Leading mobile operators have said they want to cut down drastically on the number of new base stations they deploy.
Speaking on Thursday at a Next Generation Mobile Networks (NGMN) meeting at the CeBIT technology fair in Germany, senior executives said flat-rate mobile-data tariffs meant usage was set to increase at a far greater rate than operator revenues. Therefore, they said, they would have to drive down the cost of providing mobile data connectivity if they were to continue to make money.
NGMN is an alliance of mobile operators, academics and manufacturers trying to co-ordinate their progress towards future mobile technologies, such as the long-term evolution (LTE) of 3G. Such technologies are expected to deliver data rates of over 100Mbps (current HSPA technology provides 14.4Mbps) and latency of under 20 milliseconds (current technology offers 70-millisecond latency), but it currently seems likely that applications providers, rather than operators, will benefit most from this improved connectivity.
"We will see a complete decoupling of traffic and revenues," warned the chief executive of T-Mobile International, Hamid Akhavan. "It is only a matter of time before we lose all profitability on mobile data. In the past, user experience has been driven by the average traffic on a cell site. Today it has to do with how much peak traffic you can carry in a cell."
Akhavan explained that the cost-per-bit of handling such traffic could be lowered through better spectral efficiency and simplified network architecture. However, he also said it would be essential to re-use "existing assets", adding: "The world doesn't need any more cell sites".
"Site acquisition [for deploying base stations] is more difficult these days," said Hartmut Kremling, the chief technology officer of Vodafone Germany. "We need a technology based on existing density. Backhaul for [mobile base stations] is already very challenging — increasing the number of sites will [exacerbate] this dramatically."
We will see a complete decoupling of traffic and revenues. It is only a matter of time before we lose all profitability on mobile data
Hamid Akhavan, T-Mobile
Kremling added that there were also environmental considerations regarding base stations, as 80 percent of energy consumption within the mobile industry is "caused by the radio network".
The ongoing deployment of mobile base stations — or, as they are more commonly referred to, masts — has already become an uncertain issue, as several operators have recently drawn up network-sharing agreements to increase coverage and drive down costs. The issue is also highly emotive for some people who claim there may be unknown health implications of mast usage.
Clarifying his comments on the issue, Akhavan said later in the meeting that "it is impossible to say there will be no new [base station] sites" because, for example, some areas still lack any mobile coverage at all. However, he suggested that new technologies such as LTE would reuse around 80 percent of current sites, and only a "very small number" of new sites would be added.
T-Mobile recently announced it was investing in Ubiquisys, a UK-based company that makes femtocells, which are mini-base-stations that can be installed in homes and offices to route cellular data onto fixed-line networks. This increases in-building coverage and eases the pressure on the cellular networks. On Thursday, Akhavan said femtocells could form part of the initial rollout of LTE, which he said would start in 2010.
However, the chief technology officer for Texas Instruments, Bill Krenik, warned at the meeting that at present "there are a number of issues regarding femtocells". He suggested that these included "interference issues", as well as cost and power consumption.
According to Matthias Reiss, the head of LTE for Nokia Siemens Networks, mobile traffic will increase a hundredfold by 2015, by which point 70-90 percent of the world's internet traffic will be handled via mobile connectivity. The industry expects mobile data usage to overtake fixed usage by 2012.
