LTE: The next generation of superfast networks
13 November 2012 | Kavit Majithia
LTE may be fast emerging as the leading next-generation mobile solution, but it is also providing as many pitfalls as opportunities for carriers. Kavit Majithia investigates.
The GSA made the bold claim last month that LTE is the fastest, most viable and quickest advancing technology of all time.
With approximately 700 million subscribers, China Mobile’s commitment to developing and deploying TD LTE standards on its networks is perhaps one of the largest testaments to the technology.
The company recently announced that it is set to extend the roll-out of the next-generation standard to 13 cities across the country in partnership with Alcatel-Lucent.
As a result, market watchers are now tipping China to be a major rival to North America in the global 4G LTE market. China’s neighbour, India, must be watching enviously, having given away an early lead in next-generation mobile.
Kenneth Stewart, CTO at TE Connectivity, recalls a time when India was thought to have stolen an early start on 4G, albeit based on WiMAX, by auctioning 2300MHz spectrum.
“WiMAX had a clear leadership position in two areas of the world: North America, where it was supported by Clearwire, and India, where the major players adopted 2.3Gb data plans. Had things gone WiMAX, it is possible we would have seen India in a global leadership position.”
How things change. India now significantly lags behind its Asian and North American counterparts in developing next-generation mobile standards. The thought of investing in WiMAX in today’s market seems about as appealing as investing in a Greek government bond.
The evolution of TD LTE and FD LTE has left WiMAX well and truly on the backburner. “In today’s marketplace, WiMAX will only ever be a niche technology,” adds Stewart.
The data diet
Cisco’s Visual Networking Index (VNI) study suggests that mobile data traffic will grow a mammoth 18-fold from 2011 to 2016, at a CAGR of 78% (see figure 1).
This figure will complement the number of devices that are connected to IP networks, with Cisco predicting that there will be 19 billion networked devices in 2016, up from 10 billion in 2011.
Notably, the projections from Cisco suggest that the amount of data transported on the global internet is doubling every year, and despite the fact that LTE standards are supposedly twice as efficient as WCDMA and WiMAX, LTE standards will “help the demand but not actually solve the problem” according to Stewart.
So what will? Unified Communications provider Amdocs cites three approaches which mobile operators have undertaken to address the high level demand for data.
These include increasing spectrum, developing and evolving a heterogeneous network, and implementing LTE at its present phase. The company’s product marketing manager, Phil Bull, is ruthless in his assessment of all three: “We see all of that as being inadequate.”
Bull believes instead that LTE is just one of many investments mobile operators will need to make, as practices such as offloading data to Wifi hotspots become increasingly popular.
Supporting this view, Steve Livingston, senior VP of carrier development at enterprise mobility services company iPass, recounts his experiences as an iPhone 5 user in the US.
“Living in the US and owning a phone powered by AT&T, I have access to 4G, but I must say I haven’t seen the logo available very often. I’ve had my iPhone for a week and I’ve moved 195Mbps on my phone, and 175Mbps of this was through Wifi. I can even take examples from my daughter, who will not pick up a voice call operating on a standard network, but will instantly respond to Facetime over Wifi.”
Working with carriers across the world, iPass operates a Wifi offload application tool that largely serves mobile enterprise end users. Livingston believes the value of such a service lies in the fact that consumers are constantly opening applications that push ‘big data’ but fail to pay attention to their data allowance.
“I think Wifi can be very complimentary to 3G or 4G,” he says. “Although carriers today aggressively market their data tariffs and capabilities, they are still trying to lessen the load and put consumers on a data diet.”
The backhaul battle
The mass adoption of LTE and the evolution of HSPA networks will not only require mobile operators to manage their network capacity and radio access networks better on a backhaul level, but also requires service providers to find new and innovative ways to monetise rich media content on networks.
In the case of global carrier Tata Communications, there is a clear commitment by the company to work with multi-network operators (MNOs) worldwide to address the challenges that are being presented by the move to 4G.
“There needs to be awareness of how to deal with the migration of existing services and how infrastructure will support this going forward” says Tim Sherwood, VP of mobile segment strategy and development at Tata Communications.
“Whether this is changing signalling standards, moving from TDM-based connections to IMS-based voice and VoIP, or even how to support the evolution from SMS to a more instant messaging model, we are attempting to support service providers from an enterprise VPN standpoint or Unified Communications end point.”
Sprint’s VP of networks, Bob Azzi, offers an opposing view, believing that it is the operators’ blind commitment to rolling out LTE services to 100% of their footprint that is proving their downfall.
“The sheer cost of deploying fibre and a new cell site to deploy LTE in a cornfield 100 miles outside of Chicago just does not make business sense; it could cost up to $10 million to do it. An operator’s commitment to 100% penetration is something that is hindering the advancement of next-generation mobile,” he says.
Adoption around the world
By the end of 2012, the GSA predicts there will be 150 commercial deployments of LTE in over 64 countries, compared to the 47 commercial deployments recorded at the same point last year (see figure 2).
The US, in particular, has emerged as the market leader for LTE adoption, with leaders AT&T and Verizon leading the way in terms of roll-out, accessibility and market share.
The news that Japanese tycoon and owner of telecoms operator Softbank, Masayoshi Son, has made a play to acquire a 70% stake in the third largest operator in the country, Sprint, has the potential to challenge the position of the top two.
Before the Softbank deal was completed, Azzi told Capacity that Sprint had not set out a guided strategy or projections for its LTE roll-out, but said to “expect a steady stream of announcements on a monthly basis.” With the weight of Softbank behind it, and analysts touting the deal as the most significant in wireless history, the rulebook could be thrown out the window.
Asia is certainly not far behind North America with its LTE adoption. According to research company Wireless Intelligence, Japan and South Korea are more than likely to challenge China for advanced launches: the former driven by KDDI’s investments and the latter driven by SK Telekom.
