How Operators are Evolving by Investing in their Core Business

Guest Room

How Operators are Evolving by Investing in their Core Business

By TMCnet Special Guest
Narayan Menon, vice president of Innovation Labs at InterDigital
  |  November 06, 2014

The wireless landscape is rapidly changing. Operators no longer have to worry only about their own traffic; now over-the-top players and technology giants are inundating operator networks as well. Unfortunately, operators are struggling to monetize the increased data demand effectively enough. As a result, they’ll likely have to change business models, create new, innovative offerings and enhance network connections as a means to preserve consumer relevancy, grow revenues, and reduce costs. Rather than enter entirely new markets, most carriers are focusing on bolstering their core competencies, which is primarily taking place in the form of heavy network investments.

Specifically, there are three key areas where network infrastructure will evolve over the next few years.

Small Cells

As the amount of mobile data traffic continues to increase on a daily basis, wireless networks are already hitting capacity bottlenecks, especially in densely populated areas. Consequently, small cell deployment and operation will begin taking place on a mass scale. For operators, this is a natural step, as it’s simply a part of their legacy business and an extension of macro cellular systems they have already deployed.

The idea behind this is to increase system capacity in dense areas, and to facilitate the provision of location-based services. By dividing the cellular system smaller and smaller, carriers are able to extend coverage to new areas where they don’t have cell towers or to offload data traffic in highly populated, in-coverage areas by inserting small cells in confined spaces. In the same way, by targeting a smaller area, location-based user information becomes more granular and, as a result, more accurate. This enables a more targeted approach for advertising and product development purposes.  

Currently, carriers are primarily responsible for deploying small cells, but small-cells-as-a-service is not far in the future. Using the service model, multiple operators could share small cells that are owned and operated by an infrastructure provider. Even further down the line, more vendors may begin to license solutions to operators or third-party providers that enable small cells to be managed.


Much like any other industry, wireless network functionality is moving to the cloud to maximize efficiencies for obvious reasons: cost-reduced deployment and operation, improved scalability, and easy introduction of new services. Perhaps the most important of the three is the ability to offer new services – it’s what will enable operators to achieve a cutting-edge status once again. With cloud-enabled flexibility, operators can select products and services from different vendors to build top quality solutions that meet unique customer needs.

Another significant benefit is the ability to share network resources on a larger scale. This is particularly useful when new or remote geographical regions are considered. For example, we’ll see more network and spectrum sharing to avoid cumbersome infrastructure implementations and complex licensing agreements. We’ll also see operators wholesaling more network bandwidth to third-party service providers including OTT players and MVNOs, which opens wide the door for monetizing the core network business.

Sponsored connectivity

Lastly, sponsored connectivity will see a significant uptake over the next couple of years. Emerging OTT players will package sponsored network connectivity with the services they normally deliver in an effort to gain maximum market share, and operators will pursue this route to monetize their legacy systems in new ways.

The reason sponsored connectivity can be so attractive to third-party players is because it expands an existing user base, as it makes the service more attractive to users. Thus, it can increase the amount of advertising revenue and marketable user data.

Again, the cloud movement will facilitate sponsored connectivity as it allows for operators to wholesale network functionality to these types of companies.

Mobile operators are already showing strong interest in the areas outlined above, to the point where standards parties such as 3GPP are paying closer attention and dedicating efforts to solidify standards. Certain trends such as network functions virtualization are still in early stages regarding standardization but, because of the strong push by operators, there is a strong desire to establish common APIs and methods for various cloud components to easily access one another. While the growth rate for these trends relies on the extent of operator buy-in, it’s just as heavily reliant on standards innovation. It will take a combined effort from both operators and standards bodies to achieve full network potential. 

Edited by Maurice Nagle