Feature Article

October 23, 2013

Major Rethink of Mobile Network Architecture Coming?

The financial pressures on mobile operators will become so great by the end of the decade that they will need to tear apart their network economics, along with their network architectures, according to Maravedis-Rethink.

The basic problem is the growing cost of network elements and systems at a time when average revenue per user or account is falling. That is one reason many believe increasing use of cloud-based, virtualized and software defined networks are getting so much attention.

“Operators will slash costs by leaving only ultra-low cost equipment at the cell site, eventually driving the equipment cost down below $100 by 2020,” Maravedis-Rethink analysts argue.

New mobile network architectures will rely much more extensively on huge numbers of smaller cells, where today the network is characterized by a smaller number of macro cells, says Caroline Gabriel, Maravedis-Rethink research director. 

Image via Shutterstock

Mobile service providers also will deploy almost 2.5 million cloud-connected macro layer sites between 2013 to 2018.

The big story here is the $100 cell site radio infrastructure, part of the deconstruction of the transmission infrastructure to radically reduce costs.

In fact, the new approaches are the result of serious understanding of network economics that have been clear for some time.

A 2011 study by Juniper Research predicted that global operator-billed revenues will exceed $1 trillion annually by 2016, but that operator costs would exceed revenue within four years unless changes are made.

A decline in core revenues already was a problem in some markets. In other cases, it was backhaul costs that were increasing network operating costs.

Juniper Research argued that backhaul costs more than doubled in 2010 and was projected to increase substantially as backhaul data volume grew by more than 13 times by 2015.

Many would argue that service providers are smart enough to revamp cost structures even as they work on generating higher revenues. Some might argue that users already have learned to shift as much as 80 percent of data consumption on their smart phones to Wi-Fi networks.

Small cells are seen as one way to offload even more traffic, in outdoor spaces, from the mobile network.

Edited by Alisen Downey

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