Growing popularity of smartphones pose a test for mobile networks | Business| Economy and finance news from a German perspective | DW | 22.06.2010
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Growing popularity of smartphones pose a test for mobile networks

Smartphones are making mobile Internet access a reality for a growing number of users. But the amount of data being transferred is stretching mobile networks to capacity, creating problems with overloads.

Woman holding a smartphone HTC Magic

Too many data requests from smartphone users can cause virtual traffic jams

The success of smartphones has seen an explosion in the amount of data being transferred on networks. Users of Apple's iPhone are particularly avid surfers - they load 60 times more data onto their devices than other smartphone customers.

The mobile Internet era has begun: even if users just send emails or use various apps to download sports results, train times, or weather reports onto their phones, the amount of data being moved increases massively, says Mandred Breul of Bitkom, Germany's IT and telecommunications association.

"In the last few years, we've seen very strong growth in data usage in mobile phone networks. In 2009 alone, the volume of data increased four-fold," he said.

Network operators are happy about this booming new sector; after all, it's been a long time since such growth rates were observed just in the handling of mobile phone calls.

"There are considerable opportunities in this business in the coming years," said René Obermann, head of the board at Deutsche Telekom, the market leader in Germany ahead of Vodafone. "But we have to learn how to deal with lower price levels, a trend that is going to continue. We need to use ultra-modern technology if we want to turn the increase in volume into an increase in revenues."

Data overload leads to frustrated users

Steve Jobs demonstrates the new iPhone 4 in Sanfrancisco on June 7, 2010

Apple CEO Steve Jobs even had problems during a presentation of the new iPhone 4 because too many devices were swamping the frequency

When many users in the same location make use of mobile data services, networks get congested and can become overloaded. Calls get dropped, websites take longer to load. Breul doesn't deny that overloads can happen, but he doesn't see it as a general problem.

"As soon as network operators establish that they are having regular overloads, they'll logically begin to focus on expanding capacity. It's in their own interest; they want to avoid customers getting frustrated and thinking about changing service providers," Breul said.

Providers can find it problematic when they attract surf-happy customers. That's the case in the UK with O2, which is the exclusive provider for the iPhone. Its customers have a flatrate for Internet access, so they pay the same amount regardless of how much data volume they create. As a result, O2 is now adjusting its fees in Britain so that those who surf more also pay more. In contrast, Deutsche Telekom, which is the exclusive provider for the iPhone in Germany, is holding onto its flatrate model.

According to some prognoses, Germany can expect mobile data volumes to grow 20-fold in the next 10 years. However, there's no saying how reliable such predictions are. In 2000, network operators paid more than 50 billion euros ($61 billion) for new UMTS frequencies, anticipating a surge in data traffic. Instead, relatively little happened, that is, until smartphones came along, says Breul.

UMTS hype followed by long wait

"The projected increase in data traffic did eventually happen. What we're experiencing now is exactly the hype that was predicted in 2000, it just took a little longer," he said.

The last auction of mobile telecommunications frequencies at the end of May earned the German state 4.4 billion euros: a bit less than what was expected. The four big network operators in Germany can now start getting their networks ready for the future. However, they've been bound by the state to improve Internet coverage in rural regions - the so-called "white zones," which are not very lucrative for providers.

In the next three years, Deutsche Telekom plans to invest around 10 billion euros in improvements to its network. The new mobile broadband technology is called LTE, and promises to transfer data 10 times faster than UMTS. But people who want to surf at that speed first need to get themselves a new handset - and that goes even for owners of the recently-launched iPhone 4.

Author: Andreas Becker (dc)
Editor: Rob Turner

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