Without radical changes to the way mobile communication is provided, the demand for data transmission will rapidly overtake the network’s capacity. This isn’t doomsday scenario stuff – it’s simple math.
Each operator is allocated a 5-megahertz chucks of the electromagnetic spectrum, which the operator uses at each of its transmitters. The chunks of spectrum carry data either to or from the transmitter. Many operators are given just two 5 MHz chunks – though some may have as many as five pairs. Current 3G technologies can send roughly 1 bit of data – a one or a zero – per second over each 1 Hz of spectrum that the operator owns. That means a cell tower using one pair of 5 MHz chunks of spectrum can transmit just 5 megabytes of data per second. When you factor thatApple has sold 50 million iPhones and Android is growing at a phenomenal rate, it doesn’t take long overcrowd the system. If the growth of smartphone use continues at current pace, mobile traffic will more than double every year for the next four years, which means that, assuming best-case scenario in which operators have 50 MHz of spectrum allocated to them, demand will exceed capacity in 2013. If you live in New York or San Francisco, chances are you’ve already started to experience some of this issue.
Cellular operators know this and aren’t waiting for the worst – they continue to develop new technologies to try to alleviate the problem. The jump from 2G to 3G was the first big jump. It enabled engineers to squeeze 5 to 10 times as many bits per second into each hertz of spectrum. However, the rise of the smartphone occurred just about the same time as the move to 3G, so demand accelerated greater than supply. New technologies at work include Long Term Evolution (LTE) and WiMax, but both of these will only let operators add 50 per cent more data into chunks of spectrum before hold-ups start happening again.
The most likely solution is for the government to allocate more space for mobile operators to use on their transmitters. Unfortunately, much of the spectrum in the 400 MHz and 3 gigahertz range that wireless operators use is already being used by military, TV and satellite communication. However, the move from analog to digital television may solve some of the problem. Like everything related to the government, it may take up to 10 years to get the spectrum redesigned to free up 500 MHz to the operators. Another plan in action is to limit the availability of the device to the network. AT&T has already started this by dropping the unlimited data plan for smart phones and implementing monthly caps. Rather than add space – simply reduce the amount of usage, but this is clearly a stop gap measure.
One of the most promising solutions for cheap and extensive internet use would be to install a cellphone transmitter in every home and office. These transmitters, dubbed femtocells, look like wireless routers and would plug into broadband connections. By shifting the traffic onto the Internet, they would bypass larger conventional cellphone transmitters, which would still serve users when they’re out.
Femtocells wouldn’t be too much of a burden on the home’s broadband connection, since the constraints of cell towers have forced engineers to create smartphones that use data far more efficiently than traditional desktops and laptops. Femtocells may have issues too – especially interference with each other when packed into urban neighborhoods. Femtocells have already hit the consumer market – AT&T is rolling one out and T-Mobile has had one for awhile – for people who live in areas with poor reception, but these are relatively expensive and there seems to be some consumer concern about letting other people on their network.
One of the best ways to generate consumer adoption is to offer the femtocell for free to consumers. Any consumer that has an integrated plan (like AT&T Uverse) would receive one at no charge. The benefit to the consumer is that it immediately creates a fast and powerful wireless data connection without the need for a wireless router or home network. The benefit to the operator is that they increase capacity. A simple algorithm shows the cost to give away femtocells is greatly (GREATLY) outweighed by the benefit of additional bandwidth (or reduced tower usage to be more technically correct). In an already crowded advertising marketplace, the inclusion of femtocell hardware, properly marketed, could be a tipping point in the consumer decision-making process.
With a nod to The Graduate – the future of cell phone marketing can be summed up in one word – femtocell. Actually, one of the first things we’d have to do for a client is come up with a term to replace femtocell.
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