Smartphone penetration in mature markets is nearing saturation while in developing markets uptake is rising rapidly as the average selling price drops. IDC forecasts the ASP of smartphones to fall to $265 by 2017. Developing markets like China and India are quickly moving toward the point where sub-$150 smartphones make up the majority of shipments, according to an IDC research note.
The surge in smartphone adoption of course means subscribers are consuming more and more media-rich content. The impact on mobile operators’ networks has been painful. And it’s only going to get worse.
According to Ericsson’s recent Mobility Report, video traffic is expected to expand 13 times by 2019 and account for over 50% of all global mobile traffic. Social networking makes up more than 10% of total mobile data traffic and is predicted to grow 10 times between 2013 and 2019. Music streaming is expected to increase eightfold by 2019 while web browsing is predicted to grow sixfold over the same period.
The majority of operators haven’t fully planned for this exponential increase nor are their networks and IT systems prepared to cope with the pending data explosion.
“When mobile operators started offering wireless broadband, they certainly didn’t foresee it being as successful as it has been nor did they foresee the rapid take up of smartphones and consequently OTT services,” said TM chief strategy officer Farid Sani.
Heavy investment in faster networks like LTE and LTE-A is only part of the solution for handling the traffic volumes expected over the next decade.
Telcos’ IT services increasingly are hampered by rising complexity that drives up maintenance as well as upgrade costs. The variety of devices – smartphones, tablets, ultra-books – and applications are fueling that complexity.
“Each new device, application and user has unique requirements. The key challenge is to build networks and IT solutions that can handle different types of usage and to come up with new service offerings quickly to meet the diversity of needs,” says Marko Torvinen, Ericsson’s managed services IT engagement director.
The constrains cellcos face can generally be overcome by addressing three key factors: efficiency, agility and innovation. The challenge for telcos going forward is to be able to flexibly scale to future demand, reduce time to market and enable the customer to personalize his/her experience.
Making networks “open” to the end-user and being able to launch new services in a matter of days and weeks, Torvinen says, requires a fundamental change in the way core networks are built and operated.
Moving to a cloud environment is one way to make that leap. The scalability of the cloud ensures that the underlying infrastructure can quickly be made available for more content as demand rises. For example, the cloud enables firms to quickly expand their computing capacity compared to having to build physical IT infrastructure.