Cisco Encourages South African Mobile Operators to Offload Mobile Data to Wi-Fi to Save Millions

As Cisco's Mobile Briefing Center Tours Johannesburg, Cisco Consulting Services (CCS) Experts advise that Mobile Data Offload Presents Operators with Opportunity to Optimize Capital and Operational Expenditure

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JOHANNESBURG, South Africa, 01 July 2013 Cisco's Mobile Executive Briefing Center (EBC) today commenced the Johannesburg leg of its Middle and East Africa tour which has already visited UAE, Qatar, Russia, Saudi Arabia, Ukraine and Turkey. During this tour Cisco will demonstrate how Cisco's Mobility solutions can help customers deliver premium experiences to their customers at home, at work, or on the move. Experts from the Cisco Consulting Services (CCS) group will also be available to discuss some of the market transitions in the South African Service Provider (SP) marketplace and how Cisco is working with its SP customers to help them leverage these transitions. The demos inside Mobile EBC will focus on the whole 'mobility' experience anytime, anywhere and on any device. Most importantly, the demos will provide a view of how offload to Wi-Fi will provide the viable, most cost effective alternative for mobile operators in South Africa to complement 3G, LTE and HSPA networks.

Wi-Fi Offload, a Cost Effective Alternative to Complement 3G, LTE and HSPA Networks.

The world is going mobile, and South Africa is no exception. The Cisco Visual Networking Index (VNI) Forecast (2012-2017) projects that South Africa's Internet protocol (IP) traffic will quadruple between 2012 and 2017 at a compound annual growth rate of 31%. South Africa's IP traffic (fixed and mobile) is expected to reach an annual run rate of 6.1 exabytes – almost 6.55 billion gigabytes per year by 2017. According to CCS studies, this growth threatens to overload the capacity of regional mobile operators, who may be struggling to ensure availability of high-speed packet access (HSPA) and LTE spectrum. Wi-Fi could hold the solution, transforming wireless Internet access by offering higher speeds, improved security, and more availability on almost any connected device.

Globally, mobile operators are expected to drive Wi-Fi growth through accelerated technology adoption. Because of this, SPs must consider Wi-Fi a key pillar of their broadband strategies to increase revenues and decrease costs. CCS outlines the four business models that will help operators in South Africa provide Wi-Fi to achieve maximum results:

  • Direct Wi-Fi service to end users
  • Indirect Wi-Fi service through third parties
  • Wholesale Wi-Fi services to other mobile operators
  • Mobile data offload.

Mobile Data Offload Projected to Help Save Millions:

CCS studies highlight that 'Mobile data offload' will enable mobile operators to maximise the benefits of Wi-Fi through cost savings, revenue generation and improved services. It is a viable alternative for serving mobile broadband users in crowded locations such as shopping malls, where spectrum availability for HSPA and LTE mobile access networks is limited. In addition, mobile data offload will give operators the opportunity to reduce data costs, allowing them to accelerate adoption and increase market share.

Cisco Consulting Services calculated the cost reductions operators can expect between 2013 and 2017 under four offloading schemes. It demonstrated significantly greater savings as the percentage of mobile data offload increased. This model can help mobile operators in South Africa reduce HSPA and LTE infrastructure costs by roughly 27 percent or USD $972 million.

Cisco cautions however that offloading data traffic to Wi-Fi requires significant investment. Based on its analysis, Cisco Consulting Services determined that South African mobile operators would have to invest $108 million between 2013 and 2017 to provide Wi-Fi coverage to 564 buildings with total indoor space of 2.4 square kilometres and total outdoor space of 25.5 square kilometres for busy locations across Johannesburg, Cape Town, Durban, Germiston, Pretoria, Port Elizabeth, East London and Bloemfontein. Of this $108 million investment, 20% would be allocated to CapEx and 80% to OpEx. Costs will be lower if mobile data traffic offload rates are reduced. Subsequently, to optimise the benefits of their Wi-Fi investments, operators should take a strategic approach, with user experience and long-term efficiency in mind involving creating a detailed business model, conducting a network assessment as well as selecting the right indoor and outdoor Wi-Fi locations.

Mobile Data Offload will have an impact on the following:

  • Massively growing demand: Mobile operators in South Africa are challenged to provide capacity for 1.39 Exabytes of mobile data traffic by 2017. Mobile operators are expected to invest in HSPA and LTE networks to address this growth. Offloading mobile data from HSPA and LTE to Wi-Fi networks is an attractive concept to mobile operators, but realising it depends highly on their technical and strategic capabilities.
  • Counteract the heavy investment required to build HSPA and LTE infrastructures: Without offloading mobile data traffic, mobile operators will need to invest $5.55 billion in HSPA and LTE networks by 2017.
  • Additional investment required to provide Wi-Fi coverage: Careful selection of indoor and outdoor Wi-Fi locations will help operators maximise the use of mobile data traffic offload. Costs will be lower if mobile data traffic offload rates are reduced.
  • Mobile data offload presents significant cost savings: Offloading 30 percent of the overall traffic will enable mobile operators to reduce costs by 27 percent and obtain savings of up to USD $979 million in five years. Savings will be less if the offload rate is reduced. For example, with offload rates of 20 percent and 10 percent, savings will be $647 million and $315 million, respectively. An offload rate of 5 percent will result in savings of $149 million.

Executive Quotes:

  • Irfan Verjee, Senior Manager Cisco Consulting Services for Middle East and Africa

    “We have invested considerable time and resources to identify the cost and revenue implications for mobile operators in South Africa. From a cost perspective, Mobile operators need to embrace Wi-Fi to complement and reduce the load on the high-speed packet access (HSPA) and long-term evolution (LTE) spectrum. Our studies prove that 'Mobile data offload' will enable mobile operators to maximize the benefits of Wi-Fi through cost savings of up to $972 Million based on 30% data offload. From a revenue perspective, operators are poised to gain revenue from connectivity, churn reduction and most importantly data analytics and value added services based on the unique capabilities (e.g. Location Based Services) of Cisco's Wi-Fi technology. Overall, mobile operator CxOs must consider Wi-Fi technology as a new business model to return value to their shareholders.”

  • Peter Ford, Director, Cisco Consulting Services, SP Practice, EMEAR

    “As demand for mobile devices and network connectivity continues to grow, cost effective Wi-Fi access will be critical for meeting the needs of mobility-enabled consumers in South Africa. SPs are in an enviable position of being able to successfully provide an enhanced experience for their customers through transforming wireless Internet access and offering higher speeds, robust security, and more availability on almost any connected device. One of the mandates of the South African government is to provide its citizens with universal access and connectivity. The significant increase of mobile devices coupled with the seemingly insatiable demand for bandwidth creates an opportunity for SPs in the region to help deliver greater anytime, anywhere accessibility. With more and more people, things, processes and data being connected in the Internet of Everything, the intelligent network and the SPs who adapt and enhance their offerings are more relevant than ever.”


Note to Editors:

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