AT&T Upgrades 3G Network while VZW On Track with LTE Buildout; IDC's Market Forecast


On the eve of the CTIA WIRELESS 2010® show in Las Vegas this week, the two biggest U.S. wireless carriers are pursuing different paths to eliminate current 3G bandwidth congestion, provide higher speeds to users and achieve lower cost per bit transmitted. These initiatives are extremely important for the health of the wireless industry, which has moved from a "lock in" cell phone subscriber business model to a smart phone/gadget for mobile broadband Internet enablement . Forrester Research reports that at the end of 2009, 46% of mobile subscribers owned a 3G phone; and by 2014, that number goes to 81%. Further, smart phone penetration in the U.S. was 17% of mobile subscribers, up 61% from the year before! We all know that its the 3G smart phones that are generating the bulk of the wireless traffic on carrier networks (with the exception of CLEAR WiMAX where all of the traffic comes from data cards/dongles/embedded notebook or netbook PCs).

Forrester states that the number of Americans accessing the mobile Internet will more than double to 106 million users by 2015, from 52 million today. Mobile marketing spend should grow 27% a year compounded to $1.3 billion in 2014. And data revenue for U.S. carriers should grow from just under $11 billion last year to almost $20 billion in 2014. But that growth won't occur unless current 3G networks are enhanced and true 4G networks get deployed in a big way.

Although AT&T and Verizon Wireless are investing in LTE technology, there is a very long lead time for building out a full 4G (OFDM and all IP) network. It's been estimated that LTE deployment will require investment of about $8 billion over next 3 to 5 years, excluding the costs of spectrum acquisition, which could be even higher. Due to this long deployment cycle for LTE, 3G network will still hold its importance for wireless careers. Router maker Juniper Networks, estimates that 3G networks will have more traffic than 4G networks as far out as 2014. We would certainly agree with that prediction. Yet AT&T and VZW are taking different paths in improving their wireless networks: AT&T has been upgrading their 3G data network, while VZW is aggressively building out LTE (the current 3GPP version of which is considered 3G by the ITU-R, but 4G by VZW).

The Road to a Faster and More Cost Effective Mobile Internet

AT&T has been aggressively upgrading its HSPA based 3G network over the past year, The Trefis Team writes  that AT&T has been upgrading its 3G network by deploying HSPA 7.2 technology to enable faster speeds and to increase network efficiency. AT&T expects this 3G+ data network will comprise 90% of its current 3G network footprint by the end of 2011. HSPA 7.2 is a variation of the GSM-based HSPA technology that has a peak speed of 7.2Mbps, although AT&T cautions that most users are unlikely to see data rates approaching theoretical peak speeds. AT&T’s improved 3G network upload and download speeds could match Verizon’s expected initial "4G" LTE speeds. Verizon expects initial LTE speeds of about 5 to 12 M bit/sec.

During a conference call hosted by the GSM Association on March 18th, Kris Rinne, AT&T Senior Vice President of Architecture and Planning, said the company's 3G network would be strong enough to handle data demand until it was ready to roll out 4G next year. Our underlying GSM and HSPA networks will be able to upgrade their capabilities while laying the groundwork for LTE," she said. "By improving our current HSPA capabilities, we can add more devices to our 3G portfolio while also growing our LTE portfolio."

With respect to the company's LTE aspirations, Ms. Rinne said that users can initially expect that AT&T LTE services will deliver the same applications that AT&T 3G customers currently enjoy and that the applications delivered over 4G will be faster and more reliable. In particular she said that LTE would provide for enhanced video and mobile gaming systems, as well as eventually voice services.

In contrast to AT&T, VZW is going full bore with LTE. The company says it's "on track with building the nation's first 4G LTE (Long Term Evolution) wireless network. A host of ecosystem partners, along with the company's network engineers, equipment vendors, backhaul providers and device design experts, are preparing for the launch of the highly anticipated fourth-generation network later this year."

