As many mature mobile markets start to discuss LTE deployments, the two largest mobile markets in the world - China and India - are just launching their first 3G networks. The size of the markets and the fact that neither has extensive fixed services means we could be about to witness explosive growth of broadband services.
The current numbers pay testament to this - last year alone India added 100 million new 2G mobile subscribers. By making high-speed communications widely available for the first time across both countries, these 3G deployments are likely to be a driving force behind their economies for the next decade.
Yet the picture for the operators' bottom line might not be so rosy. Both countries will need to quickly heed the lessons learnt from more mature Asian and Western markets where rapid uptake of 3G services has certainly not equated to rapidly growing profits.
In fact two separate research firms, Omnitele and Strand Consult, recently arrived at the same conclusion: the flat rate mobile data tariffs that have driven the boom in 3G uptake are unsustainable. The reality is that rocketing data usage is causing costs from capacity upgrades to ramp up disproportionately to the growing revenues from mobile broadband services. Chinese and Indian operators will need to carefully manage the economics of their networks if they too are to avoid a similar fate.
While operators could easily cope with capacity costs in 2G networks, the evolution to 3G is significant. A single GSM connection requires 13 kbps, and a GPRS connection uses around 60-80 kbps, but 3G leaps up to 348 kbps. 3G upgrades such as HSDPA, where a single connection can offer 14.4 Mbps per user, is an exponential leap. One user can use the same capacity as 1,000 GSM subscribers.
Beyond this, Indian and Chinese operators have a number of other challenges that further complicate the economic challenge. Whereas 3G has in most markets been focused on delivering services to phone handsets and laptop dongles, in India and China - where fixed-line penetration is low - there will be a real market for desktop PCs too. To aggravate the issue, desktop users are a great deal more bandwidth-hungry than their mobile handset counterparts, thereby putting a greater load on the network and in turn ramping up costs.
Additionally, as both countries also have enormous sparsely populated regions with virtually no fixed line resources, operators have a real teledensity challenge in terms of balancing the cost of providing services in certain regions against potential revenues.
So how can Chinese and Indian operators overcome this challenge? The reality is that although they both have very similar challenges, their solutions will be very different. Operators in both countries will both be deploying the latest 3G base stations alongside different telecoms infrastructures. The result will be very different mobile broadband services on the ground.
Where China's infrastructure is well prepared for this shift, in India an all-IP network is currently not an option. The country's operators must utilize the existing transmission infrastructure, all of which is legacy based. Therefore the 3G networks must be designed to maximize existing resources.
China: building on MPLS
In China, 3G licenses were issued to the three full-service telecom providers in January 2009. However, China Mobile has been operating ten pilot TD-SCDMA networks for the past year, comprising some 18,000 Node B's. These provide service to 200,000 customers but have the potential capacity to support up to 9 million subscribers. The Chinese market will see the complete range of 3G technologies deployed, from homegrown TD-SCDMA to EV-DO and W-CDMA variants.
Today, China Mobile is migrating to IP, and it is likely that the 50,000 base stations for the first commercial phase will ultimately use the new MPLS transport network. As such this leaves the Chinese operators in the enviable position of being able to migrate to an all-IP network. A single IP network able to both support the rapidly growing mobile broadband traffic as well as legacy voice and data services will slash costs thereby making all mobile services more profitable. However, such an upgrade is not without a major challenge.
The entirety of the mobile network, from base stations to core network elements, needs to be functioning based on the same clock. Ethernet, however, is inherently asynchronous. Moreover, packet-switched networks introduce delay, while packets can also go astray. When the network becomes out of sync, calls are dropped, handovers are fumbled and mobile operators' traditional voice service quality consequently drops off significantly. Other real-time services such as video are similarly affected.
It is this area that presents the single greatest technical challenge to all-IP networks. The industry is working hard to overcome these impediments by engineering clocking mechanisms in the packet layer and the Ethernet physical layer. Nevertheless, it is an issue that Chinese operators must take into consideration when planning their networks.
India: optimized Abis
Meanwhile, India is currently witnessing the first 3G service soft launches by MTNL and BSNL in a handful of cities with wider deployments expected once the license auctions have been completed later this year. However in India an all-IP network is not an option. The current infrastructure is not ready for such a radical transformation, and the economics dictate a slow evolution. This means that operators will have to deliver profitable 3G services using their existing infrastructure.
Due to the massive sparsely populated regions with limited fixed-line resources, the Indian scenario is to connect the base stations to the core through the existing microwave network. In this case, Abis optimization will be required to reduce cellular transmission bandwidth while maintaining service quality as well as enabling controlled introduction of early 3G services with no additional capital investment.
Abis optimization can reduce the bandwidth required for 2G traffic by more than 50%, freeing up what's left for 3G. Additionally more aggregation sites will need to be deployed throughout the network, thereby allowing the growing data traffic to be multiplexed and delivered to the network core more efficiently without requiring massive investment in infrastructure.
Such technology will also help to provide 3G services in remote regions in China too - it may not deliver the speeds that urban users will receive, but it will start the process of breaking down the digital divide.
Beating the numbers game
It's clear to see that operators in the two countries face very different challenges in the deployment of mobile broadband networks. However, as other 3G operators around the world are quick to attest, there is a common theme surrounding all mobile broadband services. It is a complex numbers game, the likes of which operators have never seen before, and delivering services profitably represents a significant challenge.
While the new services will undoubtedly be very popular and attract new revenues, network costs can very easily soar out of control. The big challenge for Chinese and Indian operators over the next 12 months is to effectively manage them in order to maintain margins.
Ilan Seidner is director of marketing communications at RAD Data Communications