BARCELONA -- Executives from three wireless carriers offered testimony Tuesday showing how an explosion of both wireless users and devices is forcing them to expand their networks even though doing so might not lead to an equivalent increase in revenue.
"Even as we have been facing twofold increases in [wireless data needs], twofold increases are not expected in revenue," said Thierry Bonhomme, CTO of Orange Group, a wireless carrier in France and the U.K. with 262 million customers. He spoke here at Mobile World Congress during a panel discussion that was moderated by Cisco CEO John Chambers.
Another panelist, Kris Rinne, senior vice president of architectures at AT&T, described a variety of ways that the U.S. carrier with 200-million-plus customers is eking out efficiencies with its network to drive down costs during a period of growth.
Much of that growth is tied to increases in video traffic, which Rinne described as "growing hugely, but not effectively or efficiently."
Over the past two years, Cisco has warned that video traffic will continue to mushroom, posing challenges to carriers that innovated around voice communications only. "We believe video will be the next voice," Chambers said.
A third panelist, Dennis Steiger, CTO for Shaw Communications in western Canada, urged Cisco to help manage the dramatic growth in network usage, partly by lowering prices for Cisco networking gear and by helping carriers like Shaw manage an array of network technologies. A smaller traditional cable and satellite provider, Shaw is converting to wireless technologies.
Chambers told Steiger that Cisco recognizes that service providers needs to generate more revenue from their investments in Cisco gear, but he didn't commit to lowering prices. Cisco is widely viewed by enterprise customers and service providers as offering high-quality products at premium prices.
At the opening of the panel discussion, Chambers noted that service providers globally face a situation where "revenues are not growing enough to keep up with expenses."
The discussion was held on the same day that Cisco announced a Wi-Fi infrastructure called Next-Generation Hotspots that's designed to give carriers a way to supplement wireless network coverage offered through LTE, 3G and other networks.
Cisco also announced a new device called the Small Cell Gateway, which is designed to help integrate various licensed and unlicensed networks. AT&T has been using small cell technology from Cisco for years.
AT&T's Rinne said the carrier is working to create a technology hierarchy for its network coverage that integrates Wi-Fi and LTE technologies with service management software and strategies. AT&T is trying to "scale and open up [its network] while adding a frictionless customer experience that's easy to use, buy and service," she added.
A member of the audience asked whether network operators will continue to find value in their existing switches and gear, making them backward-compatible.
Steiger suggested that network operators have no choice but to continue to innovate and invest in technology and move on, even if it's less than perfect. "This is the time to be bold, not the time to sit on the fence," he said. "Technology will age... in three years at most. Backward-compatibility is a somewhat limited issue for us. If you see the potential to make a disruptive change, you invest, and the [equipment] is going to cycle out in three years if the decision's not perfect."
Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at @matthamblen, or subscribe to Matt's RSS feed. His email address is firstname.lastname@example.org.