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Mobile broadband
 
Valery Timofeev
photo credit: AFP
Mobile broadband subscriptions reached an estimated 640 million at the end of 2009, driven by growing demand for smartphones, new applications and social networking services, and are set to exceed 1 billion this year, according to ITU statistics.
 
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Photo credit: AFP/Imaginechina

Leading 3G markets

Mobile broadband subscriptions reached an estimated 640 million at the end of 2009, driven by growing demand for smartphones, new applications and social networking services, and are set to exceed 1 billion this year, according to ITU statistics. By the end of 2009, some 130 countries enjoyed commercial 3G service (Figure 1). Asia-Pacific and Europe have fuelled most of the early growth in mobile broadband subscribers, with five out of the ten largest markets located in Europe, but recently, the Arab States and some economies in the Americas have seen soaring growth rates.

Japan and the United States remain the two largest individual markets for 3G. However, in Japan, 3G is fast approaching maturity with a penetration rate of 85 per cent in 2009, whereas the United States market still has room to grow. Based on its larger population base, the United States is forecast to overtake Japan in terms of total subscribers in 2011. Luxembourg is another high-ranking country in terms of 3G per capita penetration, with nearly 90 per cent of the population having a 3G phone. The Republic of Korea ranks high both in terms of absolute size as the third-largest 3G market and penetration. The highest ranking African country in terms of 3G penetration is South Africa.

However, the market to watch is undoubtedly China, which launched 3G services in 2009. All three main cellular 3G technology standards are now in commercial use in China. The largest mobile operator, China Mobile, has retained its GSM customer base and was awarded a licence for TD-SCDMA in January 2009. China Unicom was awarded a licence for 3G based on the W-CDMA (UMTS) standard. And China Telecom was awarded a licence for 3G using the CDMA2000 1x EV-DO standard in January 2009. With all three main standards in intense competition to satisfy consumers and meet government roll-out targets, China is forecast to take the number one slot for largest subscriber market by 2014, if not sooner.

India has yet to see the widespread launch of 3G services. The Government has postponed its 3G and WiMAX auctions, which are set to take place in April 2010. After the 3G and WiMAX transactions have taken place, the Department of Telecommunications and the Telecom Regulatory Authority of India are considering further auctions to support 4G services of the digital dividend spectrum around 700 MHz, which India plans to bring into play. The 2.5 GHz band will be allocated after the 3G frequencies, and will be used almost entirely for WiMAX, making 700 MHz a promising band for Long-Term Evolution (LTE) suppliers to target in the near term.

Figure 1 — Global growth of countries with 3G commercial services
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Source: ITU

4G Long-Term Evolution

The first commercial launch of LTE took place in Europe in December 2009, when TeliaSonera launched commercial LTE services to customers in Stockholm (Sweden) and Oslo (Norway), with two pioneering city networks. The Stockholm city network is supplied by Ericsson, while the Oslo city network is supplied by Huawei. The USB modems are from Samsung, based on its LTE chip (Kalmia), and support the 2.6 GHz band. Ericsson is advertising maximum speeds of 100 Mbit/s download and 50 Mbit/s upload. TeliaSonera has three nationwide LTE licences, for Sweden, Norway and Finland, and evaluation of suppliers for TeliaSonera's next-generation common core network and radio networks is currently under way. Vodafone plans to launch LTE services in Europe in 2012, but a number of operators are already trialling LTE in various countries, including Australia (Telstra), Belgium (Telenet), Estonia (EMT), Jordan (Zain) and Saudi Arabia (Zain), Slovak Republic (Telefonica), and the Ukraine (MTS). In the United States, Verizon aims to roll out LTE to cover 100 million users by the end of 2010, mostly in urban areas, with relatively high speeds. In Singapore, SingTel's mobile broadband network is being steadily upgraded over the next 12–24 months for LTE.

LTE was a major theme at the GSMA Mobile World Congress 2010 in Barcelona, Spain, where a number of new user devices supporting LTE were announced or demonstrated. Over twenty LTE networks are planned to enter commercial service by the end of 2010. Congestion resulting from high demand for bandwidth and the high speeds available may lead operators to return to usage-based pricing.

It’s all about speed

Are speeds still too slow to support widespread take-up? And if so, what needs to be done? Based on the experience of early adopters in Japan and the Republic of Korea, what are the most suitable speeds to encourage mass market adoption? Mobile operators bringing these new technologies to market are engaged in several trade-offs, seeking to strike a balance between various needs:

  • The needs of targeted user groups: for example, in the highest speeds possible for technological leaders and adopters (for instance, those keen to own the latest handset or download lots of video), or for the business/corporate segment, versus lower speeds for the mass market. For navigation or location-based services and mobile VoIP, which require the exchange of real-time information, minimum speeds of at least 2.4 Mbit/s are necessary.

