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Perhaps the most important metric coming out of the management session was the revelation by Steve Pusey, Global CTO, that while voice usage has only marginally increased over the past 12 months, data consumption has jumped four-fold (4 x) in the same period. No doubt, this traffic is being driven by the 21 million 3G devices (as of Q3 2007) which are now in the hands of Vodafone customers, however, my feeling is that it's the operator's 2 million datacard users who are driving much of this usage. This is supported to some extent by the utilisation of the company's network. Pusey admitted that, on average, the 3G network currently sits at about 20% utilisation. However, at "hotspots" (locations like airports and key metropolitan hubs - not to be confused with Wi-Fi hotspots) utilisation is hitting 50 - 60%. Indeed, just 10% of Vodafone's cellsites account for 50% of all its data traffic.

It are these hotspots which are currently delivering the operator's data dividends and, perhaps second-guessing analyst concerns that these locations will soon become overloaded, management displayed a strong sense of urgency in adding network capacity. Andy MacLeod, Director of Group Networks, outlined Vodafone's four-pronged approach to alleviating capacity issues: these falling into the categories of spectrum, site density, efficiency and power & processing. I'll focus on efficiency and site density. Spectrum challenges for an operator like Vodafone is an interesting subject all on its own which I'll cover in another BluePrint.

Vodafone's 3G network across Europe currently supports peak speeds of 3.6Mbps, but in hotspots in nine EU markets, 7.2Mbps HSPA has already been launched. Network efficiency will continue to be boosted by implementing the advanced coding techniques supported by HSPA. As a result, the operator will have hotspots with 14.4Mbps HSPA by the end of 2008 and will start trialling 28.8Mbps HSPA in early 2009. Vodafone are confident that HSPA will meet its capacity requirements for the next two to three years, which provides some sort of hint as to when we might expect to see LTE.

One problem when moving to the more advanced flavours of HSPA is the trade-off between bandwidth and cell size - the greater the data speed the smaller the cell size - and this exacerbates the capacity issue. While building new sites is part of Vodafone's site density strategy, there are logistical and technical barriers to deploying more base stations, particularly in metropolitan areas. As a result, the operator is championing the use of femtocells, not so much as an FMC solution, but primarily as a means to offload traffic from its core radio network. The company is presently assessing the potential of 3G femtocells to improve indoor coverage and reduce the need to built capacity in the macro network. Labs tests have proved successful and a femtocell trial is presently underway with two vendors in Spain. MacLeod expects to have the first commercially deployed femtocells in just nine months.

As Vodafone continues to grow its 3G device base and improve its data tariffs, moving more towards flat-rate pricing, there's no reason the operator's four-fold growth should not continue for another 12 months. As the world's largest mobile operator with 241 million customers in 25 countries, Vodafone's data success should send a clear message to any mobile data cynics - mobile data has arrived, it works and there's some decent cash to be made from it.

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