Low-bandwidth phones not answer to network crunch

Low-bandwidth handsets will not solve data crunch issue for mobile operators because consumers will eventually still demand more apps-friendly, feature-rich smartphones--all of which are bandwidth-consuming, according to market watchers.

In an interview with ZDNet Asia, Craig Farrell, CTO and IBM distinguished engineer for the global telecom industry, said telcos are feeling the strain of having to meet bandwidth consumption that is growing faster than they can build the infrastructure needed to support it. In many cases, telcos that have just deployed 3G and have yet to finish paying for their networks, are already looking at 4G deployment just so they can keep up with their competitors, Farrell said.

Faced with this network pressure, he said telcos can react by driving the use of handsets that consume less bandwidth but they are "not going to win" the battle this way. Eventually, he noted, it is the customers who will choose the handsets they want to use and they will want handsets that are apps-friendly and feature-rich. These devices naturally consume more bandwidth, he added.

Abhishek Chauhan, Asia-Pacific principal consultant of ICT practice for Frost & Sullivan, agreed: "Operators will certainly wish to promote low-bandwidth handsets. However, in the current situation, I don't think they will succeed in this attempt to a large extent. "If we look at the market share growth of the different platforms, it is clearly driven by app usage. This is a big trend and is unlikely to reverse.

"Consequently, the 'app-friendly' platforms like Apple iOS and Google Android will continue to grow," Chauhan said, adding that such app-friendly platforms typically consumed more bandwidth than other phones.

Singapore mobile operator, M1, shared in an e-mail that the company chooses which devices to sell based on both customer demand and the device's data efficiency.

For example, the efficient data compression in Research In Motion's BlackBerry devices is a plus point, said Petrina Teoh, M1's senior manager of corporate communications, who noted that both companies have been working closely together to promote this feature to consumers and enterprises.

Asked if customers were interested in acquiring low-bandwidth handsets, Teoh said "a mix of customers" would be drawn to such features when making their phone purchases. She added that such handsets help M1 better manage its network resources.

Turning to other technologies
Rather than drive the adoption of low-bandwidth handsets, market observers said telcos should look at other technologies to help mitigate network challenges.

According to Chauhan, offering unlimited data service packages at reasonable price-points would encourage makers of iOS and Android devices to focus first on "app friendliness", and bandwidth efficiency later.

The Frost & Sullivan analyst suggested that telcos should gradually increase their service fees to force smartphone makers to focus more efforts on building devices that were more bandwidth efficient. However, he noted this strategy would not be viable in the short term if Apple maintained its current bargaining power over operators.

Craig Skinner, senior consultant at Ovum, pointed out in an e-mail that early-market players offering flat-rate, unlimited mobile data plans were transitioning to a tiered service plan structure. In the United States, for instance, Verizon last month moved from unlimited mobile data plans to a tiered pricing structure, joining competitors AT&T and T-Mobile, Skinner said.

He stressed, however, that even with tiered pricing plans, there would still be room for unlimited data usage in certain categories.

"For example, BlackBerry handsets might be allowed unlimited e-mail messages, while consumer-oriented devices might be given unlimited access to Facebook, Twitter and other popular consumer sites," the Ovum analyst said. "Data usage that falls outside these categories would then be subject to the data usage limit."

Skinner added: "While the increasing mobile data usage is a critical issue for mobile operators to manage, their objective is to maximize profit, not to minimize costs. Achieving this requires aligning revenues with costs, as well as maximizing profit per customer. This requires meeting user demand in conjunction with having in place, appropriate data plans to match revenues with data usage and cost."

Aside from tiered data plans, Chauhan suggested that operators improved on bandwidth availability through Long-Term Evolution and Wi-Fi hotspots to mitigate the data crunch on their 3G networks.

According to Farrell, IBM is currently working with a European group to provide a local caching tool designed to help mitigate network pressure. The technology works by creating a cached version of a video from a foreign site, at the local wireless base station, when a user downloads or streams the video, he explained. The next 20 subscribers who download the same video will then access the content from the base station's cache, he said.

These users will not have to connect to the U.S. site to view the video, so operators do not have to build backhaul support to support 20 video downloads from a foreign site, he said, noting that telcos can then defer the investment to other initiatives.