  • Performance requirements: technical performance (higher speed) versus network reliability (to avoid spotty coverage or network downtime). The introduction of smartphones and iPhones — initially often under exclusivity contracts with a single operator — backfired in some countries, as it put some operators’ networks under strain, leaving them to struggle to meet surging demand for services.

  • Coverage requirements: urban coverage with high-speed networks versus greater geographical coverage (depending on the technology and specific geographical factors, greater coverage is not always achieved, at the expense of speed).

The speed acceptable to the mass market depends on the usage desired by the majority of consumers, which is often influenced by operators’ marketing strategies. In general, however, a mobile broadband speed of 43 Mbit/s is likely to prove sufficient for most mobile broadband use, as it enables customers to download an MP3 file of 5 megabytes in under a second, a video clip of 35 megabytes in under six seconds and a movie of 800 megabytes in around two minutes.

What is driving mobile broadband?

New devices

New devices are transforming the mobile broadband market by bringing mobile devices closer to personal computers in functionality, capabilities, feel and access. There is, however, no single killer application driving mobile broadband, where strength may lie in diversity and the ability to deliver personalized services and entertainment.

The Apple iPhone is widely acknowledged to be a game-changing device in many ways. Its strength lies in its vast range of applications and even the potential for users to develop applications of their own. Apple announced in January 2010 that more than 3 billion mobile applications had been downloaded from its App Store by iPhone and iPod users worldwide, in the 18 months since its launch.

The iPod and iTunes have made listening to music easier. The iPhone combines a phone with a music player and a digital camera with a digital library and photo album in a single device with access to the World Wide Web. This iPhone is among the first popular, fully-converged devices. For some, it has made use of the mobile web easy and user-friendly. For others, it has become a must-have fashion accessory.

The Apple iPad, launched at the end of January 2010, can combine the portability of an e-book reader with all the visual excitement of artwork and the real-time response and immediacy of a website. It looks set to fuel a greater interest in content, uniting the entertainment and publishing worlds as readers can access additional tagged content to supplement and enrich any simple story.

Meanwhile, Samsung Electronics Co. Ltd has announced the launch of its Samsung Wave. This is the first mobile handset to be released on the company’s new, open mobile platform called Samsung bada. The platform allows mobile users to download applications from Samsung Apps, an integrated application store. It features games, navigation, social networking, e-book, health and lifestyle applications. The new smartphone (Samsung Wave) is expected to be available globally from April 2010.

Location-based services

Location-based services are another area where many research consultancies are projecting stellar growth. However, such growth depends partly on user education and partly on how these applications are marketed. Some operators and equipment manufacturers perceive location-based services as giving them a strategic advantage over their competitors.

Nokia, for example, is planning to give maps and navigation software away free to its smart-phone customers. The content comes from digital maps maker Navteq, which Nokia acquired in 2007 with a view to enhancing its location-based service offering. Combining the maps and navigation with the camera and GPS on the phone opens up a whole new range of applications, including augmented reality and location- based services, while bringing new advertising income within reach. Nokia is using a similar strategy to that announced by Google in October 2009 for Google Maps. Google gives applications such as this away free in order to place more advertising, and Nokia is hoping that a similar strategy will help drive sales of its smartphones. Such a strategy can work well, but amounts to a bet on future growth in revenue from devices against giving away content for free – a gamble in an industry where content is king.

Social networks

Social networks and networking applications are also likely to prove vitally important in driving the future mobile broadband Internet, although estimates of the “unique” number of users of social media vary considerably (users often access more than one service regularly). For example, for December 2009, Morgan Stanley estimated that there were 830 million unique users of social media, while Nielsen put the number lower, at around 430 million. This is probably a representative margin of error, given the difficulties of definition and measurement (different networking services often overlap, and distinguishing individual users is virtually impossible).

Strong growth is inevitable, however, based on the rise of the social web. Users of social media were predicted to go from just 16 per cent to as much as 47 per cent of global Internet users in 2009 (Figure 2). Global time spent on social media sites grew by 82 per cent between 2008 and 2009, led by Facebook and Twitter usage. There are now more than fifty million tweets a day, based on an exponential growth curve. Applications such as Facebook Connect are finding more widespread use outside of their original use. Services such as Layar, which provide augmented reality, are likely to gain in popularity in 2010.

In summary, mobile broadband is here to stay. How operators will cope with the exponential growth in subscriber base and demand for services is another story and one we shall continue to monitor.

Figure 2 — Social media users as a proportion of fixed Internet users
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Source: ITU. Estimates of social media users adapted from Nielsen and Morgan Stanley.

 

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