With mobile data traffic growing and revenue per gigabyte falling, operators need to reduce network carriage costs by 50% or they will face an eight-fold increase in the costs of radio access network (RAN) equipment, according to a new report from research firm Analysys Mason.
RAN is the air interface and base station technology in a cellular network.
The report 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,” says Terry Norman, co-author of the report and analyst for Analysys Mason (London). “Therefore, operators will either accept network congestion or use pricing to control demand – neither are good business practices. 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 for small-cell technology,” says Norman.
The costs for indoor and outdoor Wi-Fi are significantly lower than those of upgrading to 4G, according to Norman.
“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,” says Norman
However, a Wi-Fi approach presents residual challenges, such as site accessibility, and maintaining the quality of product and service, says Analysys Mason.