Heavy mobile traffic set to flow this way

Telecoms operators such as Du and Etisalat face revenue losses and declining levels of customer service if they fail to plan adequately for a coming explosion in volumes of data traffic.

Etisalat says it has blocked the iMessage service. Ryan Carter / The National
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Etisaslat, du and other regional telecommunications operators face revenue losses and declining levels of customer service if they fail to plan adequately for a coming explosion in volumes of data traffic.

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Mobile operators in emerging markets such as the Middle East have already begun gearing up to offer third and fourth-generation telecoms services, such as streaming video entertainment to portable devices connected to their broadband wireless networks.

But Shiv Putcha, an analyst at the research company Ovum, warns that the new services will generate unprecedented levels of data traffic as well as a growing demand for expensive devices such as smartphones, tablet computers and portable wireless connectivity sticks known as dongles.

Mobile operators in emerging markets will struggle to deploy next-generation services and products but not because of a lack of technological expertise. Their difficulties will lie in achieving the economies of scale enjoyed by the big global operators. This gives the likes of Vodafone, with its 300 million-plus customers worldwide, a huge advantage in deploying high-speed networks and new devices such as the latest smartphones over smaller locally-based rivals.

Mr Putcha says this is particularly true of operators in regions such as the Middle East. In the UAE, du and Etisalat are essentially dealing with a small home market, although Etisalat has operations in multiple markets.

"While it is not quite a doomsday scenario, operators need to ensure that they have covered all areas if they are to cope with the coming explosion in traffic," Mr Putcha says.

Local players can, however, form new partnerships to achieve the kind of economies of scale needed to compete effectively with the big global operators.

"Operators such as du and Etisalat could consider approaching device manufacturers together with other operators to buy devices in sufficient quantities to be able to acquire large numbers of devices at a similar pricing level to the big operators," Mr Putcha says.

But whatever steps du and Etisalat may be planning, they will have a limited time to execute them before being potentially overwhelmed by demand for broadband data services and portable devices.

The number of mobile broadband users in emerging markets is expected to increase exponentially over the next five years, according to Ovum. It is predicted that the majority of consumers will access mobile broadband using small-screen devices such as feature phones and smartphones. Ovum predicts that these will account for 77 per cent of all mobile broadband connections in emerging markets by 2015, representing about 1.6 billion connections.

According to Ovum, such a huge surge in mobile broadband connections will have far-reaching consequences for networks operated by the likes of du and Etisalat. They can now realistically expect to be flooded with millions of emerging market consumers using their mobile devices for internet access. Ovum believes operators should prepare for the data deluge by ensuring their networks are as free of congestion as possible. Rapidly rising levels of data traffic must also be correctly structured for profit-making.

"Operators must consider adding smart charging and policy control capabilities that will allow them to balance network efficiencies with revenue generation and unique and personalised user experiences," Mr Putcha says.

Mobile operators in emerging markets also need to invest in their distribution networks to add capacity and remove bottlenecks. Some mobile operators may also need to fund investment in high-priced network software to ensure an easy flow of data traffic.

"Operators will need to carefully consider the addition of optimisation and bandwidth-shaping tools that will ease the pressure of bandwidth-intensive applications such as video," Mr Putcha says.

But analysts may have underestimated the volume of data traffic mobile telecoms operators will have to accommodate. For example, Sony is expected to unveil a portable wireless device this year that will enable users to experience 3-D movies on the go. The futuristic product is expected to be in the form of a sleek visor headset. Such devices will eventually add a mobile dimension to the kind of virtual reality that enables users to feel fully immersed in a 3-D experience. A new generation of virtual reality headsets will soon enable subscribers to enjoy 3-D entertainment anywhere.

The Sony headset will initially be available only in the company's home market of Japan. But Nokia and other telecoms operators have been working on virtual reality devices since the late 1990s. All that has been holding this technology back was the lack of sufficiently robust broadband networks to allow wireless downloads of the vast volume of data traffic needed for mobile 3-D.

The challenge now facing local operators is how to accommodate the huge demand for next-generation mobile services.