Good old Wi-Fi could be the fix to an impending explosion of data on wireless networks.
Nearly three years after Apple introduced the game-changing iPhone, wireless operators around the globe are feeling the effects of the wireless data tsunami that is well under way. Even networks that don't support the iPhone are feeling the pinch as a generation of new wireless devices offering bandwidth-hungry Web applications are hitting networks.
The result, as many iPhone users in New York City and San Francisco will tell you, is a network that.
Savvy smartphone subscribers with Wi-Fi-enabled devices have already been seeking out Wi-Fi hotspots for their Internet surfing, music-streaming, and video watching. But as more devices, such as the Apple iPad come online and the, wireless operators are looking at Wi-Fi as a way to offload some data traffic from their overburdened 3G networks. And as wireless data is expected to continue to grow rapidly over the next several years, they're looking at Wi-Fi as a part of their long term wireless strategies as well, even as they build out 4G wireless networks.
"The thirst for bandwidth that new devices and applications on the network create far exceeds what 3G or 4G technology can offer," said Jeff Thompson, CEO of TowerStream, a company that provides fixed wireless access using WiMax. "And you can't put the genie back in the bottle."
Mobile data traffic is growing unabated, largely due to an onslaught of new devices that provide access to a bevy of Web-based applications. Internet infrastructure equipment maker Cisco Systems predicts that by 2014 there will be more than 5 billion personal devices connecting to mobile networks, as well as billions of machine-to-machine devices also connecting to networks.
Wireless data traffic throughout the world has increased by 160 percent over the past year to 90 petabytes per month, or the equivalent of 23 million DVDs, Cisco said in a recent report. And by 2014, that figure is expected to increase 39-fold to about 3.6 exabytes per month (or 3.6 billion gigabytes).
Already some networks are crumbling under the stress. AT&T, the exclusive carrier in the U.S. for the iPhone,in the last two and a half years. The extra traffic, particularly in densely populated regions, has caused problems for consumers in the way of dropped calls and slow Net access.
AT&T's chief executive of operations, John Stankey, said during the company's fourth-quarter earnings call that during certain periods in some sections of Manhattan nearly 70 percent of the phones active on AT&T's network are data-intensive devices.
AT&T's problems are a harbinger of what's to come for other operators that are just now getting data-intensive smartphones. AT&T has already said it will, bringing the total to between $18 billion to $19 billion. The company didn't break out how it would spend the money, but it mentioned plans to add cell sites, , and upgrade its network to the next generation of HSPA. It will eventually upgrade to 4G wireless using LTE technology.
Wi-Fi as the solution
Even with new 4G networks coming online and more backhaul capacity in the network to help open up the lanes of traffic, there will be so much demand that wireless operators are going to need to use every solution they can to address the problem. And this is why AT&T plans to continue investing in its Wi-Fi hotspot network. Today, the company has 20,000 hotspots around the U.S. in retail locations like Starbucks coffee shops, hotels, and airports.
"Wi-Fi is a very important technology for us," said Mark Siegel, a spokesman for AT&T. "And it will be considered as a factor in our network plans in the future."
AT&T subscribers are already using Wi-Fi to offload some 3G traffic. A recent AT&T survey indicates that in the past month 43 percent of smartphone users said they had connected to an AT&T hotspot at least once, Siegel said. In 2009, AT&T consumers connected to an AT&T Wi-Fi hotspot four times more often than they did in 2008.
Momentum is growing. In the fourth quarter of 2009, there were more than 35 million connections to the Net via an AT&T Wi-Fi hotspot. This is up by 10 million over the fourth quarter of 2008, Siegel said. He also pointed out that the majority of these Wi-Fi connections are being made by smartphones, such as the iPhone, rather than laptops. In fact, 73 percent of Wi-Fi connections in AT&T hotspots came from "integrated devices" in the fourth quarter compared with 61 percent for all of 2009.
One of the biggest benefits of Wi-Fi is the fact that it's already in most devices. Laptops come with Wi-Fi pre-installed, and now most new smartphones also come with Wi-Fi built in.
Advances in Wi-Fi technology over the past couple of years have also made it more useful for mobile operators. The latest version of the technology--802.11n--can transmit over longer distances at faster speeds. Multiple radio technology also helps Wi-Fi signals move around corners and better penetrate walls for more coverage.
