A Wireless Carrier's Challenges in Managing Data Demand

New Canadian wireless entrant Mobilicity speaks on various challenges and difficulties breaking into a new market with an insatiable demand for mobile data.

Any mobile device enthusiast will tell you that mobile broadband connectivity is crucial. In fact, Microsoft recently outlined new features in Windows 8 that will make connecting to mobile broadband more seamless and easy than before.

The reality that is hitting many consumers today is that bandwidth cannot be freely had. Data demands grow as the internet richens with multimedia and video streaming services, but at the same time service providers are introducing caps on data. Some service providers pull the reins tighter on their customers, but seldom without a reason. We had the chance to sit in on a Q&A session with Mobilicity, a cell phone and mobile broadband startup in Canada with 18 months the market, at a special event in partnership with HowardForums.

Announced at the event was that Mobilicity will be carrying the Samsung Galaxy Nexus starting February 6. A lucky participant who asked the best question at the event was to be awarded one of these Android phones.

Mobile Data Management

A hot-button issue was the network's data policies, which have come under intense scrutiny as its smartphone customers have discovered that Mobilicity aggressively shapes bandwidth and throttles data. Some users have reported repeatable instances where initial data speeds hit the 2 Mbit speed limit (as set by the carrier) but slow down to 0.05 to 0.15 Mbit after watch YouTube HQ videos on their devices.

Following an investigation by HowardForums, Mobilicity CEO Stewart Lyons revealed the carrier's current policy that if a user consumed more than 100 MB within a 15-minute window, he or she would be tagged for temporary throttled speeds. That works out to be 111 kb/s or 0.888 Mbits/s averaged over 15 minutes. Lyons revealed that this was to stop its customer base from using Netflix on Mobilicity.

Mobilicity also employs a deep packet inspection box to curb BitTorrent usage. Due to the number of ways BitTorrent may be masked, BlackBerry Maps was a false positive and was temporarily banned from use. Current users are also reporting that SSH is blocked, leaving Mobilicity who want to remotely access other machines through that protocol out of luck.

The Competition

Even with the restrictive network management policies, Mobilicity sees itself as having a distinct value advantage over the "Big 3" incumbents of the Canadian wireless market – Rogers, Telus and Bell, all of which also run value-oriented discount brands. Mobilicity often runs promotional plans that offer unlimited calling, texting and data for $40 a month – complete with basic features such as call display and voicemail. A similar plan from the Big 3 (and its discount brands) would run at least twice as much.

Mobilicity isn't the only value-oriented newcomer to the market, however. Wind Mobile, which launched slightly before Mobilicity, also offers similarly discounted unlimited plans in the metropolitan markets of Toronto, Vancouver, Ottawa, Calgary and Edmonton. While Wind is facing similar challenges with data management, and clearly states that it has the right to throttle its users after 10 GB of mobile data, the general consensus among HowardForums users is that Wind has a far more liberal data policy.

Tower Sharing

One of the most interesting questions of the night was regarding tower-sharing agreements: Given that Wind also operates on the same AWS frequency, would Mobilicity consider a tower-sharing agreement. Lyon responded enthusiastically, "Love it. Where do I sign?" (At this point, the room erupted with laughter as Howard jokingly suggested that he place a call to Tony Lacavera, CEO of Wind.) Lyons then continued, "All these tower sharing agreements are funny. We're in for sharing towers with anyone. It's funny because the government asks for a tower sharing policy because they really want to see it be successful. [The government] goes to the incumbents and they say 'We offered Mobilicity and Wind tower sharing and they refused', and I shake my head. Why would we ever refuse? Do you know how complicated it is to build a tower with city approval? We would never say no. It's a nonsensical argument.

"If anyone wanted to share a tower with us, provided that we could use the tower and it's in a good location for a site, we would say yes. In fact, we have not shared a lot of towers to date, probably less than 10 towers shared to date across the country. We build predominantly on rooftops. If a tower came up, absolutely, because towers are usually at great heights and good locations – we'd probably say yes in a second."

