Editor’s Note: Welcome to our weekly Reality Check column. We’ve gathered a group of visionaries and veterans in the mobile industry to give their insights into the marketplace.
As operators continue to invest in 3G technologies and examine options available for 4G, three things are top of mind: market demand, access to capital and availability of spectrum.
With a “data tsunami” upon us, the demand for mobile broadband solutions to address the exploding consumption of data is evident in many markets. In Asia, Europe and North America, 3G technologies are being upgraded and 4G deployments are beginning to be commercialized.
Many operators are seeing tremendous profits from 3G voice and data services, typically achieving new quarterly records for data revenue. That money is paying for investments in LTE and Mobile WiMAX, as well as being reinvested in 3G networks.
However, one area where most operators around the world are still facing a huge challenge is with spectrum. In many cases, spectrum availability is limited or depleted, government is retaining tight controls on allocation, and politics are influencing fair distribution. Frequently, it’s a situation that is out of many operators’ control.
Additionally, many operators are finding that the spectrum they do have is making it cost-prohibitive to deploy 3G services outside of major urban centers. Higher frequency bands require more base stations to cover a larger area, which can present a negative return on investment in rural areas.
Thinking outside the box
With these spectrum challenges, operators need to explore outside of their comfort zones, perhaps even looking beyond their traditional technology areas. In this era of mobile communications, it’s clear that one technology does not (or can not) fit all. Operators must be flexible in their technology decisions to make sure they are serving the needs of their customers.
This has become most evident recently in India, where operators Tata and Reliance have become so constrained by limited spectrum availability for CDMA2000 that they are now also offering GSM voice services. By offering affordable GSM voice services nationwide, they can focus their limited CDMA spectrum towards mobile broadband services in urban centers.
Another solution is to look at alternative frequency bands. In essence, spectrum has become a 21st century land grab, with operators seeking to gain as much of it as they can so they can deploy whichever technology makes the most sense to address data demand.
KDDI Corp. in Japan has taken this approach, acquiring as much spectrum as possible to deploy multiple mobile broadband technologies, including EV-DO, WiMAX and LTE. KDDI is currently deploying multicarrier EV-DO, part of the Revision B standard, and plans to augment its EV-DO and WiMAX offerings with LTE by the end of 2012, using 850 MHz and 1500 MHz spectrum bands.
With chipsets incorporating an ever-expanding range of frequencies, multi-band devices are also available to utilize multiple networks. As LTE deployments ramp up, the device ecosystem will expand accordingly with multi-mode devices that utilize varying flavors of 3G and 4G technologies.
450 MHz offers widespread coverage
In many developed and emerging markets, one frequency band that is gaining a lot of interest is 450 MHz spectrum. Identified for IMT-2000 services in 2007, the 450-470 MHz band operates at a lower frequency with attractive propagation characteristics, allowing fewer base stations to cover a given area, reduced capital expenditures and cost-effective delivery of services to both rural and urban regions.
With these benefits in mind, it’s no surprise that the number of CDMA2000 networks running on the 450 MHz band (also called CDMA450) has grown rapidly. There are 117 CDMA450 networks operating in 62 countries, delivering 1x and EV-DO Revision A telephony, mobile broadband, multimedia access and location-based services.
Operators in Europe have found 450 MHz to be an ideal frequency for covering the varied terrain that is prevalent in areas like Scandinavia, Eastern Europe and Russia. Specifically, they are using the propagation characteristics of the lower frequency to cost-effectively deliver 3G mobile broadband to sparsely populated areas, many times offering no voice services at all.
In one unique case, KPN, an operator in the Netherlands, is using 450 MHz exclusively for machine-to-machine applications, including smart meters for two of the nation’s utility companies. Several operators have also announced their intention to explore using LTE in the 450 MHz band as well.
The digital divide in emerging markets
It’s also important to note that, despite the growth in wireless data usage, only 20% of the world’s subscribers are using 3G mobile broadband technologies such as EV-DO, W-CDMA and HSPA. The reality is that, even in developed markets, many operators have yet to deploy 3G data solutions.
As a result, there is still a tremendous need in emerging markets for basic telephony and Internet services, especially in rural areas. In many cases, these services have never been introduced because the cost of deploying wireline technologies has been cost-prohibitive.
The cost of deploying 3G technologies has been lowered enough to justify covering underserved areas wirelessly, so long as the business case for using valued spectrum is also strong enough. This effort has also been hindered by political obstacles, such as delayed 3G spectrum auctions in India and China: half the world’s population was unable to legally have access to 3G mobile broadband services until this year.
With increased interest in bringing fixed and mobile voice and data services to Latin America, a number of operators and regulatory bodies are moving forward with the use of the 450 MHz band in Argentina, Chile, Ecuador, Mexico, Peru, Suriname and Venezuela.
Most recently, Brazilian regulatory agency ANATEL announced plans to clear and allocate the 450-470 MHz band for delivery of the full range of 3G voice, data and multimedia services throughout Brazil. By doing so, the spectrum will be used to more effectively deliver fixed and mobile telephony and broadband data services to both rural and urban regions.
The demand for voice and data services is not slowing down and the digital divide is still a challenge in many regions, while spectrum remains a limiting resource. Moving beyond the “one technology fits all” mindset requires operators adopt a multi-band, multi-mode approach to network management that may also mean creative use of the spectrum available to them. In some cases, a lower frequency band like 450 MHz can provide some much needed relief and affordable 3G coverage in spectrum-constrained countries.
Perry LaForge is executive director of the CDMA Development Group (CDG).
