The news: In January, Ericsson announced that it expected global mobile broadband subscriptions to double to 1 billion in 2011--with around 200 million of these in Europe--and maintain a high rate of growth thereafter, reaching 3.8 billion by 2015.
On the operator front, companies also looked to get ahead of increased data traffic. O2 UK disclosed later in January its plans to double infrastructure capital expenditures to support the migration of iPhone 4 and 3G dongle users to refarmed 900MHz spectrum. The company confirmed that it was spending an average of €2.35 million per day to deploy additional 3G capacity within the 900MHz band to improve data throughput.
In the future, Ronan Dunne, O2 UK's managing director, said that the company planned to charge content providers to use LTE and was investigating various business models. He indicated that the "toll road" principle was one example for content providers to choose a particular channel to transport media-rich content. "It's using the network efficiently with a view to optimising the experience for the end user," Dunne said.
With LTE some years away in a number of major European countries, operators started to look at alternative options to offload data traffic from their cellular networks. Wi-Fi offloading was the most obvious choice, with operators in the UK and France actively considering the option.
"We would definitely provide Wi-Fi coverage to support the cellular network in areas were there is congestion," said Bertrand Waels, head of UMA, WiMAX and access points for Orange France. "If we can identify the right location to install Wi-Fi hotspots then the technology is the best candidate for the job."
Thomas Wehmeier, an analyst at Informa Telecoms & Media, was more forceful in his viewpoint, claiming that the offloading of data traffic from 3G networks had been at the very centre of operator thinking over the past six to 12 months, "and any self-respecting network director should be looking to include Wi-Fi as part of a more holistic network strategy."
In November, 3UK illustrated the extent of the problem saying that 137 terabytes of data were now being carried by its UK mobile network every day. The company, the UK's smallest mobile operator, said that data now accounted for 97 per cent of all traffic flowing through its network, driven by the high percentage of smartphone users among its customer base.
However, parts of O2 Germany's network would seem to have been overwhelmed during December with the CEO René Schuster admitting that smartphone usage was causing "capacity bottlenecks in hotspots such as train stations or in the centre of big cities."
While confirming that that the telephony issues would be overcome by year-end, fixing the mobile data bottleneck is more complicated. "Further capacity improvements for mobile data require a significant expansion in the transport network and are thus more expensive," according to a newsletter sent to German dealers by O2.
With the drive to sell smartphones set to continue, unless LTE can be deployed quickly--unlikely in several countries--then the deployment of Wi-Fi or "small cells'"seems an unavoidable option for most operators
One advocate of this strategy (and also a vendor) was Picochip, whose CTO, Doug Pulley, suggested that major cities needed operators to react to the problem. "While Wi-Fi will offer some respite to the network, ultimately a city with London's population density means that small cells, deployed in the most congested areas, are the only way for the mobile networks to cope with the traffic," he said.
Why it was significant: Network congestion, a polite term for overload, quickly became a common issue for mobile operators in 2011, driven by the growing popularity and affordability of smartphones. While some operators have managed the impact of this sudden increase in mobile data traffic--typically those that came late to the iPhone party--others have not fared as well. Among them is Telefónica O2, which experienced a network meltdown in the UK in 2009. Given that European operators have had extensive experience designing and building 3G networks it is surprising that, as a group, the upsurge in data traffic has caught them unprepared. Data traffic was something that each of these operators had been attempting to stimulate over the past years, and the arrival of the iPhone and its followers has presented a business opportunity that came close to being fumbled in 2011.