Friday's release of the new iPhone 4S, with its more sophisticated phone camera, faster processor and iCloud access, has Apple fans licking their chops in anticipation of the boosted services. This latest addition to the iPhone family is likely, however, to have the service providers that support the new handset holding their collective breath with its promise of even more traffic to their already groaning wireless networks. Such was the sentiment among some telecommunication industry experts on Friday at The State of Telecom 2011 forum at Columbia University in New York City.
Global mobile data traffic growth is expected to increase over the next five years by a 92 percent compound annual growth rate, thanks to video files and, to a lesser extent, mobile gaming, Robert Pepper, Cisco's vice president of global technology policy, said at the meeting. Video and gaming are two areas in which the iPhone 4S is expected to excel.
Carriers such as AT&T and Verizon, both of which offer the iPhone, still derive most of their revenue from voice services, Craig Moffett, senior analyst with Bernstein Research, said at the forum. Unfortunately for them, people are making fewer and fewer voice calls, opting instead to communicate via e-mail, text messages and social networks—all of which fall under wireless carriers' data plans. Whereas many of these carriers initially offered unlimited data plans to alleviate traffic from their voice networks and satisfy customer demand, they have since begun to promote caps on monthly data access, offer tiered pricing plans and even to throttle data access for the heaviest users.
The iPhone effect isn't limited to North America. In 2010, the average monthly traffic among Korea Telecom (KT) iPhone users was 360 megabytes, five times more than the average traffic among its other smartphone customers. Over time, iPhone traffic increased more than two-fold, and call quality decreased as a result of KT's unlimited data plans, Hee-Su Kim, senior vice president of Korea Telecom's Economics and Management Research Lab, told the telecom forum. KT's response was to offload some smartphone traffic to WiFi and Wireless Broadband (WiBro) networks, add more computing power to its mobile switching center, and implement tiered pricing based on data usage.
The carriers themselves are responsible for putting themselves in dire financial straights, one consumer watchdog said Friday. "Wireless companies underinvested drastically in their infrastructure, although financial analysts will tell you that they couldn't find investors," said Mark Cooper, director of research for the watchdog Consumer Federation of America. As a result wireless carriers won't be able to keep up with subscriber demand, he added.
The size of the data files moving to and from Internet connected devices will continue to increase—particularly with the projected jump in video files—yet file compression has not yet caught up to speed. "Advances in compression have been slowing down," Eli Noam, professor of finance and economics, director of the Columbia Institute for Tele-Information (CITI), said. "There is no Moore's Law here. Compression also doesn't work well on live events or where there's lots of action."
The offloading of mobile data to portable, personal base stations has become an increasingly popular option. "The way you get more capacity is to use the existing spectrum more efficiently by offloading traffic to small cells," Dave Burstein, editor of the DSL Prime Web site, said during one of the forum's panel discussions.
The idea is that AT&T, Verizon and other carriers wouldn't have to invest as much in expanding their core infrastructure. Different types of portable base stations—often called microcells, femtocells or picocells, depending upon their range—are designed to produce signals of different strengths, covering a radius of anywhere from 2 kilometers to less than a few meters.