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Smartphone customers and the bandwidth-hungry applications they’re using have forced wireless carriers to accelerate their plans for big upgrades as they move toward the next iteration of their networks.
The biggest challenge these wireless operators will face is making sure they have enough capacity in a part of their networks known as backhaul to feed the hungry appetites of wireless data customers.
In short, this ongoing effort is meant to ensure smartphone customers, today and in the future, aren’t as routinely annoyed as some iPhone customers say they have been over the past year.
“Backhaul is at the top of the list of issues to resolve before building their 4G networks,” said Scott Imhoff, a director of enterprise mobility products at Motorola. “You can upgrade the radios on all your cell phone towers, but if you don’t have big enough pipes aggregating that traffic then it doesn’t do you any good. “
Here’s the problem: wireless operators have spent billions of dollars over the past several years upgrading cell phone towers with 3G wireless radios to bring data services to wireless phone customers. And soon they will be dropping billions more to upgrade these networks to 4G technology.
The radios have gotten faster and operators have put up more towers to increase their footprints, but the technology used in the backhaul network, which connects those towers to the carriers’ nationwide networks, has not changed much in the past several years. In many instances, operators are still using old copper lines called T1 line. These lines designed specifically for voice networks offer a maximum transfer speed of 1.5 megabits per second.
The iPhone as game changer
Up until the iPhone, the 1.5 Mbps T1 lines in the backhaul network were sufficient in most parts of the country. There were some smartphones on the market, mostly used by corporate customers. But the data usage by these customers was minimal, mostly e-mail. And while many “regular” handsets have been able to access the mobile Web for years, usage was relatively low until the iPhone.
But in the summer of 2007 that all changed. With its full HTML browser, touch screen keypad, and user-friendly interface, the iPhone and the App Store redefined how people used their phones. Instead of simply talking or texting, wireless customers are now listening to streaming music, watching TV, and playing online games from their mobile handsets. And this has caused a huge surge in data usage on these networks.
Taylor Salman, director of solutions marketing for Ciena, an infrastructure provider to large phone companies, said he tracked a data application that real estate agents used to get mobile access to their home listing services. Within three months of the iPhone’s launch, traffic from iPhone users to this mobile Website surpassed usage from all other types of smartphones, namely Symbian and Windows Mobile devices.
Salman said that wireless operators knew that smartphones would eventually cause wireless data traffic to increase. But before the iPhone traffic had grown at a slow steady pace. After the iPhone, usage patterns quickly changed.
“The carriers thought they had some time to upgrade their networks,” Salman said. “But the iPhone blew everything out of the water.”
AT&T’s wireless data traffic increased more than 18 times in the last two and a half years, AT&T Chief Technology Officer John Donovan said during a speech at the CTIA tradeshow in October. And voice traffic on the AT&T wireless network nearly doubled in that time. New customers and an increase in data traffic are putting strains on the network, he admitted. And he said the company is changing how it plans its network.
“There is nothing I look at more than customer usage patterns,” he said during the speech. “There have been big changes in usage, which has forced us to throw our traditional planning models out the window.”
It’s no secret that many iPhone customers throughout the U.S. are unhappy with their service. From San Francisco to New York City to Austin, Texas. iPhone customers have been complaining about dropped calls and slow data connections. The problems only seemed to get worse when AT&T and Apple began selling the iPhone 3G. In many cities, such as San Francisco, customers have complained that their iPhone 3G devices operate more on the slower 2.5G EDGE network than on the 3G network. And still others say that dropped calls have gotten worse.
The issues iPhone customers have been experiencing can’t be blamed entirely on capacity issues in the backhaul network. But capacity constraints could be contributing to the problems. If sections of the backhaul network do not have enough capacity to support the aggregated traffic from the towers, it’s like trying to drink from a punch bowl using a cocktail straw. No matter how hard you suck, you won’t be able to get much liquid through straw.
