1/6/2010 12:36:00 PM
O2's network challenge deepens despite Â£30m cash injection
O2 faces a challenging 2010 after a series of outages last
year forced it to admit that smartphones were placing increasing
pressure on its network.
Although a Â£30m cash injection during the last quarter of 2009
may have helped O2's growing network problems, CEO Ronan Dunne
told the Financial Times last week that there is still work to be
The growing number of mobile applications running on devices such
as the iPhone and RIM's BlackBerry devices has been causing
problems since last summer, the operator admits.
O2 is now looking at which applications cause particular strain
on its network and Dunne is working with RIM, Apple and other
manufacturers to learn more.
In November, Mobile exclusively revealed that O2 had added Â£100m
in additional network spend over one year, having admitted
problems in areas with a 'high concentration of smartphones'. It
brought forward 40 new site builds, to be implemented in London
before Christmas 2009.
Data on O2's network had increased 20-fold in one year, the
operator's chief technology officer, Derek McManus, told Mobile
in November - and it is set to increase further. The operator
must now find a way to compress and manage the data.
Strategy Analytics analyst Phil Kendall says: 'There are going to
be certain apps that are driving traffic. A lot of it comes down
to video use, such as YouTube or iPlayer content. If they [O2]
can find a way to compress the video further, then that would
File transfer and peer to peer downloading can also consume a
fair amount of bandwidth - it's how well you can compress that
data that is challenging, says Kendall.
The other issue is the browser. For example, Opera says it can
offer the mobile web using a tenth of the bandwidth. Reducing the
page size makes the browser more efficient, but it is not in its
interest to compress data if it reduces quality, adds Kendall.
And as more networks take on the iPhone, the problem could
spread. Although it appears O2 is currently behind, addressing
these problems now may propel it back to the forefront this time
Who is causing the problem?
Analyst comment: Phil Kendall, Strategy Analytics
It is a relatively small amount of people generating a large
amount of traffic. AT&T [the US network that distributes the
iPhone] said last year that around 3% of its users represent 40%
of traffic. The figure is similar here. If you can adjust pricing
to penetrate the heavy users then O2 may need to address this.
Also, it is ironic that O2 is one of the networks that has
delayed the spectrum auctions and yet it needs the bandwidth more