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Carriers Face a Tough Decision

Tue, 03/13/2007 - 8:33am
Nancy Maas
Editor-in-Chief
It is a well known fact that cellular carriers have invested a significant amount of money to improve mobile data revenues as a way of compensating for declining voice revenues. However, if mobile operators continue to stimulate data growth through competitive pricing and enticing applications, there will be a hefty price to pay in order to remain a key player. It’s really like a Catch-22. As carriers invest in the deployment of 3G networks, the amount of capital needed for additional networks as well as the associated power consumption required to deploy such networks will continue to rise. A conflict will definitely arise between the need to consume power and the need to deploy mobile broadband networks.

According to an ABI Research report entitled Energy Efficiency Analysis for Mobile Broadband Solutions, energy costs represent the third most significant operating expense (OPEX) for cellular carriers, plus the constant fluctuations in energy costs can make business forecasting rather difficult. The study goes on to suggest that the move to higher data rates means that the energy required per subscriber arising from increasing data consumption will push the per-subscriber energy OPEX for cellular solutions past acceptable levels unless carriers move from a traditional cellular only approach to one that integrates WiMAX and Metro WiFi. It concluded that the best way to support mobile broadband will be to integrate current cellular offerings with target WiMAX and Metro WiFi deployments in dense high traffic areas.

Stuart Carlaw, director of wireless research at ABI, says that from a pure coverage perspective WiMAX is twice as energy-cost-effective and Metro WiFi is 50 times more energy-cost-effective than WCDMA. When data traffic is factored into the equation, WiMAX can accommodate 11 times today’s average data consumption and still be more energy cost-efficient compared to WCDMA or HSDPA.

Clearly power consumption will force carriers to reassess their mobile broadband technology options. Total energy consumption as a result of mobile broadband service delivery is forecast to grow from 42.8 billion kilowatt hours in 2005 to 124.4 billion kilowatt hours in 2011. As data consumption continues to grow, capacity degradation of networks will occur and carriers will need to either replace or install the necessary network components required to support these upgrades. It’s quite possible that this could result in a wash, canceling out any potential benefits carriers may realize from data revenues.

When I hear such figures, it makes me shutter. Our energy consumption and reliance on foreign sources of energy continues to be a critical concern for this country. For the sake of our economic future and security, let’s embrace the power of technology and innovation and use it to our advantage. If creating mixed networks, integrating WiMAX and Metro WiFi, will deliver a significant savings financially and a reduction in power consumption, let’s not hesitate, let’s move forward and develop the technology to its fullest potential. Sure there will be obstacles to overcome implementing this combined approach, but that never discouraged development in the past and it shouldn’t now.

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