23 July 2008
Filed in mobile broadband
Mobile operators are winning the battle to offset declining voice revenue with an increase in data services. Vodafone achieved a massive £2.2 billion in non-messaging data revenues for the year ended March 31 2008, up 55 per cent from £1.4 billion in 2007. This was driven by "strong growth in business email and PC connectivity devices" along with "strong takeup of mobile broadband USB modems."
To deliver this 55% revenue growth, Vodafone had to increase data traffic volumes by over 1000%. T-Mobile reports similar traffic uplifts. ABI Research quantifies backhaul costs at 30% of the annual capital and operational expenditure for a mobile operator. Simple maths shows that unless operators can dramatically reduce backhaul costs they will struggle to maintain profitability as data revenues grow. Operators must implement more effective backhaul strategies than traditional ‘point to point’ microwave and leased lines if they are ever to make data ‘pay’.
Meanwhile, Informa confidently predicts that this explosive data growth will continue. (See article: Mobile traffic boom will eventually revive base station) They expect global mobile data revenues to increase 77% by 2012 while global mobile data traffic grows far faster, increasing by more than 1000% in the same period. Vodafone’s results show that, if anything, Informa’s prediction for data traffic growth may prove to be conservative.
One thing is for sure: Current backhaul strategies are not scaleable and that, when it comes to backhaul, doing more of the same will not be enough.
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