The company J'son & Partners Consulting presents main findings of the analytical report «Mobile Data Traffic Offload: world experience of mobile broadband network offload," which analyzed and summarized the experience of countries actively using different technologies (Wi-Fi, femtocells, etc.) to offload mobile data traffic.
To date, mobile networks in Russia and the world are overloaded with data traffic, and the problem, according to the forecasts, will be relevant for at least several years. Sales of smartphones and tablet PCs are growing rapidly, and such devices add pressure on mobile networks, also due to so-called signaling traffic. Classic 2G/3G networks cannot provide the processing of increasing amounts of data, which results in lower quality and customer loyalty. This can eventually lead to an outflow of subscribers to competitors (for Russia, this problem is exacerbated by the forthcoming introduction of MNP service - preserving the number when moving to another service provider). There are a number of technologies both in radio access networks offload, and in the concept of offloading major networks, which have potential value to mobile operators.
As it was previously noted there are several key factors forcing mobile operators in the world and Russia to implement different technologies offloading mobile traffic. This, above all, concerns rapid traffic increase, which to a large extent caused by the boom of sales of smartphones and tablet PCs.
According to J'son & Partners Consulting estimations, in 2011 total mobile data traffic in Russia reached 247 petabytes (PB), an increase by more than 3 times as compared to 2010. According to J’son & Partners forecasts this figure will increase during the period 2011-2016 by 12.8 times - to 3160 BP (Fig. 1). The share of total mobile traffic in mobile data traffic in Russia will amount to 2-3%.
At the moment, multifunctional smartphones have become more available and demanded in the Russian market, tablet PCs are gaining popularity as well. According to J'son & Partners Consulting forecasts, total smartphone sales in 2015 will exceed 20 million units, or about 2% of global sales. Strong growth in sales of tablet PCs will take place parallel to this. According to J'son & Partners Consulting estimations, sales of these devices in Russia in 2011 increased by 5 times to 1.1 million units, and by 2015 will reach 5.8 million units.
Thus, one of the trends is the increase in the share of Tablet PCs with 3G/4G-modems. The proportion of such devices, according to the retailer "Svyaznoy", in the 1st half of 2012 increased by 2% as compared to the same period in 2011 - to 61%. This trend, according to J'son & Partners Consulting, will increase with the further spread of mobile broadband and cheaper devices and will eventually lead to an increase in the load on the mobile network. The problem is particularly acute in large cities, is which now, according to the results of field studies of independent researches, communication of a poor quality can be observed.
Increase in the number of smartphones and tablets (including tablets with 3G/4G modem) and the subsequent avalanche increase of traffic forced operators to look for a way to offload the network so that voice services and data services can work with an acceptable quality.
At the initial stage of smartphones spread (2005-2006) mobile operators were not interested in the development of Wi-Fi because of fears of cannibalization of services based on 3G. Therefore, large operators tried to lobby for their interests, forcing device manufacturers not to use Wi-Fi in smartphones or "cripple" the technology in the software. Since then the situation has changed, and many of the largest operators actively deploy Wi-Fi networks, including for the purpose of mobile traffic offloading.
One of the main drivers of Wi-Fi popularity has become a high demand for this technology by the users. In many cases, the 3G networks does not provide sufficient indoor signal, and in this case Wi-Fi-access became a good alternative.
The emergence and rapid growth of iPhone popularity greatly facilitated the renewal of use of this technology. Business strategies of the largest operators and vendors concerning Wi-Fi have been revised. In particular:
• The company AT&T in 2008 acquired a hotspot operator Wayport for $ 275 million, which is an
important step in AT&T strategy of the operator expansion to the market of public Wi-Fi access.
• In 2011, Qualcomm acquired Atheros for $ 3 billion. According to the chipset market leader’s
opinion, Wi-Fi should be in every smartphone.
• The operators all over the world are spreading users SIM-authentication to access Wi-Fi. This
procedure was introduced by T-Mobile, Orange, SK Telecom, Korea Telecom, PCCW, China
Mobile, China Telecom, etc. (http://go.radisys.com/rs/radisys/images/paper-dpi-internet-offload.pdf).
The popularity of Wi-Fi among smartphone users is growing from year to year and has now reached significant values. For example, South Korea's consumption of the traffic through Wi-Fi (by the time spent on the network and traffic volume) is about 50%. In the UK, according to Bango, about the half of all mobile web sessions via smartphones are carried out through Wi-Fi. More than 70% of the connections in the Wi-Fi hotspot network of AT&T (U.S.) are initiated from smartphones, by the end of 2Q2011, the number of such sessions approached to 250 million.
According to Wireless Broadband Alliance and Informa Telecoms & Media, in November 2012, the volume of Wi-Fi traffic from smartphones for the first time exceeded Wi-Fi traffic from laptops (40% and 39% of the total Wi-Fi traffic, respectively). The share of tablets was significantly lower and amounted to 17%. (http://www.mobiledevice.ru/wireless-broadband-alliance-smartfon-Notebok-wi-fi-podkliucheni.aspx).
