Mobile Marketer has re-launched! Click here to learn more!

Researcher warns on flat-rate plans' effect on carriers

A leading market researcher is sounding a warning on the risks that flat-rate plans pose to wireless carrier networks and their backhaul capacity.

Flat-rate plans will test the limits of 3G networks, said Nadine Manjaro, senior analyst at ABI Research. Verizon Wireless, AT&T, Alltel Wireless, Helio and Sprint all have unlimited all-you-can-eat plans, though not all of them combine data and voice.

"Carriers have not had the total capacity of their networks utilized in the past," Ms. Manjaro said. "But as broadband prices decrease, you're going to have an uptake in usage.

"Currently carriers in North America use a lot of T1s for backhaul, so the backhaul they have is not flexible or scalable," she said. "So as they reach a capacity limit they have to add additional carriers, which requires more backhaul and sometimes the backhaul is not readily available."

Backhaul is the connection from the cellular base station to the core or transport network.

The limitations of these 3G networks are exposed in other ways. Flat-rate plans encourage a higher usage of SMS text messages. Such traffic will affect the carrier's ability to deliver voice signaling and thus voice calls.

ABI is also worried that unlimited plans may encourage an increase in unsolicited text messages, instant messaging and picture mail usage.

However, unlimited Internet access will levy the most strain on carrier networks. Downloading videos or the use of streaming video applications will also cut the number of subscribers who want to access the network because of the increased demands on the infrastructure.

ABI said South Korean carriers SKT and KTF, both of which offer video calls and global roaming on WCDMA networks, are already seeing degraded voice quality.

"People started to push the limit," Ms. Manjaro said.

The analyst's concerns are highlighted in a new study from ABI titled, "Mobile Backhaul Analysis: Global Trends and Opportunities."

Ms. Manjaro's advice to carriers is simple.

"That they need to start planning for their backhaul ahead of time," she said. "If they hit a limit, it's not an easy fix. My concern is that they're not planning for the limits."