Traffic delivery costs must fall


With mobile data traffic growing and revenue per gigabyte falling, operators need to reduce network carriage costs by 50% or they will face an insurmountable eight-fold increase in the costs of radio access network (RAN) equipment, according to a new report from Analysys Mason.

The report, ‘The case for Wi-Fi offload’, predicts that if operators in Western Europe simply try to meet the growing demand for data traffic by deploying more base stations, RAN costs could rise to $40 billion per year by 2016. This compares with $5 billion per year in 2011. 'Operators can’t afford to spend that sort of money,' said Terry Norman, co-author of the report and lead analyst for Analysys Mason’s Wireless Networks research programme.

'Therefore, operators will either accept network congestion or use pricing to control demand; neither are good business practice. The elegant solution is to make substantial efficiency improvements.'

One way to reduce network carriage costs, which is attracting a great deal of interest from mobile network operators, involves carrying a proportion of the traffic on a cost-efficient small cell. 'Because Wi-Fi is widely deployed and competitively priced, it is a leading candidate small cell technology,' Norman explained.

'The costs of indoor and outdoor Wi-Fi are both significantly lower than those of upgrading to 4G,' Norman added. 'In Western Europe, operators need to save $30 billion in mobile access network costs between now and 2016. Wi-Fi would go a long way towards making up that deficit because it costs only about 20% of an equivalent macro deployment.'

However, a Wi-Fi approach presents residual challenges, such as site accessibility, and maintaining the quality of product and service


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