Taking the Scare Out of Wireless Bandwidth Scarcity

When it comes to telecom industry truth, the general public has often been the dupe of hype-wizards with an agenda. Remember during the Internet ramp-up when we were told that the packetized nature of IP telecom made it the "inherently best" transport technology?

Never mind the similar efficiencies in ATM packets and TDM multiplexing. By the time telecom-savvy experts arrived to poke holes in the IP superiority theory, ATM's fate was sealed. The IP pre-eminence was firmly entrenched in the public's mind. Case closed.

Today, there's another myth circulating on "wireless bandwidth scarcity." The theory goes that the unprecedented popularity of the iPhone and other wireless Web devices is causing major pain for telecoms — there's simply not enough capacity to serve the overwhelming demand.

And is there some market research to support that claim? You bet. Cisco has published a 2009 report that sheds light on the crisis. And the results of the study have been widely covered by leading publications.

I quote a key study finding from InformationWeek:

"The Cisco report states that smartphones generate more than 30 times the traffic of basic cell phones; laptops with wireless modems [generate] 450 times the traffic."

Wow, laptops with wireless modems generating 450 times the traffic of a basic cell phone? Who would have thought? That statistic certainly suggests that wireless modems are putting mobile operators in a world of hurt.

So how was that 450 number calculated? Not quite sure because I have yet to get my hands on the original study. One reasonable explanation for the hockey stick, however, is that basic 2G cell phones, which operate on circuit networks, use relatively little "data" traffic.

In any case, focusing on the data throughput of the devices misses the point. The key parameter to track is the actual data being generated on live wireless networks. And it's here where the 450 number begins to look squishy. For example, you can buy basic 2G phone service from Virgin Mobile for about $10 month. Verizon Wireless, meanwhile, charges $60 a month for its wireless dongle with a 5 Gigabyte/month limit. So looking at how wireless service is priced, you have a multiple of only 6 to 1, which is a heckuva lot less alarming than 450 to 1.

All of which points to the danger of relying on technical studies to predict market trends.

That's not to say wireless carriers aren't faced with the problem of allocating precious radio access bandwidth, especially during peak hours of the day. It's a key issue to be sure, and TRI thinks the answer is take advantage of techniques like content caching, lifestyle cellular plans, and policy-based charging solutions to better manage the flow.

Still, wireless is a booming and profitable business today, so the wireless bandwidth scarcity theory is probably more hype than reality. But no matter what you believe, modernizing the mobile B/OSS so it's prepared to deal with the new demands of the mobile data world is certainly a winning strategy.

Dan Baker is Technology Research Institute’s (TRI) principal market synthesizer and co-founder. He is a former market analyst at Venture Development Corporation (VDC), where he tracked the telecom and real-time computer markets. In 1992 while at VDC he authored one of the first multi-client research reports on the Advanced Intelligent Network software and systems market. From 2004 through 2008, TRI sold its research reports exclusively through Dittberner Associates. Baker was the research director and principal analyst for reports in the Dittberner OSS/BSS KnowledgeBase.