Smart cities and Tech Evolution - XI Wireless Infrastructure

Penetration growth in Egypt of cell phones. In just ten years it has grew from 10% to over 100%.

When Marconi invented radio communications he said that it was a pity his invention could not be used for one to one communications. The radio signals covered a large territory and everyone could have listened into it thus making personal communications impossible. He invented the radio (and opened the door to the television) but he would have wanted to invent the cellular phone. At that time the processing power needed to harness the radio spectrum and make it available for person to person communication was not available and it would not be available till the 1980ies.

It was the effect of Moore’s Law that made cell phones a reality, both in terms of technical feasibility and in terms of economic affordability.  The evolution will continue in the coming years leading to yet another revolution, as we’ll see discussing 5G and Fog. As I noticed before, the Moore’s Law has reached its end in terms of cost per transistor but it is yet working in terms of density and power decrease. These latters are the driving forces for the wireless infrastructures in the coming years.

Wireless is good, from the point of view of an Operator, for three reasons:

  • air is very cheap
  • the Operator is paying only part of the investment bill 
  • the Operator can increase smoothly the capacity as demand increases

That air is cheaper than a cable (and related civil works) is a no brainer. One would say that air is “free” but actually the Governements have decided the Operators have ot pay to use it: they need to pay for having the exclusive usage of the spectrum. Getting a tiny slice of spectrum for the 3G meant an investments of billions of € to many Operators in Europe (different Governments adopted different policies but all charged for the licences). Still, once you have acquired the licence the air is there to use for free.

Of course, air is not enough. You need the infrastructure to support wireless comm. That means towers to deploy the antennas, feeding cable to bring the signals to and from the antennas and the switching nodes (plus a bit more). What is nice, from the point of view of an Operator is that in wireless communications a good portion of what needs to be done to establish and mantaining the connectivity is done by the cell phone and cell phones are paid by the users. If we were to look at the overall cost of a wireline and of a wireless communications systems offering a certain capacity we would see that their cost are comparable. However, in the case of a wired communications 100% of the cost are borne by the Operator (including the powering of the telephone in our home) whilst in the wireless communications the Operator will have to foot about 30% of the overall cost, the remaining 70% being borne by the users (who buy the cell phone and pay the power to recharge them from their own pocket.  To get a better feeling of the amount of power we are talking about, the Telecom Italia network used in the year 2000 some 2 TWh of power, nowadays, in spite of the much bigger traffic it still uses around 2TWh per year but the total power consumption is estimated around 6TWh per year: 4 of them are being paid by the users (it is not just the phones, it is also the modems to access internet and computers/tables using the internet).

The third, most important aspect is that in a wireless network an Operator can start covering a broad area with an antenna. As demand increases and the capacity provided by the antenna is no longer sufficient the Operator will invest money to place another antenna, reducing the power of the first one and hence its coverage and letting the new antenna to fill in for the coverage and provide the extra capacity. This investment is done as the demand grows, hence it is in synch with the revenue growth. This is not the case when we are dealing with a wired infrastructure that needs to be deployed, and be pervasive, before the demand exist (and revenues come in). In wired infrastructure it is the investment (the Operator hopes) that drive the demand, whilst in the wireless infrastructure is the demand that drives the investment.  This make a whole difference for an investor.

This is also why a Municipality, and a private investor, is much more at ease in investing in wireless. This is already apparent in the case of non-licensed spectrum, like WiFi, where we are seeing a boom of private deployment (and Municipalities deployment).  

This is also the reason why the pace of penetration of wireless has been so fast. The statistics of the ITU on wired infrastructures do not apply to wireless infrastructures. We have seen many developing Countries moving from 0% to 40% in less than 10 years, versus the 40+ years that would have been required by a wired infrastructure (and in many Countries we are now close to 100% penetration!). 

The economics behind wireless are the reasons why Smart Cities should leverage on wireless as their development infrastructure. More of this on 5G.

Author - Roberto Saracco

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