The main advantage of using Wi-Fi to offload traffic is this technology extensiveness in the world.
Thus, according to Strategy Analytics, a quarter of all households in the world now has an extensive Wi-Fi network, in 2016 the number will reach 42%. In the leading countries (South Korea, United Kingdom and Germany), this indicator exceeds 70%. In Russia, the penetration of Wi-Fi in the private sector is below the world average - 22.9%. However, the speed of data transmission in the networks of "home» Wi-Fi, according to Carrypad.com, is only slightly lower than in LTE networks, and by latency indicators Wi-Fi even outperforms LTE (Table 1).
Besides, Wi-Fi standard is widely spread in hotels, public catering companies, public transport, subways, airports, railway stations, etc. According to the study conducted by the Association of Corporate Travel Executives (USA), 80% of corporate managers consider the presence of Wi-Fi access the main criterion when choosing a hotel.
Other advantages of Wi-Fi are the low cost of deployment and maintenance (as compared with 3G/4G networks), high speed of data transfer, work in the unlicensed spectrum in the most of countries.
However, Wi-Fi has a number disadvantages (Table 2). In particular, this technology is characterized by limited capacity, a lot of noise and complex security management, etc. In addition, in the present, in most cases (except for a few introductions of SIM-authentication) access to Wi-Fi point is inconvenient for smartphone users: users have to enter the password and, in some cases, to register etc.
However, despite Wi-Fi shortcomings mobile operators are actively implementing this technology to offload traffic. The largest number of Wi-Fi access points in the world of fixed operator Free (France): 4 million. The ratio of base stations and Wi-Fi access points in this company is 1:4000! The top five also includes China Mobile (2,83 mln), Softbank (0,27 mln), KDDI and Korea Telecom (KT) (0.1 mln each) (Figure 2).
Japanese operator KDDI via Wi-Fi and WiMAX managed to offload 32% of data traffic from smartphones in rush-hour of June 2012. Target indicator for March 2013 is 50% of offloaded traffic.
In general, operators use different strategies to offload mobile traffic. For example, Softbank Mobile is actively using Wi-Fi and femtocells for this purpose, combining them with offload in the range of 1.5 GHz, in which the operator’s DS-HSDPA network functions. France Telecom Orange focuses on the existing Wi-Fi-network (domestic and public) and simplification of user authentication. AT & T, having enough scale of Wi-Fi networks and femtocells, combines paid and free access to Wi-Fi, and provides for the users of packages significant discounts for femtocell equipment (access point). Verizon, in contrast to its rival AT & T, doesn’t widely use Wi-Fi to offload mobile data traffic. The operator believes that Wi-Fi has limited power to offload traffic of makronetworks and focuses on femtocells.
The main trends in the use of mobile data traffic offload through Wi-Fi is the introduction of SIM-authentication (no need to enter a password) and the integration of Wi-Fi in a mobile network.
As shown above, the largest cellular operator in the world is rapidly increasing the number of Wi-Fi hot spots in order to offload cellular networks. Deployment of Wi-Fi networks is more efficient from economic point of view, than expansion of cellular networks. However, most operators do not charge a fee from subscribers for Wi-Fi-access, thereby increasing customer loyalty and reducing the outflow.
Limiting or charging fee for Wi-Fi-traffic, operators run the risk of reducing customer loyalty, encouraging them to manual selection of free public Wi-Fi access points, where possible.
In Russia, the market of Wi-Fi and femtocells as compared to the developed countries is very poorly developed. One of the reasons is related to regulatory problems. Thus, in January 2012, the law of Roskomnadzor came into force charging for spectrum according to a new method developed by the Ministry of Communications. This method does not include Wi-Fi in the number of "promising technologies", so Wi-Fi frequency fee is high.
The costs of radio spectrum and the difficulty to obtain frequencies for the deployment of external (street) Wi-Fi access point are the main factors hindering the development of large-scale Wi-Fi projects in Russia.
The absence of a clear subscribers understanding of the benefits of using femtocells, the second most popular technology of traffic offloading, is one of the main barriers to its wider use. In Russia, the use of femtocells is also constrained by regulatory issues. However, the Russian legislation is gradually adapting to the realities of the market. Thus, the State Commission for Radio Frequencies (SCRF) at the next meeting on Dec. 19 plans to allow the use of femtocells in GSM (900 and 1800 MHz) and LTE (791-862 MHz and 2,5-2,69 GHz) networks in addition to the permission for 3G femtocells (1.9-2.1 GHz).
According to J'son & Partners Consulting estimations, to date, operators of "big three" have established less than 2 thousand registered femtocell base stations. In the U.S., the largest femtocell market, approximately 1.5-2 million of such devices is operating now, more than half of all installed femtocells in the world. In the optimistic scenario J'son & Partners expects 1 million femtocells operating in Russia by the end of 2016.
Imperfections of legislation, lack of awareness and inadequate efforts of operators to promote the technology hinder a more active use of femtocells in Russia.
