How the iPhone Is Driving a Wireless Bandwidth

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					How the iPhone Is Driving a Wireless Bandwidth Boom
By Om Malik
September 2, 2009

Last weekend, I met with a friend for coffee to discuss the state of the network. He
observed that I was consistently writing more and more about the mobile industry. I
corrected him — I am writing more and more about the mobile Internet, not the mobile
industry. And I’m doing so because it’s one of the most dynamic parts of today’s
technology ecosystem — there’s no getting away from it.

If you’re an iPhone user, then you are all too familiar with the trials and tribulations that
come with AT&T’s 3G service. It can be slow, it can be temperamental and it can be
missing in action. Ma Bell, of course, has been trying its best to boost the bandwidth to
your handset by using its 850 MHz spectrum band for 3G services.

But that isn’t enough. It doesn’t matter how much speed the air interfaces can handle;
what matters is how much bandwidth is available to cell towers. As we have written in
the past, most of the mobile companies are using older-generation technologies — a
handful of T-1 connections that pump 6-10 megabits per second of bandwidth capacity
into cell towers that turn around and share it with tens of thousands of users. But the
popularity of new 3G devices such as the iPhone and BlackBerry 3G has increased the
use of data, putting the backend networks under strain. And from that perspective,
today’s 3G networks are like glittering skyscrapers built on a foundation of matchsticks.

The current buildout of wireless networks is mirroring that of the wired Internet in the
late 1990s and early part of this decade. Back in the day, every time you pulled down a
track from Napster, you put an enormous strain on the network, which, in turn, led to the
rise of bandwidth providers such as Qwest and Level 3, along with a series of hardware
makers. Today that problem is magnified manifold, mostly because the number of mobile
users is so much higher than PC users accessing the Internet.

So every time you look up Facebook on your handset, you’re contributing to the strain on
those wireless networks. And according to analyst firm Telegeography, by the end of
2013 the addressable market for 3G and 4G cellular services will have grown to more
than 4.5 billion — or about 71 percent of all wireless subscribers.
This is clearly a big opportunity not only for new startups, but also for more established
equipment makers. ADC Telecommunications, which makes gear for broadband
networks, is a perfect example. The company has been a beneficiary of Verizon’s
expansion of its fiber networks to consumer homes, and now that fiber-to-the-home
technology is finding a new use in the wireless backhaul networks. ADC’s fiber will
compete with the microwave technologies being used for backhaul as well. This
connectivity technology is known as “fiber to the cell site,” which means that carriers are
connecting cell towers and mobile base stations with ultra-high-capacity fiber links to the
Internet. And because these fiber networks can be easily upgraded to handle any amount
of bandwidth when demand arises, the switch to 4G from 3G technologies won’t result in
a bottleneck.

In a conference call with analysts to discuss the company’s most recent quarterly results,
ADC CEO Robert Switz said that there “are approximately 200,000 cell sites in the U.S.,
with less than 10 percent of them fed by fiber today.” Carriers are looking to supplement
these large macrocells with smaller, microcellular networks, which allow more
bandwidth to be made available to consumers.

“While we have seen customer spending delays throughout this year, we believe that
mobile carriers’ capacity issues continue to build and that our solutions provide an easy
way to implement and economic solution to these problems,” Switz said on the ADC call.
Loosely translated: These wireless backhaul networks are stretched to the max and are in
desperate need of an upgrade. And guess who ADC’s two major customers are? AT&T
and Verizon, both of which are betting the farm on their respective wireless networks
(and which together own more than half of the cell sites in the U.S.).
Verizon recently said that it plans to extend its fiber network for use as backhaul for its
future Long Term Evolution (LTE) network, which may help it cut costs. According to a
report released last month by telecommunications services provider Acision, backhaul
typically accounts for 30 percent of operating costs.

And as Switz noted, the demand for wireless bandwidth capacity isn’t going to come
down anytime soon. “You’ve got huge growth. And the apps are growing every day for
the smartphones. So the capacity, the wireless carriers can’t keep up with capacity
demand,” he said. “I just recently was in two meetings, names to be left blank, one
provides silicon into the market and the other provides services and their forward
strategic plans, they’re forecasting essentially handheld mobile devices with 100 MEG
capacity, the ability to do telepresence conferencing and all the other good stuff that we
laughed at years ago when AT&T used to put out their commercials on video, which we
now all have.”

This sort of matches with Cisco’s forecast from earlier this year, that mobile traffic
worldwide would reach more than one exabyte per month by 2012 — though some of our
readers expressed doubts about Cisco’s claims.

Regardless, it’s clear that the future of the mobile Internet is bright, exciting and
intriguing. I will be discussing that future onstage with T-Mobile USA’s chief technology
officer, Cole Brodman, at our Mobilize 09 conference on Sept. 10 here in San Francisco.
Hope to see you there.

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