Mobile Data's Doomsday Scenario

A provocative study commissioned by Tellabs suggests mobile operators could wave goodbye to their profits by 2013 unless they wise up

February 3, 2011

3 Min Read
Mobile Data's Doomsday Scenario

According to the Mayan calendar, the world is going to end in December 2012.

Yes, next year!

That apocalyptic dateline could come as something of a relief to the world's mobile operators though because, according to a new report, they could be waving goodbye to their profits in 2013 unless they get to grips with the data deluge that's swamping their networks.

And without profits, well ... what's the point?

According to the study, commissioned by Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA) and based on data from Analysys Mason , some mobile operators could be kissing their profits goodbye as early as the first quarter of 2013 if they fail to redesign their networks appropriately. (See Tellabs Predicts Profit Drought for MNOs.)

That darned data!
The basic premise is that the cost of transporting, managing and delivering mobile data traffic is increasing at a pace that far outweighs and accompanying growth in data revenues -– a well analyzed and understood trend. As a result, some mobile operators could soon be spending more cash than they're getting back in service revenues, and start losing money.

According to the study, mobile operators in North America are the first in line to find themselves reporting operating losses because of their onerous data-related capital and operating expenditures, followed by those in Asia/Pacific and then Europe.

Investing only additional network capacity is an uneconomic way for mobile operators to deal with the problem, says Tellabs, which suggests that the only route to salvation for the mobile operators is to invest in network intelligence, and not just dumb pipes.

"Business as usual is simply not enough," warns Ben McCahill, director of mobile strategy at Tellabs, who will probably work all weekend.

It's not all doom and gloom
The nightmare, loss-making scenario can be averted, though, if operators invest in technology that is application and context aware, allowing them to manage their mobile data traffic in the most efficient way possible and develop new marketing strategies based on meaningful data gleaned from the network.

This involves the deployment of distributed, mobile packet-aware systems that can go beyond the current packet inspection platforms and perform more detailed application analytics that, in turn, can help with the enforcement of per-subscriber policy rules.

Handily, of course, Tellabs is in possession of crisis-averting technology in the form of its SmartCore platform that's based on the mobile packet core capabilities acquired in late 2009. (See Core Blimey! Tellabs Buys WiChorus.)

And not by coincidence, Tellabs today announced a new evolved packet core product for Long Term Evolution (LTE) networks, and a capacity boost for its wireless packet core platform. (See Tellabs Tees Up LTE EPC and Tellabs Boosts Packet Core Capacity.)

More than just plumbing
Of course, any mobile operator that has a 2011-2015 (and beyond) investment strategy focused purely on network plumbing and not involving the Service Provider Information Technology (SPIT) elements that can make it more operationally efficient and customer friendly has no right to make a profit anyway: It's hard to imagine many mobile service providers having a "business as usual" mentality.

And Tellabs isn't the only company that's sending a "we can help you deal with the data issue" message to the mobile operator community. All the major mobile infrastructure players, especially those with rival mobile packet core platforms and Service Provider Information Technology (SPIT) elements such as policy control and enforcement platforms, will be banging the same drum in Barcelona at the Mobile World Congress (Feb. 14-17).

None of this will appease those that live by the Mayan calendar, though. No manner of network intelligence is going to stop them from hiding under their kitchen table next December, praying to the sun gods, and hoping they'll get to hang their 2013 calendars.

— Ray Le Maistre, International Managing Editor, Light Reading

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