Mobile Networks Face Data Overload

The massive demand for mobile broadband will stretch mobile networks to the limit after an analyst company warned that mobile data traffic is set to increase 25 fold by 2012.

That is according to analyst firm Informa, which warned that mobile operators need to take action in order to imminent data traffic jams.

The problem for mobile operators is essentially that of economics, as revenue generated by people using mobile data services will only double over the same three year period.

“Revenues from data are increasing much slower than traffic,” said Dr Dimitris Mavrakis, mobile network analyst from Informa, on the BBC news website. “Where operators are experiencing exploding data traffic, revenues are not following them,” he warned.

The “decoupling” of revenues from traffic presented operators with a problem, said Mavrakis, because it deprived the phone firms of cash at a time when their networks were in need of upgrading.

Last week, the audience at The Future of Mobile conference, run by Westminster eForum were told that mobile data is based on an unsustainable business model, and will crash heavily after the present boom.

Mobile data is based on a business model as flawed as the sub-prime mortgages which led to the current financial crisis, the audience heard.

With services such as Skype, Facebook and Youtube using unlimited amounts of data, and operators charging a flat rate for access, data volumes will rise faster than the revenue used to build networks, said Andrew Bud, chairman of mobile billing company mBlox, speaking at the event.

“Everyone is selling something they don’t have possession of, and the cost and revenue are not linked,” Bud said.

A similar warning was sounded last week by Graham Currier, Chief Operating Officer at WiMax backer Freedom4.

“Currently the GSM networks cannot cope (with the demand for mobile broadband),” Currier told eWEEK Europe. “You cannot expect voice networks to suddenly triple their capacity, and what happens when it fills up is that my voice call gets dropped.”

“GSM is a fabulous protocol that gives very good voice quality, but data is a whole different ball game,” he added. “If you want broadband data, you need a broadband data network, its not rocket science. But people only find out when the network gets crowded and their calls get dropped.”