Matching access resources to service requirements at the lowest cost per bit is the key to differentiation, says Andrew Mackay, Cisco's manager for mobile architectures for Asia-Pacific, Japan and China
Mobile Internet: What is driving telcos toward carrier-grade Wi-Fi offerings?
Andrew Mackay: First are the challenges that mobile network operators (MNOs) are facing with the proliferation of large-screen mobile devices with internet-based multi media applications. The networks are struggling to meet the rampant demand in mobile broadband connectivity and bandwidth. At the same time, mobile data revenues have failed to keep pace, leading to rapidly declining profitability. Here Wi-Fi has become attractive because it can add additional access capacity at a lower cost per bit.
Second is the changing nature of the mobile value chain. MNO's traditional services are under threat from internet based "over the top" services. Wi-Fi is also being looked to as a way to diversify the business model, from just consumer and enterprise offerings to business-to-business offerings, such as wholesales access, machine-to-machine, connected venues and third-party service enablers like location analytics.
How can they best deal with spectrum scarcity and constraints in macro site acquisition?
There are three ways to increase wireless capacity density: add more bandwidth (more Hz), increase spectral efficiency (more bps/Hz) or reduce the number of users per radio channel (more bps/Hz/user).
New spectrum we know is scare, with limited new allocations above 2.3 GHz and 700 MHz (digital dividend) in APAC countries over the next five years. This is why service providers have turned their attention to the use of unlicensed spectrum, of which in most countries there is over 400 MHz in the 2.4- and 5-GHz bands. Compare that to the average of 60 MHz MNOs hold of licensed spectrum.
Spectral efficiency has improved with every new generation of mobile technology, but 4G technologies like LTE and LTE-Advanced are close to the Shannon limit (the theoretical maximum data rate a communication channel can support). So the bulk of wireless capacity expansion is going to come from more sites, and since macro-site acquisition has become very slow and costly, an underlay of smaller cells to soak up capacity hotspots makes sense.