For example, at a distance of about 500 meters, 802.11n Wi-Fi device can transmit signals at 15.5 Mbps. This is compared with about 5.2 Mbps using the older 802.11g Wi-Fi standard. Compare this with average speeds of 3G wireless, which is about 400 Kbps to 700 Kbps and it's easy to see why consumers would choose to use Wi-Fi when given the opportunity. Wi-Fi is also faster than WiMax, a 4G wireless technology that offers average downloads around 1 to 2 Mbps.
"The newer 802.11n technology changed the game for Wi-Fi," said Selino Lo, CEO of a Wi-Fi networking company called Ruckus Wireless. "It offers better range and coverage. And it offers the ability to service more simultaneous customers, which allows wireless carriers to use it to build much more scalable networks."
Towerstream, a company that specializes in providing wireless backhaul solutions to wireless carriers and large companies, is exploring using its rooftop rights in densely urban areas to create Wi-Fi hotzones. Since the technology today creates larger Wi-Fi hotspots, Thompson thinks operators could extend their Wi-Fi hotspots beyond a single cafe, covering entire downtown areas.
"You can build an 802.11n hotspot that isn't much smaller than some of these cell sites in densely populated urban areas," Thompson said. "It's still a little early for us, but we're talking to carriers to see if there is an opportunity for us to leverage our rooftop rights to help them build out these networks. It's a lot cheaper and easier to install than setting up a new cell tower and it offers a lot more capacity."
AT&T has been the most vocal U.S. carrier to talk about its use of Wi-Fi to help alleviate capacity issues. In fact, during the company's earnings call, when asked how AT&T expected to handle additional traffic from Apple's iPad, an executive said he expected many consumers to use Wi-Fi.
T-Mobile has also been a big proponent of Wi-Fi. In 2006, the company began offering a service for $10 extra a month that allowed people to make unlimited phone calls using Wi-Fi. The company has since discontinued the service when it introduced an unlimited calling plan for all its cell phones, but it still allows subscribers to seamlessly switch to Wi-Fi for voice and data calls on certain phones.
All of its Wi-Fi-enabled handsets are able to switch to Wi-Fi for data. But company executives say T-Mobile doesn't view Wi-Fi as a technology for offloading data traffic, so much as it sees it as a way to extend the T-Mobile network.
Sprint Nextel is also using Wi-Fi to offload some data traffic and to extend the reach of its network. At CES in January, the company, a 3G/4G wireless router that creates a mini-hotspot for up to five Wi-Fi devices.
Verizon Wireless seems to be the least enthusiastic U.S. operator over Wi-Fi. For the past few years, Verizon has downplayed the importance of Wi-Fi. And up until recently, it routinely disabled Wi-Fi on many handsests. The company experimented with deploying its own Wi-Fi hot spots several years ago in New York City, turning old phone booths into wireless hot spots. The service never took off, and Verizon dismantled the hotspots. The company was also a vocal critic of many municipal Wi-Fi projects, including the one in Philadelphia.
But in 2009, the company had a change of heart toward Wi-Fi. Itto its own Verizon Wi-Fi hot spots as well as to hotspots offered by Boingo as part of their broadband service.
While Verizon sees the value in extending Wi-Fi to broadband customers, the company still doesn't appear to be embracing it for offloading data traffic. A spokesman for the company was not available to talk about the company's Wi-Fi strategy.
That said, Verizon has been very public about its aggressive plans for. The company will be launching some markets in 2010 with more to follow in 2011.
Even though operators may not be talking publicly about their plans for Wi-Fi, Steven Glapa, director of business development at Ruckus, said they are talking to him about deploying solutions.
"Operators are definitely interested in Wi-Fi for offloading data traffi," he said. "The normal process for a tier 1 carrier may take 12 to 24 months to evaluate, test, and deploy new radio technology, but many of the people I am talking to are telling me they need to make decisions much sooner than that."
He said carriers around the world who have had the iPhone the longest are the most eager to expand their Wi-Fi networks for offloading traffic. Glapa said consumers may start seeing more hotspots and hotzones for offloading data traffic as soon as this year. But he expects many carriers to get these Wi-Fi offload networks up and running in 2011 and 2012.
"When you start seeing CEOs talking about capacity issues, that's when you can expect to see some changes pretty quickly," he said. "So I am sure wireless subscribers will start seeing something by the end of the year."