Japan cellcos tackle traffic jams
Smartphone penetration in Japan is still only 10%, but operators are already being forced to offload traffic to Wi-Fi, Wimax, fiber, and cable TV networks to manage network congestion. In addition, operators are turning to FDD- and TD-LTE for capacity relief, and are waiting for new spectrum in the 900MHz band to be allocated for LTE in January 2012. However, even these measures won’t be enough to ease the increasing traffic demands on operators’ networks in the coming years.
Takashi Tanaka, the president of Japan’s second-largest mobile operator KDDI, told Mobile Asia Congress (MAC) that the company’s 3G and LTE networks will collapse under the expected mobile data traffic demands by 2014. Last month, smartphones accounted for over 50% of KDDI’s total handset sales, and smartphones generated more than 60% of traffic on its network.
However, increasing smartphone penetration is not the only reason for the pressure on Japanese operators’ networks. The other major factor is unlimited data plans. In response to the increasing pressure on its network, NTT DoCoMo has announced that it will abolish its flat-rate LTE plans by the end of April 2012. We believe that KDDI and Softbank will follow NTT DoCoMo’s lead and not rollover their flat-rate tariffs for LTE. If they do, it could pose a major threat to their businesses.
KDDI has stated that traffic management is its “top priority”, and we believe that this is also the case for DoCoMo and Softbank. KDDI’s flat-rate tariffs for smartphones are 30% higher than those for feature phones, which assist in increasing its data ARPU. However, KDDI still requires 100,000 new public Wi-Fi hotspots to cope with the increase in data traffic. On October 1, 2011, KDDI began throttling 3G data users that download more than 3 million data packets (one packet is 128 bytes) over three consecutive days. Last year, KDDI also upgraded its network with 1xEV-DO Multi-Carrier technology, which offers peak speeds of 9.2Mbps. KDDI has announced that it will commercially launch 1xEV-DO Advanced in April 2012 to increase the capacity of its network.
Softbank Mobile’s vice president of network operations, Yoshihiko Nodera, told delegates at MAC that the company plans to migrate traffic from its existing 3G network that uses the 2100MHz band to spectrum in the 900MHz band, which will be available for commercial usage from August 2012. The freed up capacity in the 2100MHz band will then be used for FD-LTE. Softbank Mobile also plans to deploy TD-LTE in March 2012. The operator already uses femtocells, and has 300,000 Wi-Fi hotspots for data offloading. Softbank also throttles the speed of heavy data users, but Nodera says that this is “an interim solution”, which suggests that Softbank will not roll out unlimited data pricing for LTE.
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