LTE World Summit Special - Telecoms

feature introductionStrong StarterCompared to its predecessors LTE has shot off thestarting blocks but it remains a very small part of theoverall mobile market. MCI offers an overview of thecurrent situation and picks out some of the challengesthat require further attention.By Mike HibberdAt what point does a cellular networktechnology become mainstream? LTE,as we are often told, has outstripped itspredecessors in terms of deployment, makingit the fastest mobile technology in historyin terms of uptake as well as throughput.Research from the Global Mobile SuppliersAssociation published in April counted 175commercial networks in 70 countries at theend of 1Q13. It has taken a little over threeyears to reach this point; an impressiveachievement for the industry.But LTE remains a minnow in relative terms.Third quarter 2013 data from Informa’s WCISPlus put global LTE subscriptions at 88.48million, which accounts for 1.35 per cent of theoverall cellular market. At the end of the year,Informa forecasts, it will be the fifth largestnetwork technology, behind GSM, WCDMA,CDMA and—by a whisker—TD-SCDMA.Four years on, at end 2017, Informa predictsthat LTE will be nudging one billion subscriptions, having overtaken the dwindling CDMAand the slower growing TD-SCDMA.The maturity of LTE is also relative in geographical terms; in the leading markets of theworld uptake is flying.The US accounts for overhalf of all current LTE subscriptions while, inSouth Korea, LTE has more than 40 per cent ofthe market. Japan is the third of the leadingmarkets and, with 13.8 million LTE subscriptions, oversees the considerable gap between thetop three and the chasing pack; Fourth placedAustralia has 2.05 million LTE subscriptions.Most of the leading LTE operators havebeen driven by necessity, with CDMA technologies nearing the end of their lifespan.There is plenty of headroom remaining onWCDMA networks that have evolved towards0404-05 MCI180.indd 4HSPA, which is leading to a less aggressiveapproach from operators in other maturemarkets—particularly in Western Europe.So despite having less than a quarter of amillion LTE subscribers, Austria still makesthe top ten LTE operator listing.Operators report that, technically, LTEdeployments have not been unusually demanding. Michel Lenoir, programme managerfor LTE at Vodafone Netherlands says thathis firm’s rollout was “broadly comparableto the move from 2G to 3G” while Mock PakLum, chief technology officer at Singapore’sStarHub, says that, for his organisation, itwas actually easier. “Because it is all IP,” hesays, “it is not as painful as rolling out 3G.”But there has long been a sense that thetechnology element of LTE would be nowherenear as challenging as the business of making it pay. At the 2012 LTE World SummitOrange Spain CTO Eduardo Duato addressedthis issue in the frankest terms, suggestingthat many operators—particularly in themarkets hit hardest by macroeconomic difficulties—would be incapable of deriving areturn on LTE without taking network sharingto previously unexplored depths.Despite Orange having calculated the totalcost of ownership for LTE as 30 per cent lowerthan 3G, Duato’s warning was dire: “We areunable to really come up with a solid businesscase for LTE; we see only erosion in the yearsto come,” he told event delegates.Unable to decommission their legacy networks “for a very long time”, establishedEuropean operators are going to be hit hardby the cost of managing three generationsof network technology concurrently, he said.Duato captured one of the key differencesbetween GSM operators’ LTE deploymentsand those of CDMA leaders like Verizon andSK Telecom. Ex-CDMA operators are highlymotivated to migrate users to LTE as fast asreasonably possible because there is no otheroption. Necessity will enable them to reapthe cost efficiencies of network consolidationmore quickly than their GSM-based peers.GSM will remain in place for many yearsyet, not least to facilitate the roaming servicesthat were so fundamental to its selection andsuccess (CDMA operators, meanwhile, havebeen well used to workarounds for roaming).While GSM operators argue that they willharvest the benefits traditionally associatedwith following rather than leading in anytechnological evolution, they will not beable to exploit a single, or even dual networkportoflio for some time to come.Indeed in a recent survey of European operators conducted by Informa, integration problemswith legacy networks was rated the secondmost serious challenge that operators face indeploying LTE. The first was an “unclear business model and lack of visibility for successfulpricing models,” suggesting that—one yearon—Eduardo Duato’s concerns remain valid.LTE has already influenced pricing behaviourfrom operators, with recent developments including shared or multi-device plans, contextualupgrades and moves to separate device costfrom service cost, allowing operators to extricatethemselves from the burden of device subsidy.Yet competition remains intense and notall operators are looking to LTE to providepremiums. Earlier this year the UK arm ofHutchison’s 3 announced that it will not priceLTE services at a premium to its existingoffers. In a nod to the higher charges leviedMobile Communications International First for news, best for business30/05/2013 15:20