Wireless Intelligence estimates that these three countries, along with the US, will account for a mammoth 87% of global LTE deployment. Europe too boasts some well advanced markets, with Germany and the Scandinavean countries leading deployment, but other countries have been hindered by the Eurozone crisis.
The launch of 4G in the UK, for instance, has been subject to continuous high-profile delays. “There is no doubting that the UK has lagged behind in the deployment of this technology in comparison to other advanced markets,” says Peter Jennings, head of customer design and architecture at MLL Telecom. “Even when it is deployed, only time will tell whether LTE will be sufficient to meet the data demands of consumers.”
Ofcom’s recent announcement to allow the recently rebranded EE, formerly known as Everything Everywhere, to use its existing spectrum came as welcome news to consumers that own an iPhone 5 or Samsung S3 handset. It was unwelcome news, however, for rival UK operators O2, Vodafone and T-Mobile.
The spectrum will be used for both FD LTE and TD LTE, with the UK government aligning the 2600MHz and 800MHz bands. TE Connectivity’s Stewart suggests that increased consumption of smartphones in Europe, the US and Asia, could one day lead to “a global LTE roaming market”.
Wifi pioneer Livingston, however, rubbishes this idea, claiming spectrums differ too much between countries for this to happen. “When you ask telecoms carriers how 4G roaming will work you get very vague answers,” he says.
“It will only work if you are operating on the same spectrum as your home market, but how will a consumer even know this? They are unlikely to turn on data roaming. The ecosystem is even more complex in the US as different carriers in the country operate on different spectrums.”
Quicker than quick
Tata Communications, which works with over 60 MNOs globally to ensure LTE is accessible in both the mainstream and less accessible markets, believes the LTE ecosystem is already changing.
LTE networks, according to Sherwood, now require the same quality of inter-operator backbone services that match the standard of, for example, IPX+ or Ethernet offering.
“There is an inherent need in the market for service providers like us to support data roaming and we are now starting to work with customers as they start to launch LTE roaming. We are then required to provide not only the diameter signalling interworking, but also data transport for data roaming for GRX and IPX for differentiated service management.”
With a large amount of software and upgrades required on networks to ensure the transition, it could be a bitter pill to swallow for those operators that had made the early jump to WiMAX, such as Bharti Airtel in India. These operators are now required to make additional investment to complete the transition from WiMAX to LTE.
According to TE Connectivity’s Stewart, this process can be as complex as making the transition from legacy networks to WiMAX. “If they invested in the chipsets and had the core team design and map it, they have lost all that investment,” he says. “In some cases the vendor can reprogramme base stations to the new standard, and it can depend on how cheap the operator went with their initial deployment. I would say roughly half the investment is gone.”
Even in the developed markets, however, the lack of available fibre can hinder the development and adoption of LTE networks, according to Richard Karpinski, senior analyst at Yankee Group. “No carrier is willing to be left behind on LTE, but backhaul remains a constant challenge,” he says.
“Getting fibre to the cell site removes an often unseen bottleneck, but this remains expensive and often not available.” Analysts have seen carriers deploy cheaper strategies to address the problem, including deploying EoC or microwave radio access, but none of this is seen as a viable long-term solution. What is abundantly clear in the long term is that the LTE market is only set to grow.
Research firm Dell’Oro Group forecasts that investment in LTE equipment for the radio access network will grow up to eight times its present value by 2016, which will be welcome news for the much maligned vendor market. The battle, certainly for carriers and content companies alike, is firstly to address the challenges for backhaul that comes with such high data consumption, and then secondly find new ways of monetising content placed on networks.
Tata’s unique strategy of aiding service providers and MNOs across the globe is indeed commendable, but for most telecoms environments the battle for market share is an open playing field.
Operators in the UK, parts of Asia and Europe can draw lessons from the game of chess that is being played out in the US.
Sherwood believes that even when all the spectrum auctions are said and done and LTE investments have been made on a global basis, it will still take two to three years to fully see the effects of such a technological advanced network, operating on advanced handsets. “Accessing applications and services that are increasingly IP represents a challenge for everyone.” Watch this space.
Is LTE key to Russia’s economy?
The Russian government has a strong commitment to developing Russia’s technology sector in order to move away from the economy’s reliance on the energy industry.
In July this year, Russian regulator Roskomnadzor awarded licences for next-generation mobile services to Russia’s four leading operators.
In rather complex circumstances, the licences were awarded for free, giving MTS, VimpelCom, MegaFon and Rostelecom the licence to launch 4G services, with a deadline set in place for June 1 2013 for the first deployment.
This deadline, however, is largely unrealistic. According to Alex Danilin, senior analyst at iKS-Consulting, the original widespread roll-out of WiMAX has meant companies will have to go through a complex process to have the frequencies ready for LTE roll-out.
“I don’t actually expect there to be massive adoption of LTE in Russia until 2014,” he says. “Frequencies may have been awarded but there is still a formal process, and they still need to be cleaned from military usage.”
Danilin’s predictions appear accurate. MegaFon, for example, still needs to develop its physical network, while MTS has only begun work on its regional network in Moscow, which still needs to be expanded to the commercial side of the city.
As for Rostelecom, Danilin says: “This company doesn’t seem to have any plans for massive deployment, despite the fact they have big potential in terms of the frequencies they have been awarded.”
iKS-Consulting predicts that by the end of 2012 the Russian mobile market will generate revenues of $3.3 billion. This is without any sort of official commercial deployment of LTE technology, largely because the Russian market invested heavily in WiMAX during its early phase.
And unlike rivalling developed economies, Danilin believes WiMAX still has a place in the Russian telecoms ecosystem.
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