, operators can provide high bit-rates even when usage and service penetration levels are high. The main benefit over traditional broadband service provision is the avoidance of the existing copper network with its associated high maintenance costs, as reflected by the current local loop unbundling fees and, in some cases, insufficient quality for providing DSL services.
An important area to be considered when evolving 3G networks is the ‘second-mile’ transmission network. Mobile operators can enhance the business case for mobile broadband services by leveraging existing transmission infrastructure and upgrading it in a targeted, cost-effective way as capacity needs increase. Here, microwave transmission solutions offer operators a great deal of flexibility in meeting their needs for capacity enhancement and traffic aggregation.
Ericsson’s view is that mobile broadband services provide ‘high-quality’ revenue potential, particularly as broadband is an already proven, mass-market service with low associated risk. Moreover, 3G mobile operators are in a unique position of being able to extend the appeal of broadband services for consumers and to create a whole new market among enterprises and residential users — even in remote and rural areas.
