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Technology Trends: Outlook for 2011

January 25, 2011
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The last year of the decade has clearly been a landmark year for the Indian telecom sector. The government successfully concluded 3G and broadband wireless access (BWA) auctions with spectrum being valued at Rs 677 billion and Rs 300 billion respectively. On the technology front, with private operators finally launching 3G services by end-2010, the wait-and-watch game for this technology came to an end.

Globally, as operators find their feet after the recession, the launch of 4G networks is gaining momentum and this network architecture is supporting demanding applications. The popularity of smartphones and other devices such as tablet computers is exploding in both developed and emerging markets, and there is an explosion of mobile traffic.

Mobile subscribers are now looking forward to better quality of service and a plethora of data applications like live mobile TV, video calling, video and music streaming, videoconferencing, ubiquitous connectivity and more. With these expectations as a backdrop, some key technology trends that are likely to drive the industry in 2011 include an increased pace of 4G network build-out, the continued dominance of 3G networks and the continued growth of the internet as a key utility in 2011, thereby leading to a dramatic increase in bandwidth consumption.

4G technologies 

4G technology – which promises a targeted maximum data speed of up to 100 Mbps, bandwidth flexibility and availability up to 40 MHz, worldwide roaming over multiple networks and spectral efficiency – is expected to be adopted on a larger scale in 2011 by operators in developed countries. Even as mobile Wi-Max and long term evolution (LTE) battle for the pole position as the dominant 4G technology, analysts across the board agree that LTE, Wi-Max and flat architectures will define telecom networks in 2011.

While the single most important similarity between LTE and Wi-Max is orthogonal frequency division multiplex (OFDM) signalling, the two technologies are also significantly different. While both use OFDM access (OFDMA) in the downlink, Wi-Max optimises for maximum channel usage by processing all the information in a wide channel. LTE, on the other hand, organises the available spectrum into smaller chunks. LTE uses single-carrier frequency division multiple access (SC-FDMA) for uplink signalling, while Wi-Max uses OFDMA. A major problem with OFDM-based systems is their high peak-to-average power ratios. LTE opted for the SC-FDMA specifically to boost power amplifier efficiency. Wi-Max’s OFDMA has a peak-average ratio of about 10 dB, while LTE’s SC-FDMA’s peak-average ratio is about 5 dB. The difference also affects the baseband chip because of the need to support two modulation schemes in the uplink.

Although both the IEEE 802.13e (mobile Wi-Max) standard and the evolving LTE standard support frequency division duplexing (FDD) and time division duplexing (TDD), Wi-Max implementations are predominantly TDD. LTE seems to be heading in the FDD direction because it is a true full-duplex operation: adjacent channels are used for the uplink and downlink. LTE can, therefore, quote a better spec for downlink data rates, albeit at the cost of placing very severe latency requirements for forward error correction.

Deploying any new technology, service or infrastructure component affects service provider operations on multiple levels, and the evolution of 4G wireless networks is no exception. The transition to 4G will have a significant impact on network operations. Operators are finding that 4G wireless network deployment is influencing infrastructure design and deployment in four primary areas: radio network, backhaul, service interconnection and content management.

While each area has operational considerations, there are also operations issues between areas as well as general operations issues relating to overall 4G services.

The primary impact of 4G radio network changes on network operations is the commissioning and support of new cells and in linking adaptive radio behaviour down into the network layer. Self-organising radio frequency (RF) networks are not necessarily going to organise at the backhaul and connectivity level, so it is imperative that radio management not only provides operational support system (OSS) and network management system (NMS) interfaces to current operations platforms, but also ensures that the interfaces support process automation between radio layers and the rest of the network.

Operators will also need to support “small cells” (femtocells, picocells, etc.). These small cells will be installed primarily by users and registered with the provider, but they clearly pose a security risk if they are not authenticated. Normal cellular networks might consist of tens of thousands of cells in an entire service area, but there could be millions of small cells, which create a major management surveillance issue and even threaten database scalability.

Nonetheless, despite these and other issues, the expenditure on the wireless infrastructure establishment is expected to reach over $40 billion in 2011 as the industry restarts its network upgradation, which was delayed by the economic crisis, and rolls out LTE and Wi-Max networks.

For LTE, 2011 is going to be a big year with widespread rollouts planned by DOCOMO, AT&T and Verizon Wireless (has already launched in 30 markets). According to the Global mobile Suppliers Association (GSA), there are now 180 operators in 70 countries that are deploying, trialling or evaluating LTE. However, most carriers are likely to stick with tests or small scale “hotzone” rollouts for several years.