Contents of the full report (63 pages) «Mobile Data Traffic Offload: World experience of mobile broadband networks offload»
1. Main drivers
1.1. Actual and forecasted growth of mobile data traffic
1.1.1. In the word
1.1.2. In Russia
1.2. Smartphones and tablet PCs sales in Russia and the world
1.2.1. In the word
1.2.2. In Russia
1.3. Other reasons
2. Technological solutions, their advantages and disadvantages
2.2. «Small cells», femtocells
2.3. Technologic comparison of femtocells and Wi-Fi for traffic offload
2.4. Mobile CDNs (Content Delivery Networks)
2.5. Other solutions: Mobile Cashing
3. Use of Mobile Data Offload in the world
3.1. Softbank Mobile (Japan)
3.2. France Telecom Orange (France)
3.3. AT&T (USA)
3.4. Vodafone (Great Britain)
3.5. Verizon Wireless (USA)
3.6. KPN (Netherlands)
3.7. Other operators
4. Monetization scenarios of Data Offload
4.1. Opportunities for operators
4.1.1. Additional profit
4.1.2. Costs reduction
4.1.3. Churn rate decrease
5. Main barriers
5.1. Lack of users’ awareness
5.2. Regulatory problems
5.3. Roaming problems
5.4. Other barriers
List of figures
Figure 1. Mobile Internet traffic forecast in the world, 2011-2016
Figure 2. Traffic growth of fixed and mobile Internet in the world
Figure 3. Mobile Internet traffic forecast in the world by region, 2011-2016
Figure 4. Traffic offload from mobile networks, 2011-2016
Figure 5. Total mobile data traffic in Russia, 2010-2011
Figure 6. Average mobile data traffic per active subscriber of the "big three", 2010-2011
Figure 7. Market shares of mobile operators in Russia in terms of mobile data traffic, 2010-2011
Figure 8. Mobile data traffic in Russia, PB, 2010-2016
Figure 9. The global smartphone market in natural terms, 2009-2011
Figure 10. Forecast of the global smartphone market in natural terms, 2012-2016
Figure 11. Penetration of smartphones in 2011
Figure 12. The global tablet market in natural terms, 2009-2011
Figure 13. Forecast of the global tablet market in natural terms, 2011-2016
Figure 14. Forecast of global mobile Internet traffic by the type of device, 2011-2016
Figure 15. Traffic offload from mobile networks (mobile devices and tablets), 2011-2016.
Figure 16. Smartphone sales in Russia, 2008-2012
Figure 17. The number of smartphone users in Russia, 2008-2012
Figure 18. The share of smartphones in mobile phones sales in Russia, 2008-2015
Figure 19. Tablet PCs sales in Russia, 2010-2015
Figure 20. The number of tablet PCs in Russia, 2010-2012
Figure 21. Tablet PC market structure in Russia: WiFi and 3G/4G support
Figure 22. Forecast of the global mobile Internet traffic by the type of content, 2011-2016
Figure 23. Frequency of video applications use through a smartphone in Russia
Figure 24. The number of smartphones users connected to Wi-Fi hotspot of AT & T network
Figure 25. Femtocells advantages for operators and subscribers
Figure 26. Main advantages of various types of "small cells" for end users
Figure 27. Main reasons for operators to offer enterprises femtocells and FMC-Services
Figure 28. What are the most important reasons for the deployment of "small cells"?
Figure 29. Effect of Wi-Fi on the development of "small cells" market
Figure 30. Mobile CDN implementation scheme for 3G and 4G netwroks
Figure 31. The largest Wi-Fi networks of mobile operators, 3Q2012
Figure 32. The share of mobile data traffic offload through Wi-Fi/WiMAX by operator KDDI
Figure 33. Use of KDDI in Wi-Fi network architecture
Figure 34. Main stages of the integration of Wi-Fi network into a mobile network
Figure 35. Main barriers to a greater use of "small cells" in the private sector
Figure 36. Main problems in the private segment of "small cells"
Figure 35. The world's biggest hot spots aggregators in 2011
List of tables
Table 1. Mobile data world experience, 2011-2016
Table 2. Sales of various types of mobile devices in the world, 2011
Table 3. Mobile traffic per device, MB / month.
Table 4. Comparison of average annual growth rate in the number of devices and data traffic in the world, 2011-2016
Table 5. Comparison of the results of LTE and home Wi-Fi tests
Table 6. Advantages and disadvantages of Wi-Fi technology for mobile data traffic offload
Table 7. Main disadvantages of femtocells and their possible solutions
Table 8. Comparison of Femtocell and Wi-Fi technologies
Table 9. Spectrum available for Wi-Fi and femtocells
Table 10. Speed of communication on Femtocell and Wi-Fi networks
Table 11. CDN impact on boot time
Table 12. Categories of mobile caching manufacturers
This Information Note is Prepared by J’son & Partners Consulting, We strive to provide factual and prognostic data that fully reflect the situation and are available to us before issuing the material. J’son & Partners Consulting reserves the right to revise the data after publication of new official information by the market players.
For additional information:
J'son & Partners Consulting
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Moscow, Russia, 101990
T.: +7 (495) 625-72-45