Verizon Wireless engineers report trials showing peak download speeds of 40 to 50 megabits per second (Mbps) and peak upload speeds of 20 to 25 Mbps and expects LTE average data rates of 5 to 12 Mbps on the downlink and 2 to 5 Mbps on the uplink in real-world environments.

Running on a nationwide license won at the FCC 700 MHz auction in 2008 [#], the Verizon Wireless 4G LTE network is reportedly "being built to ultimately have the broadest geographic coverage and to leverage the deepest spectrum capabilities by using a commercial broadband technology that is unrivaled in its ability to extend into buildings."

[#] Please refer to these articles

  1. Has the 700 MHz Auction Been a Failure? 
  2. FCC 700 MHz Auction Postscript: Big loss for US Wireless Network Competition

Lowell McAdam, VZW President and CEO, recently stated, "The CTIA WIRELESS convention is the perfect setting to focus on the important behind-the-scenes work we are doing with more than 25 partners to bring 4G LTE to life. Our progress is good, and we're confident that the next generation of wireless network technology will deliver the speed, reliability and bandwidth that businesses, government and consumers have been anticipating. Our work on 4G LTE underscores our continuing commitment to provide the best wireless experience available today. Building and operating great wireless networks is what we do, and everything we do at Verizon Wireless – from devices to applications to solutions – stems from that foundation of network know-how." VZW is working with a variety of partners to create a "4G LTE ecosystem." The company has created a LTE Innovation Center, Open Development and the Verizon Developer Community to "foster and support on-ramps to LTE."          

IDC Market Forecasts for Mobile Broadband and LTE

At the March 10th IDC 2010 Directions Conference in Santa Clara, IDC analysts Amy Lind and Carrie MacGillivray predicted a 32% compound annual growth rate (CAGR) for global mobile broadband connections, which were projected fo reach over 350M by 2013.  [We wonder if those include M2M connections, which are potentially much larger than human held device connections].

More significantly, LTE was predicted to have a CAGR of 471%, with 2012 (and later for some countries) as the critical inflection point for LTE mass adoption.  The technology was said to: offer improved capacity, full mobility (vs "mobile" WiMAX portability), be Initially oriented toward PCs  with pricing In flux as operators continue to rethink their business models.  

By 2013, IDC predicts:

  • Mobile broadband will be ubiquitous and the defacto way of communicating
  • Business models will be focused on revenues per subscriber or device   
  • Global mobile services spending will surpass $975 billion
  • Iconic 4G devices will be critical to success

The two IDC analysts offered their essential guidance to session attendees:

  • Wireless carriers should place emphasis on data services, which are essential for revenue growth.  
  • Detailed market segmentation is required to focus devices (and apps) on relevant audiences.  To achieve this objective, IDC believes that wireless network operators will deepen partnerships with device and application vendors (AT&T and Clearwire are already doing this now).
  • Integration key to staving off wireless displacement and driving mobile broadband adoption

In a separate presentation, IDC Research Manager Godfrey Chua was very optimistic about LTE.  This author was stunned to hear Mr. Chua predict that LTE infrastructure equipment sales would overtake all WiMAX infrastructure sales by 4G 2011!  That's less than 18 months from now!   According to Mr. Chua, both AT&T and VZW are looking to LTE to effectively deliver high quality mobile broadband service at the lowest cost per bit possible (through the more cost efficient OFDM based modulation and multi-carrier transport).  He sees 2012-2013 as the LTE market inflection point, which is consistent with the opinion of other IDC Analysts.  Why have all the major global cellular operators made such an early committment to LTE?  Here are a few reasons given: 

  • To deliver high quality mobile broadband at the lowest cost per bit
  • To relieve 3G capacity pressure by migrating laptop users to LTE
  • To create a more robust platform for applications and services –that lead to new business models and therefore revenue streams         

Godfrey next compared the rationale and position of LTE (vs WiMAX):

  • To address capacity pressure in 3G networks (vs WiMAX to address underserved broadband connectivity demand)
  • Full mobility is the value proposition (vs WiMAX portablity of netbooks/notebook access)
  • Geared towards developed markets (vs WiMAX orientation toward emerging markets)
  • Relevance to emerging markets not until 2015 (vs WiMAX being always relevent to emerging markets)                                 

2010 will be a critical year for LTE network equipment companies as they all seek to build momentum. in the forthcoming global market.  Mr. Chua sees Ericsson and Huawei as early leaders in providing LTE gear.  He says that Alcatel – Lucent’s Verizon Wireless win is key, but now they must convert trials into contracts.  Meanwhile, Nokia Siemens Networks is  looking to maintain relevance in LTE.  The competitive pressure will surely intensify as other players –Motorola, ZTE, NEC and Fujitsu –seek to up the competitive ante. 

