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.