Reality Check: 3G is capable of meeting the growing demand for data

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.
Even as we stand on the cusp of the first LTE market launches in a rapidly-expanding era of mobile broadband, voice services retain an incredible amount of mindshare among wireless industry executives, and with good reason. Currently, 70% of wireless operator revenues worldwide come from circuit-switched voice services and 75% of wireless data revenue is generated from mobile messaging.
Existing voice networks will remain an extremely important asset for operators until IP-based voice services can offer the same kind of performance and user experience at the same or less cost as GSM, WCDMA and CDMA2000 1x. Additional mandated services, such as E-911 and CALEA, also demand a level of reliability that will factor into these decisions. We’re reminded that current voice networks will also play a critical role in how and when operators will deliver carrier-grade VoIP and messaging services over next-generation broadband networks.
Meanwhile, global mobile data traffic is expected to double every year through 2013, making investment in data networks vital to accommodate this growth. According to Cisco, video will be responsible for the majority of this traffic growth, accounting for almost 64% of the world’s mobile traffic by 2013. To meet this demand for mobile data traffic, laptop PC cards, USB dongles and broadband-enabled handsets with higher 3G speeds will drive over 80% of this global mobile data traffic by 2013.
Right now, around a dozen of the world’s 312 CDMA operators have committed to a 4G technology, and only a handful of those are actively deploying their networks. Just as we’ve seen with Telstra’s high profile commitment to the long-term HSPA technology roadmap recently, many CDMA2000 operators will also rely on EV-DO for many years to come. The makeup of their future networks will largely be dependent upon four areas: market demand, device availability, access to capital and availability of spectrum.
In the United States, we have three large operators who are leading the push for next-generation OFDMA technologies because they have the demand, spectrum and capital available to justify the investment. Accordingly, they will create and drive the market demand and ecosystem for Mobile WiMAX and LTE that will encourage a wide selection of multi-mode, multi-band devices.
For the majority of the remaining CDMA operators who don’t immediately have the demand, spectrum or capital for 4G services, the CDMA2000 evolution path provides a very economical and flexible solution for both voice and data to meet their unique needs on a case-by-case basis. With the explosion of mobile data in the coming years, network capacity becomes an obvious primary concern.
CDMA2000 1x Advanced is a key upgrade to operators’ existing core networks, with software and hardware enhancements that can quadruple voice capacity. As a result, operators can free up one of their 1.25 megahertz voice channels for 3G mobile broadband services, including a component of the EV-DO Rev. B standard called Multicarrier EV-DO. By aggregating EV-DO Rev. A channels with a software upgrade, an operator can either triple their speeds on both the downlink and uplink, or double their network capacity at existing speeds.
Within the CDMA ecosystem, China Telecom is rapidly becoming an influential market driver. In a little more than six months, the operator has brought 3G CDMA services to over 500 cities and is selling more than 600 CDMA2000 device models, of which about 200 are powered by EV-DO Rev. A. Thanks to its significant network investments, its successful ability to market 3G services and a broad selection of devices, China Telecom is now adding around 2.5 million new CDMA2000 subscribers per month.
With this success, it’s no surprise that China Telecom is already looking ahead. The operator has committed to deploying LTE services within the next few years, but beforehand is extending the value of its existing 3G CDMA network by upgrading to EV-DO Rev. B. Commercial testing is already underway in Shanghai using USB modems provided by Huawei and ZTE, with the expectation that China Telecom will upgrade its entire network software to Multicarrier EV-DO by the end of the year. As a result, Chinese CDMA users will experience peak downlink speeds of 9.3 megabits per second and uplink speeds of 5.4 Mbps.
What’s more significant, however, is the impact that China Telecom’s commitment to EV-DO Rev. B will have on the ability to create a device selection that other CDMA2000 operators can draw from. Other carriers who have publicly committed to Multicarrier EV-DO upgrades, such as KDDI in Japan and Wana in Morocco, will benefit from this expanded ecosystem. As we’ve seen with other technology launches, other operators tend to fall in line once one large operator takes the first steps.
The same will be true with LTE and Mobile WiMAX. Dual-mode devices with EV-DO Rev. A and Mobile WiMAX capabilities are already offered through Sprint Nextel and Clearwire. Similarly, multi-mode devices with CDMA2000 1x, EV-DO Rev. A and LTE will eventually become available through the procurement efforts of Verizon Wireless.
These next-generation network buildouts will take time, and not everyone will have the resources available to deploy them. Nevertheless, with the mobile broadband era already upon us, 3G enhancements are available to handle the load.
Sources: Average of Informa Telecoms & Media, “Mobile Industry Outlook,” 2008 and Strategy Analytics, “Global Cellular Data Market Forecast (2001-2011),” 2007.
Source: Strategy Analytics, “Wireless Media Strategies,” October 2008.
Source: Cisco Systems, “Visual Networking Index,” January 2009.