Even as LTE gains ground, Wi-Max continues to make steady progress with close to 200 trials under way currently, and a robust ecosystem of devices. Samsung, in collaboration with UQ Communications, a Japanese Wi-Max operator, demonstrated the IEEE 802.16m version of the technology with speeds of 330 Mbps.

The threat that this technology is likely to face will come from TD-LTE, an alternative technology championed by China and Qualcomm, which can operate on the same bandwidth as existing Wi-Max networks. If this technology proves successful, it could see several Wi-Max operators migrating to the LTE standard.

3G 

Although operators in Japan, America and Western Europe are migrating to 4G networks in 2011, many operators in developing countries are still trying to enhance their existing 3G networks and are in the process of extending 3G coverage (India and China, for instance). In fact, 3G networks will continue to be the dominant wireless networking platform of choice throughout 2011 even as 4G networks begin to proliferate in the market, and the demand for faster mobile data upload and download speeds continues to increase. Fewer than 30 LTE carriers in six countries are likely to offer commercial services by the end of 2011. The adoption of 4G might be slower than expected because some mobile providers have not fully utilised their existing 3G spectrum. Therefore, 3G network technologies will continue to serve as the backbone for the majority of mobile data traffic for the next few years to come as operators leverage their current investments in 3G networks and still unutilised 3G spectrum.

Demand for mobile bandwidth is driven by broadband applications and this, for the time being, will be satisfied by operators via HSPA. According to a leading vendor, operators can stretch their network by maximising HSPA’s spectral efficiency to bridge the gap with LTE’s bandwidth capacity. This can be done by increasing the number of base station units or upgrading the units’ software. For instance, T-Mobile is at the 3G stage and is likely to continue to focus on enhancing its current platform until it can gain the optimum pricing and spectrum position for LTE in the US and Europe.

In India and China, 3G networks are still being deployed and it will take two to three years before these networks are scaled up on a nationwide basis. Therefore, 3G will dominate the technology landscape in these countries and is likely to lead to an exponential increase in mobile data traffic.

Backhaul 

Capital expenditure on mobile backhaul varies greatly by region and by technology. While most countries face similar current or future struggles to reduce network congestion, the solutions being adopted differ according to existing infrastructure, network generations, and government mandates and incentives.

One major division is over whether to use optic fibre or microwave for the mobile backhaul. Capex for microwave backhaul will peak in Western Europe this year at almost $4.4 billion. The European spending surge is due to the expansion of 3G networks to new areas, as well as a few initial 4G network deployments.

In India as well, with 3G network rollout expected to accelerate in 2011, investment in microwave backhaul would be high even as operators focus on optic fibre rollouts.

Globally, all regions will see some increase in microwave backhaul capex over 2011-13, followed by a gradual decline. However, in China, given the government’s mandate to use fibre for the country’s 3G and 4G networks, fibre will be the backhaul medium. In the US as well, the prevalence of optic fibre cable in many parts of the country combined with the high cost of tower leasing indicates that interest in microwave as a backhaul solution is lower than anywhere else. In fact, according to key operators in the country, microwave is likely to be used only where fibre is unavailable.

Broadband 

On the fixed broadband front, the DSL platform, which accounted for close to 60 per cent of the fixed broadband service revenue, will continue to dominate the segment. However, the growth rate of this technology is expected to slow down due to saturation in most regions. Optic fibre broadband adoption will gain pace in 2011 as well, as operators accelerate fibre broadband rollouts. Optic fibre broadband can provide speeds high enough to offer consumers advanced services such as IPTV, video-on-demand (VoD), and other interactive applications. In fact, according to ABI Research, fibre broadband services will generate revenues of more than $30 billion during 2011. 

Cloud computing 

Cloud computing offerings are expected to accelerate in 2011 as telecom operators invest heavily in data centres, implementing software platforms, and marketing and selling cloud services. With data centre virtualisation being routed through the cloud, a lot of traffic due to the data explosion can be plugged. Currently, cloud computing services exist along a spectrum from open public to closed private.

Going forward, whether it is moving from a private to a public cloud, sharing data centres with other operators or becoming a virtual cloud SP leasing out services as an additional form of revenue, the cloud opportunity is exploding, changing the landscape of information technology. Vendors will offer packaged private cloud implementations that deliver the vendor’s public cloud service technologies in a form that can be implemented inside the consumer’s enterprise. Many will also offer management services to remotely manage the cloud service implementation. These significant advancements will drive stronger adoption and value from the entire cloud computing ecosystem. 

Clearly, globally as well as in India, the sector is heading for another exciting year with new technologies on the anvil (3G in India, and LTE and Wi-Max in global markets). In fact, 2011 will be the year when these technologies move from the drawing board to become a reality with large-scale rollouts. However, existing technologies will continue to hold their own even as newer technologies offering faster speeds and better quality of service are deployed.

 
 
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