For reference, Bell and Telus pooled their resources together to launch an HSPA network, allowing it quickly catch up to Rogers in having an iPhone-compatible 3G network. Wind and Mobilicity are building their networks out independently, with Ericsson handling the duties for Mobilicity and Huawei for Wind. Ericsson also manages the network for Sprint and provides equipment to T-Mobile.

Decisions on Limited Resources

Ericsson engineers at the discussion revealed that tweaking a network is a constantly evolving task. Changes have to be made to tower and network configuration through the seasons, as the presence or absence of leaves on trees can affect how cell phones interact with towers. The engineers likened the challenge it is facing right now with its data demand against cell capacity to a glass of water, which can only hold a finite amount before you need another container.

The fact is that building a network is expensive. In response to a question regarding cell coverage in Toronto's PATH – a 28-kilometre (17 mi) system of pedestrian underground tunnels that connect together much of the downtown core – Lyons revealed that management wanted "multiple" 7-figure dollar range in fees just to install repeaters. Instead, the company is looking at an alternative way to cover the underground retail network. The Big 3, as well as Wind, currently offer cell coverage in the PATH.

The impression given by Mobilicity management is that it has made tough choices based on a limited budget, with the sacrifice on PATH coverage being a prime example. Lyons further explained that resources that would have otherwise gone to expanding Mobilicity's coverage footprint have been diverted to adding more capacity in high-demand areas.

While Mobilicity's may still be a small carrier in a limited number of markets, its challenges are no less real than what the likes of AT&T or Verizon face. Data demand is growing and keeping a consistent level of service that's fair to all customers is a huge challenge. The introduction of the iPhone on AT&T opened up a whole new dimension of data demand on AT&T, which exposed the weaknesses in the strained networks of New York and San Francisco. AT&T has since made significant improvements, but it hasn't help it a secret that it's had to come up with throttling policies for data hogs.

The Top 1 Percent

We've heard numerous times from those in charge of internet providers – both mobile and hardline – that a small percentage of users is responsible for the majority of bandwidth consumption. This appears to be a consistent plight expressed by all providers, and thus far dealt with by either throttling policies or hard caps.

During the Q&A session, our very own Jane McEntegart posed the question whether or not Mobilicity has considered creating tiered levels of services so that customers can choose between unlimited but throttled data versus a smaller allowance at full speed – especially in light of the report that says that the top 1 percent of mobile data users consume half of all traffic, and the top 10 percent consume 90 percent of the world's mobile data. (Incidentally, her question was unanimously chosen as the winner for the Galaxy Nexus, but the prize was taken away from her due to not being an active HowardForums user or Mobilicity customer.)

"Absolutely. We're only halfway through what we want to do with data. We've talked about a few things to do with speeds and that's something we want to look at," Lyons responded. "That question is one that's being pondered by CTOs all over the world. This is a very current and serious issue. It's very hard for networks to keep up with demand. There's an insatiable demand for data out there, and it's much harder on the wireless side, as we're confined by things such as spectrum."

"It's a challenge for all the networks out there. I've traveled the world; I'm originally from Australia, but I've worked in England, Egypt, Canada, Sweden. The phenomenon of the smartphone made a big impact on the network capacity. Every time you switch on that handset, it's polling the network. Before, it didn’t do that," explained Christian Lundgren, head of operational assurance at Ericsson. "When it was just a voice network, it was simple; we could calculate things a lot easier. Facebook, HowardForums, they're constantly sending pages out to your handset. Facebook is one of the biggest ones; it is literally connected to the network at all times, even when you're sleeping. We don't realize it, but from a signaling perspective, it's checking your Facebook account to see if there are new messages. The phenomena of all these apps on the smart handsets have really had a significant impact on how you dimension and plan the network."

Smart people or Smartphones?

On more than one occasion, Mobilicity management stated that its products and services are for smart people. In fact, the company's slogan is "Now that's smart." The likely question right now on present customers' minds is whether or not the network is for smartphones. Time will tell, but in any case, customers will always win where there are more choices and competition on the market.

For a full rundown of the Q&A, check out HowardForums.

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