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Telecom network optimization driven by higher user expectations

A host of telecom network optimization techniques promise more efficient networks and data transmission, but falling bandwidth prices complicate the calculations.

Editor's Note: In this series, Telecom Network Optimization Options, looks at the latest techniques in telecom network optimization, from optimizing the content itself to caching and compression, and from techniques to optimize physical infrastructure for wireless to network virtualization. The series evaluates how effective these methods are at meeting today's telecom business objectives.

The skyrocketing rate of mobile and fixed-line data usage is forcing telecoms to try new network optimization methods, ranging from simple CDMA software revision and content transcoding to rebooting into a new virtualized network architecture.

Telecoms are also turning to network optimization to mitigate the risks of oversubscription.

The larger carriers are driven in part by higher customer expectations, while smaller regional players are trying to avoid costly capital expenditures.

Telecoms are also turning to network optimization to mitigate the risks of oversubscription. Both landline and wireless providers typically sign up customers at higher service levels than a network could come close to guaranteeing during peak usage, relying on the likelihood that users will rarely push usage to that peak.

Oversubscription normally works fine, just as it does in other industries, ranging from air travel to the movies, but consumer usage habits can change rapidly. For instance, the introduction of the iPhone and other Web-friendly mobile devices has forced telecoms to finds ways to bridge the capacity gap between the present and the next five-year network upgrade.

In these cases, severe "bottlenecks" can degrade or disrupt services, according to Akshay Sharma, a Gartner analyst.

"The issues come when the user behaviors change dramatically," he said. "That's when the problems arise."

There have been plenty of dramatic changes in recent years -- like the creation of YouTube and BitTorrent. Sour economy or not, the next big thing is surely just around the corner, ready to live up to its label of "disrupter." It's the unsavory job of telecoms to clean up the pieces after the disruption.

Telecom network optimization options abound

Fortunately, a host of tools is available to telecoms, and the right ones will vary greatly from job to job.

For example, a number of vendors are proposing transcoding or compression technologies for mobile video to ease the data burden on cellular providers.

Such a method might, however, do little good for landline providers, which could instead opt to push out caching mechanisms into their metro market to reduce repetitious traffic flow.

The price of inaction could be high

In newly published research, Gartner analyst Phillip Redman found that many carriers advertise 1.8 Mbps connections on the 3G networks, but actual speeds, particularly if users are mobile, can be half that, partly as a result of the density of mobile users.

"Advertising and hype have set expectations higher than can be satisfied for some users," Redman wrote about AT&T's 3G network, which has been challenged by the huge popularity of the iPhone. "Clients have been asking about the slower-than-expected speeds from most of the 3G network providers."

With the four major carriers pushing their 3G networks, customers have plenty of choices to churn to, particularly since wireless customers are not known for loyalty in the first place.

The trends in wireless are just as valid for landline connections, even if the potential resolutions -- and challenges -- are different.

"You can go shopping, you can get entertainment, you can search and get messages," said Jeff Kagan, an independent telecom analyst. He said today's usages could not have been imagined 10 years ago. "As the years go by, and as service improves, customers are not willing to go back to earlier times when there were more problems."

Even if some infrastructure upgrades get put on hold while credit frees up, telecoms must still increase reliability and speeds if they are to keep customers satisfied, Kagan said.

A penny-wise problem

But optimization is not always the answer, particularly when it comes to telecom, where bandwidth is often a feast-or-famine commodity.

"Bandwidth is the thing that service providers need to economize [on] the least," said Tom Nolle, president of CIMI Corp. "Pure capacity's cost is coming down, and it doesn't make a lot of sense to spend a lot of money to get more bandwidth."

A $5 million upgrade might boost bandwidth by 5%, but if a carrier has fiber lying dark somewhere, the cost to switch it on is marginal while doubling the bandwidth.

In most cases, Nolle said, carriers would rather just create new infrastructure than squeeze out the last few percentage points of optimization, particularly if that optimization requires new, complicated equipment that they will need to install and maintain.

Capital expenses eat up about 18 cents for every revenue dollar, while 22 cents get poured back into network operations costs, according to Nolle.

"It always boils down to TCO -- total cost of ownership," he said.

In many cases, he said, potential efforts toward optimization would better be spent developing new monetization strategies to make sure that any new bandwidth created actually makes the provider money.

As more users demand advanced IP services on their own terms, the monetization problem will become increasingly urgent, even as quality-of-service expectations continue to grow.

"The landscape is going to get interesting," Sharma said.

E-mail series author Michael Morisy with your thoughts on optimization.

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