introduction featureBiggest challenges faced when deploying LTEUnclear business modeland lack of visibility forsuccessful pricing modelsResponse (%)by UK LTE market debutante EE, 3UK said:“Unlike some other UK mobile operators, [LTE]will be available across all existing and newprice plans without customers needing to paya premium fee to ‘upgrade’.”Meanwhile EE cut its prices in January,well aware that its first-mover advantage isshortly to expire—and it is clearly trying toattract as many users onto long contracts aspossible. But EE’s price cuts and 3UK’s announcement reflect the fact that users are notwidely inclined to up their spend for fasternetwork access.“If the price of a service is well above aconsumer’s income or disposable spendinglevels then they are simply not going to buyit,” says Jaco Fourie, senior BSS expert atEricsson. “If you have more than 100 per centpenetration in a market then you might geta bump from the early adopters when youfirst launch [a new technology] but whenyou get to the mass market you will grow atGDP—end of story.”Nonetheless there is optimism out there, ifyou know where to look.Vodafone Netherlands’Michel Lenoir says that, while the firm’s initialdeployment of LTE at 2600MHz in 2012 wasa small-scale sop to licence obligations, it’scurrent move towards deployment at 800MHzand 1800MHz is “based on the commercialbelief in the return on investment for LTE.”Nokia Siemens Networks’ head of portfoliomanagement Thorsten Robrecht says that belief in LTE has improved enormously over thelast year. “It is a really big surprise how muchLTE has really boosted,” he says. “In termsof deployments [the industry] is so far aboveour own expectations and forecasts that RoIdoes not seem to be a problem. At the end of2012 we had 52 LTE customers. By MobileWorld Congress [in February] we had 78.”Whatever positive shifts may be takingplace in the collective industry mindset—andhowever comfortable CTOs feel with the deployment of LTE—significant challenges muststill be met, not least at the very heart of themobile proposition. LTE is a data technologydesigned to move rapidly increasing volumesof data traffic. But voice communication remains essential to the mobile proposition andsolutions—both interim and permanent—areof critical importance. »Integration problems withlegacy networkAdditional sites, becauseof higher-frequencyspectrumLack of voice supportReliability concerns withnew equipmentOther051015202530Source: Informa Telecoms & MediaLTE subscribers by region March 2012March 2013 (88.48m LTE subs worldwide, as of 03/13)March 2012March 2013Africa039,333Americas2,200Asia Pacific6,327,990Eastern Europe286,3191,460,189Western Europe366,9002,156,582Middle 7,41988,478,348120,57435,714,20043,870Source: WCIS Plus www.wcisplus.comWorldwide LTE subscriber growth forecastNumbersDec 2013133,839,100Dec 2014252,009,400Dec 2015405,835,400Dec 2016632,502,400Dec 2017946,893,600Source: WCIS Plus www.wcisplus.comMobile Communications International First for news, best for business04-05 MCI180.indd 50530/05/2013 15:21

feature introductionHere again the split between operatorsof the GSM and CDMA bloodlines becomesapparent. GSM players have fallback optionsthat offer a comfortable safety net for voicecommunications while the CDMA camp,once again, is motivated to migrate to newstandards at more of a gallop. There arenumerous ways to enable voice on an LTE,device, however and the familiar industry issues of fragmentation and interoperability arerearing their head once more. For a detailedexploration of the VoLTE landscape, see ourfeature on page 12.Related to voice and no less fundamental towhat mobile has come to represent is roaming.In the past new mobile network technologieshave enjoyed lengthy grace periods duringwhich they could bed in before anythingother than basic functionality was requiredof them. Today’s end users, enterprise andconsumer alike, are quick to demand ubiquityfor any service improvement bestowed uponthem—and they expect cross-boarder support.At Mobile World Congress this year GregDial, director for global roaming at VerizonWireless, told MCI that his brief for the showwas to identify potential roaming partners inpopular overseas markets.“We are surveying the market and lookingat our travel centres to see where US customers are going,” said Dial. “It’s a wide variety ofdestinations but certainly the UK is a marketwe look at very closely; the Caribbean andLatin America too and Canada. We’re still inthe planning stages, but we’re here at MWCbuilding relationships for 4G LTE roaming,both outbound but we’re also open for business for inbound roaming as well.”LTE roaming is somewhat obstructed by thevariety of spectrum bands that are allocatedto the technology in different markets—asizeable caveat to the notion of LTE as a single global standard. To complicate matters,operators are so concerned about spectrumshortages that they are buying whatever theycan get their hands on in the hope that futurenetwork technologies—carrier aggregation inparticular—will magically link them togethersomewhere down the line.For now certain bands are emerging aspotential near-global candidates and for adeeper dive into the issue, check out our feature on pxxx.Historically operators have looked to devicevendors to address the problem of multibandcompatibility. With LTE the device vendorsTop ten LTE markets by subscriber numbers, March nGermanyUKAustriaLTE 1,996,7001,309,500860,000549,500318,000234,700LTE

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