Beyond Cellular – An Analyst Veiwpoint

By Matt Lewis – ArcChart

As the mobile industry is now entrenched in the mass roll-out of 3G, it is prescient to ask: where does the industry go from here? Incredibly, the mobile services market has grown to 1.4 billion users worldwide and revenues of $500 billion with little deviation from the classic mobile operator business model which has existed since commercial cellular services started in the late 1980's.

However, wireless technologies are in the market today and on the imminent horizon which offer superior speeds to wide area cellular technologies and are completely IP-based. This threatens to disrupt the conventional cellular service model, and in the process shift the competitive positioning of mobile operators worldwide.

Over the coming years, step changes in the wireless industry will not be characterised by a serial overlay of evolved cellular technologies, such as the move from 2G to 2.5G and now 3G. Instead, it will be marked by the addition of evermore advanced wireless standards to a mixture of local, metro and wide area wireless technologies. These will consist of Wi-Fi and Ultra Wide Band (UWB) in the local area; broadband wireless access technologies like WiMAX, UMTS-TDD and Flash-OFDM in the metro area; and 3G cellular technologies like CDMA 1xEV-DO, W-CDMA and HSDPA in the wide area. This is set to create the “wireless cocktail”, a mix of multiple wireless standards combined into a single service platform for the consumer.

From an infrastructure perspective, this move towards the wireless cocktail is largely being motivated by operators' drive towards an all IP network core. As standards borne out of the IEEE, Wi-Fi and WiMAX are defined around IP. However, the same is not true for circuit switched cellular systems, but this is about to change with the arrival of IMS (IP multimedia subsystem).

IMS is a standard for connecting devices publishing multimedia content with those consuming it, over an IP network. Connections are established directly between publisher and consumer, even if both publisher and consumer are users on a mobile phone. As a result, IMS will dramatically reduce the time it takes operators to introduce new data applications and services to their subscribers; sometimes as quickly as a matter of weeks. Many in the industry also believe that it is worth deploying IMS just for the reduction in operating costs which will result from the shift to an IP-based network, even if no new services are ever deployed.  In the UK, British Telecom believe that deploying IMS in their fixed network will reduce the total number of devices managing that network by 100,000, saving almost $2 billion in operational costs.

IMS essentially abstracts data services from the core network, meaning that rich and compelling applications can be built, either by the operator or third parties, and quickly delivered to subscribers. This should provide the boost to data revenues which operators need in order to support their ARPU, which has been suffering in light of eroding voice revenues.

As a 3GPP standard, IMS is targeted at cellular operators, but there are clear indications that some fixed operators will also deploy the standard. IMS is a central part of BT's 21^st century network (BT21CN), and the UK incumbent is the largest fixed advocate of the standard so far.

Circuit switched voice will remain an integral part of an operator's network as they migrate to IMS but, inevitably, when IMS is fully integrated and IPv6 adopted, VoIP will become the standard voice transport medium. As a result, IMS will accelerate arrival of the day when all base station infrastructure - whether for local, metro or wide area networks – is reduced to a radio head which plugs directly into an operator's IP core. Already, vendors are developing such solutions for WiMAX and radio specialists like REMEC are designing similar “box” system for GSM/WCDMA cellular.

The disruption which the wireless cocktail will have on the cellular industry will be related to the extent to which the mix of wireless technologies is integrated into the mobile handset, and how rapidly this integration occurs. Today, Wi-Fi has seen widespread integration into PDAs and notebooks, but their impact on the revenues generated by the mobile industry is negligible. However, there are several factors driving integration of Wi-Fi and WiMAX into the mobile handset, including: Intel's aggressive support for both Wi-Fi and WiMAX, with handset integration of these technologies as its ultimate endgame; demand for mobile data and VoIP; a supply-side influence from semiconductor and handset manufacturers looking for avenues for product differentiation and demand from new market entrant service providers.

However, the existence of multiple radio handsets still presents the challenge of handoff between the various networks of the wireless cocktail. This is not addressed by IMS, but another 3GPP standard, Unlicensed Mobile Access (UMA), caters to exactly this. UMA provides access to GSM and GPRS mobile services over unlicensed spectrum technologies, including Bluetooth, 802.11 and WiMAX. With the aid of a UMA network controller, which sits between the IP network and a cellular operator's core network, a seamless handoff between these unlicensed, IP-based networks can be enabled, so long as the multi-radio handset has a UMA client installed. At the moment, UMA will handoff IP calls to a circuit switched network, and visa versa. But it is likely that, since both IMS and UMA are managed by the 3GPP, UMA will evolve to support an IP to IP handoff when a user moves between, for example, a Wi-Fi network and an IMS-enabled cellular network.

UMA is not the most elegant convergence solution around. For example, while it can manage a handoff between a Wi-Fi access point and a cellular base station, there is no support for handoff between two access points. However, UMA remains the only convergence solution supported by a standards body.  In April, Philips announced the first UMA-enabled handset reference platform, containing both a Wi-Fi and GSM radio and a UMA client provided by Kineto Wireless. At SuperComm 2005, both Nokia and Alcatel announced support for UMA in their infrastructure equipment.

From the consumers' perspective, demand for the wireless cocktail will driven be by the increasing need for high-speed internet access whilst away from a fixed connection, and the applications and services which can take advantage of this. In particular, the rising demand for VoIP and mobile VoIP is perhaps the single largest factor which will continue to drive demand for wireless broadband internet access, not just in the home and enterprise, but more importantly in the metro and wide area.