In closing, Godfrey offered the following essential guidance: 

  • Realization of the long-held vision for the network is near
  • Mobile data traffic will continue to explode
  • Network transformation is critical, it is key to remaining competitive
  • Green efforts will persist, it goes hand in hand with the transformation process
  • Vendor positions will continue to shift

3 thoughts on “AT&T Upgrades 3G Network while VZW On Track with LTE Buildout; IDC's Market Forecast

  1. Long live 3G mobile data (Barron's blog)
    At the CTIA Wireless show in Las Vegas today, Ericsson (ERIC) announced that measurement of actual network traffic in 2009 shows that mobile data traffic has now surpassed voice traffic.
    The company said data traffic grew 280% in each of the last two years, and should double over the next five years. Ericsson says the crossover point was at about 140,000 terabytes her month.
    Ericsson also said it found that 3G traffic now tops 2G traffic.
    Global mobile data traffic surpassed voice traffic in December, according to Ericsson’s internal measurements on its live networks, said CEO Hans Vestberg during an afternoon press briefing at CTIA Wireless 2010.

    Ericsson said its findings found that global data traffic grew 280% during each of the last two years. Voice traffic accounted for about 140,000 Terabytes per month, while data traffic surpassed that, Vestberg said. Going forward, Ericsson expects data traffic to double each year for the next five years. The surge in traffic is forcing Ericsson to become a “change agent,” as people begin to use wireless networks in different ways. On the evening of the Chinese New Year, more than 23 billion SMS messages were sent, Vestberg said. Thus, while the wireless industry tends to overestimate growth in the short term, it likely underestimates growth forecasts for the next five to 10 years, he noted. Vestberg compared wireless technology advances to electricity, which at its invention was used for one purpose: to power a light bulb. Today, it is used for nearly everything inside a home.

    The world’s largest infrastructure provider noted that while the world looks to LTE deployments, there is still much buildout left to do on 3G networks, noting that 2009 was the first year the company sold more 3G equipment than 2G equipment.

    Continuing the electricity analogy later in the presentation, Vestberg compared flat-rate pricing rather than usage-based pricing for wireless to flat-rate pricing and usage based pricing for electricity. Flat-rate plans are no problem with the street is lined with single-family homes, but when the steel mill moves in at the end of the street, the pricing model needs to change.

    While operators didn’t make the same margins on data services than they did on voice, data is the growth area, the company said.

    AT&T announcement

    AT&T and Ericsson said they were launching an AT&T Connection Kit for Device Developers, combining AT&T’s network with developers targeting the emerging markets and machine-to-machine communications segments. The connection kit includes AT&T SIM cards, data capacity for testing, access to the AT&T control center, powered by M2M company Jasper Wireless, and best practice guidelines. Ericsson’s mobile broadband modules are included in the package.


