Verizon: Cozying Up to Latent Mobile Demand

 

The Verizon Wireless Network future growth and capacity management plan requires one basic thing - more spectrum.

 In the operation of their popular cellular network they have reached or are rapidly approaching what is commonly known in the world of computing and transportation systems as "latent demand". This condition typically exists when the supply of goods ( bandwidth) increases, more of those goods or services is consumed by the end user. 

In Verizon's case, the more tower based cellular network and spectrum capacity that is added, the more that is used by both existing and new customers. Verizon customers will only continue to demand more bandwidth in the next decade.

 

Newly emerging mobile device technologies and services will only further saturate data mobile networks such as Verizon's in the future. These include data-intensive applications as high quality video streaming required for medical, video conferencing and other enterprise purposes. These services are needed to expand our digital economy.

We recently reported on the projected growth of mobile data due to the rapid adoption of smartphone and tablet devices.

Overall wireless mobile data use is increasing rapidly as tablets, smartphones and applications squeeze more data through wireless networks. In response to this situation Verizon has taken the following actions.

 

In a recent filing with the Federal Communications Commission, Verizon claimed that the only possible way to create the required bandwidth and provide capacity intensive mobile broadband is to keep building their tower macro-cellular networks. In order to do that Verizon needs more spectrum, and if it does not get that spectrum, it will start running out of LTE capacity by 2013.

In the same filing the logic was oulined in support of Verizon’s planned $3.9 billion purchase of nationwide AWS spectrum licenses held by SpectrumCo, by Verizon executive director of network strategy Bill Stone. 

He said that Verizon’s current spectrum holdings do not provide enough capacity to meet growing 4G demands, in some places hitting full capacity by 2013. More places will hit capacity by 2015.

“Our usage projections suggest that traffic on our LTE network will surpass data usage on our EV-DO network in early 2013. By year-end 2015 our LTE data traffic is projected to be 5 times the peak data traffic ever carried on our 3G EV-DO network. The impact of that growth rate compounds, resulting in a more than 20-fold increase in LTE data traffic from year-end 2011 to year-end 2015.“

Today, about 5% of Verizon’s customers use LTE. Verizon  is pushing to migrate as many customers to LTE as possible. Even though Verizon is trying to move more users to their LTE network, their EV-DO network is not seeing a drop in usage either. Stone stated:

“…overall traffic continues to increase on the EV-DO network even as some customers migrate to the LTE network. Thus while traffic is migrating to LTE, spectrum deployed for EV-DO is not fallow, but is filled by the growing data demands of remaining users. Put another way, customers are not yet moving to LTE fast enough to stop, and reverse, EV-DO traffic growth.“

The answer to Verizon’s latent demand issue has now become a common theme among all U.S. wireless operators as they all strive to gain access to more spectrum. 

Most  carriers will need more spectrum if we expect them to provide the big bandwidth-plentiful data networks of the future. Verizon’s predictions on mobile data use seem alarming.

Network bandwidth saturation is an ugly thing in that business, when data transfers slow down users get impatient. I am willing to bet that Verizon has the right team in place to build out sufficient capacity to keep ahead of the latent demand curve.

 

 

 

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