In order to provide high quality of service to their customers, 3G operators must have sufficient network capacity per user, or 3G device, to support our forecast traffic volumes per 3G device.
Following the launch of 3G services by a 3G operator, the total available 3G network capacity has only to be shared among a relatively small number of users/devices, resulting in a large capacity per 3G device. This explains why 3G operators have not been overly concerned about the initial take-up of mobile broadband services, which consume relatively large amounts of network resource.
However, two factors will cause the available network capacity per device to decrease substantially over time, for a given 3G technology. These are:
- the migration of customers from 2/2.5G to 3G services
- the continued increase in overall cellular device penetration. Within the next five years, cellular device penetration will generally increase, even in developed markets, as an increasing number of mobile users will have at least one 3G device (for example, some users may subscribe to a mobile broadband services as well as a standard mobile tariff).
As shown in the figure below, the impact of these factors on 3G service traffic per device for incumbent 3G operators will be substantial. We have modelled an incumbent 3G operator with 20 million cellular devices customers in 2007 (split between 2G and 3G networks), 15 000 3G base station sectors and 10MHz of 3G spectrum. For simplicity, we have shown the case where all 3G devices support that technology and the 10MHz of spectrum is entirely devoted to the technology considered. In practice, the capacity available to a 3G operator will be somewhat less than this. Firstly, it would take a considerable length of time for handsets with the new technology to permeate the user base. Secondly, the technology evolution step may be such that not all of the spectrum can be immediately available to the new technology. For example, LTE uses a fundamentally different radio interface to HSPA+ and previous technology generations. Therefore some of the available spectrum would have to be reserved for handsets using previous technology. Hence, the figure can be regarded as an upper bound on the capacity per 3G device for each of the technologies considered.
With a relatively small number of devices in 2008, HSPA will support an average traffic level of 352MB per month per device in our typical network implementation. As 2G users migrate to 3G services, this figure will rapidly decrease, to only 79MB per month per device by 2014 (less than a quarter of its level in 2008).
As shown in the figure, 3G enhancements will be essential in order to maintain the levels of network capacity per device for incumbent 3G operators with large customer bases.
In contrast, new-entrant 3G operators, with smaller customer bases and without the need to migrate customers from 2G services, will not experience such significant declines in network capacity per 3G device (provided that their market shares do not increase significantly). As shown in the figure below, there will be a modest decline in 3G capacity per device as a result of an increase in mobile penetration.
For our typical new-entrant 3G operator – with 5 million 3G devices in 2008, 15 000 3G base station sectors and 15MHz of spectrum – the capacity per month per device for HSPA will decline from 532MB in 2008 to 430MB in 2014. As with our incumbent 3G operator, we have modelled the case where all 3G devices support each technology and all of the available spectrum is made available to that technology. Hence, these figures represent an upper bound on the network capacity for this particular network implementation. Compared with incumbent 3G operators, there will be much less urgency for new-entrant 3G operators to deploy 3G enhancements, such as HSPA+ and LTE (at least from a capacity perspective).