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  2. Gartner Group's Wireless Market Forecasts  – contrast with IDC
    The Mobile Web
    By 2011, over 85 percent of handsets shipped globally will include some form of browser. In mature markets, such as Western Europe and Japan, approximately 60 percent of handsets shipped will be smartphones with sophisticated browsing capability and the ability to render conventional HTML sites in some manner. The growth in smartphones with relatively large and high-resolution screens will encourage greater numbers of people to access conventional websites on mobile devices, and will make it possible to deliver some B2C applications using conventional Web tools without adaptation. In mature markets, the mobile Web, along with associated Web adaptation tools, will be a leading technology for B2C mobile applications through 2012, and should be part of every organization’s B2C technology portfolio.
    Mobile Widgets
    Widgets are installable Web applications that use technologies such as JavaScript and HTML. Many handsets support widgets running on their home screens, where they are easily visible and accessible. Despite the lack of standards, widgets provide a convenient way to deliver simple, connected applications, especially those involving real-time data updates (such as weather forecasts, e-mail notifications, marketing, blogs and information feeds). Because widgets exploit well-understood tools and technologies, they have lower entry barriers than complex native applications, and thus can be a good first step to assess the demand for an application on a specific platform before undertaking expensive native development.
    Platform-Independent Mobile AD Tools
    Mobile platforms will become more diverse through 2012 although consolidation will not have started, and, in some markets, five or more platforms may have a significant presence. Therefore, tools that can reduce the burden of delivering installable applications to several platforms will be very attractive. Platform-independent application development (AD) tools cannot deliver a “write once, run anywhere” equivalent to native code; however, they can significantly reduce the cost of delivering and supporting multiplatform applications that provide a more sophisticated experience than the mobile Web and operate outside signal coverage.
    App Stores
    App stores will be the primary (and, in some cases, the only) way to distribute applications to smartphones and other mobile devices. App stores also provide a range of business support functions, such as payment processing, that assist smaller organizations. Gartner believes that app stores will play many roles in an organization’s B2C and B2E strategies. They will be a distribution channel for mobile applications and a commercial channel to sell applications and content (especially in international markets), and they will provide new options for application sourcing. Many applications will exploit ecosystem cloud services.
    Enhanced Location Awareness
    By the end of 2011, over 75 percent of devices shipped in mature markets will include a GPS. GPS will be the primary, but not the only, means of establishing handset location. Wi-Fi and cell ID systems will remain important in situations where GPS is unavailable or unreliable. The popularity of location-aware handsets will enable a wide range of B2E and B2C location-aware applications, and will serve as a foundation for more-sophisticated contextual applications in the future. However, organizations must be sensitive to local privacy regulations, ensure that applications that expose location are “opt in,” and remain on alert for new risks and concerns that will be raised by location awareness.
    Cellular Broadband
    During 2010 and 2011, the availability of multimegabit wireless broadband performance will continue to grow as mobile networks enhance their broadband performance. Continuous improvements in wireless broadband performance will increase the range of applications that no longer require fixed networking, and make cellular broadband a more effective fallback when fixed connections fail. Embedded cellular networking will become a standard feature of many corporate laptops, and will enable new types of network-connected devices and business models, such as e-books and media players.
    Touchscreens are emerging as the dominant user interface for large-screen handsets, and will be included in over 60 percent of mobile devices shipped in Western Europe and North America in 2011. Touch-enabled devices will also make increasing use of techniques such as haptics to enhance user experience. Organizations developing native handset applications may need to exploit single and multitouch interfaces and haptics to give their applications a compelling and competitive user experience.
    Many network service providers increased their commitment to machine to machine (M2M) in 2009, so a good range of both national and multinational M2M service options will be available in mature markets during 2010 and 2011. Although the M2M market is very fragmented, it's growing at over 30 percent per year. Low-cost M2M modules will enable a wide range of new networked devices and business models. Key applications include smart grid, meter reading, security/surveillance, automotive systems, vending and point of sale, remote monitoring, and track and trace.
    Device-Independent Security
    This isn't strictly a single technology, but refers to a collection of security technologies, application technologies and sourcing options that enable the provisioning of applications that are secure, but less tightly tied to specific devices and platforms, and that, in many cases, do not require security tools to be installed on the client. It includes thin-client architectures, applications as a service, platform-independent forms of network access control (NAC), portable personality, virtualization, and hosted security services, such as "in the cloud" virus scanning. Device-independent tools cannot provide the rigor of fully installed security, but a blend of several of these tools can enable CIOs to deliver applications that can run on a wider range of devices while reducing security risks.
    Additional information is available in the report "Ten Mobile Technologies to Watch in 2010 and 2011" which is available on the Gartner Web site at
    Also see:

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