“The backhaul issues could be a contributing factor to the problems that some iPhone users are experiencing,” Salman said. “These are complex networks. So there could be a lot of things going on. But as carriers have overlaid data service onto their voice networks, the backhaul network hasn’t evolved. And providers didn’t think they had to immediately change that.”
AT&T says it has already spent billions of dollars upgrading its network. The company’s annual report indicates it spent about $20 billion in capital expenditures for its wireless and wireline networks in 2008. And in 2009, AT&T was estimated to spend between $17 billion and $18 billion on its wireless and wireline networks. AT&T hasn’t specified how this money is allocated. But AT&T Wireless President Ralph de la Vega has said that AT&T has been putting money into upgrading its radios to use 850MHz spectrum. It’s also been upgrading cell sites to HSPA 7.2. And some of the money has been used to upgrade the backhaul network.
Preparing for 4G
AT&T isn’t the only operator beefing up its wireless backhaul networks. All of the major wireless operators are investing. And the need for capacity will only increase as operators move toward 4G networks, which will allow all kinds of devices like digital cameras, music players, video game devices, and countless other devices to use the network.
Clearwire, the only operator offering a 4G wireless service in the U.S. commercially, said that customer usage patterns look more like wireline broadband customers rather than wireless customers. When the speed and capacity are available, customers are finding ways to consume the bandwidth, said Mike Sievert, chief commercial officer for Clearwire.
“When customers upgraded from our older WiMax service to the current 4G service usage nearly doubled on average,” he said. “4G wireless customers look a lot more like broadband customers in terms of usage than they look like 3G wireless customers.”
Imhoff of Motorola said that operators will need a minimum of 100 mbps to initially support 4G services on backhaul lines servicing a group of cell towers. And depending on the density of the towers and the population that’s being served, they could need more. Most operators today are looking at solutions that allow them to easily upgrade these networks to grow their backhaul capacity as customer demand increases.
For example, Imhoff said that Verizon Wireless, which is in the process of deploying its 4G wireless network, is investing in equipment that allows it to increase capacity in 50 Mbps blocks all the way up to 400 mbps.
“I think the smartphone demand opened a lot of eyes,” he said. “And the way these companies invest has changed. Instead of investing in backhaul infrastructure for 20 years, operators are now looking at these investments for five or six years and making sure they can upgrade easily.”
The fix
Ideally, these operators would like to run fiber connections to cell towers and clusters of cell towers to aggregate the traffic over high capacity links. This works well in urban areas where there’s a lot of fiber already in the ground. In some cases, operators may own the fiber themselves or they may lease it from wholesalers such as Level 3.
But in places where fiber is not available, carriers are turning to wireless microwave technology. Clearwire is using a hybrid approach that includes accessing fiber, where it’s available, and using microwave in places where fiber is too expensive or not available at all. This is one of the reasons that the company has been able to build out its network as quickly as it has
In a little more than a year, Clearwire has launched service in 25 markets, where its is available to about 30 million people. By the end of this year, it expects to be in 100 markets with the potential to serve 120 million subscribers.
Every major wireless operator in the U.S. has accelerated its backhaul upgrade projects, equipment suppliers say. But these upgrades will not happen overnight. And they won’t all happen at the same pace. Some operators are in better shape than others in terms of access to fiber or access to spectrum. Verizon has been investing a great deal in fiber over the past few years as it builds out its Fios fiber-to-the-home network. And Clearwire executives claim they have an advantage due to the swath of spectrum they have leased from the government.
Salman said it will likely take at least another two to three years before most carriers in the U.S. have completed their backhaul upgrades, which will coincide with 4G wireless deployments. For consumers, it will be difficult to know for sure where backhaul networks have been upgraded and where they have not. And this could mean that depending on the operator, service will likely be spotty for some consumers in some parts of the country.
“Operators will probably upgrade higher density urban areas first,” he said. “But even though one carrier may upgrade the New York City area, another one might be beefing up service in San Francisco or somewhere else. So consumers should pay attention to where service is good and on which carrier they get best the connections. Then they can choose that operator, and hope that when they travel they still get decent service.”
