LTE Market Forecasts Up as Operators Announce Deployment Plans

Introduction

There's no doubt that LTE (3GPP Release-8) is gaining traction among many wireless network operators.  Two market research firms increased their LTE forecasts this week, while U.S. Cellular announced its LTE roll out plans.  This December, Telia Sonera will turn on LTE data service in Finland, while NTT DoComo will make its LTE data service available in Japan.  Finally, we report on a new Base Station System on a Chip (SoC) that could significantly reduce the cost and upgrades for LTE infrastructure equipment.

LTE Market Forecasts

On November 11th, market research firm Infonetics Research released excerpts from 2 LTE reports: LTE Deployment Strategies: Global Service Provider Survey and LTE Infrastructure and Subscribers.

Highlights:  LTE Infrastructure and Subscribers 

Infonetics increased its forecast for the worldwide LTE infrastructure market, expecting it to grow roughly 10-fold from 2010 to 2014, to $11.5 billion.  The market is fueled by macrocell eNodeB deployments and the rapidly growing number of operators committing to LTE.  Infonetics increased its LTE subscriber forecast as well, now anticipating close to 165 million worldwide by 2014

Highlights:  LTE Deployments Strategies Survey 

By the end of 2010, a dozen LTE networks are expected to go live, and there are currently over 100 commitments by service providers around the world to deploy LTE networks.  72% of operators Infonetics surveyed about their LTE deployment plans say they will follow the W-CDMA-to-HSPA+-to-LTE deployment path.  94% of operators surveyed will deploy IMS (voice over LTE, or VoLTE), and 39% expect to launch a voice service over LTE one year from network launch.

Subs

2010-Infonetics-CRS-LTE-Strategies-Service-Provider-Survey-09-07-10-Chart

"As we anticipated back in 2008, today HSPA+ has become the clear bridge between 3G (e.g., W-CDMA and CDMA2000) and LTE. Current networks won’t disappear anytime soon and early LTE networks will only carry data while voice services will fall back to good old circuit switched networks before LTE deployments start to ramp up in 2012.  We’re still at a very early stage for LTE with HSPA/HSPA+ rollouts, which are poised to enjoy a long tail," notes Stéphane Téral, principal analyst for mobile and FMC infrastructure at Infonetics Research.

Meanwhile, ABI Research's latest report – Wireless Infrastructure Market Data – predicts that both LTE and mobile WiMAX will become viable wireless broadband access technologies, with WiMAX also being a leading backhaul technology.

Jake Saunders, ABI Research vice president, indicated that the LTE market is full of possibilities, in spite of a slight slippage in LTE deployments, with mobile operators planning to launch commercial services before the end of 2010. He estimated that operators would be actively deploying LTE in 2011.  According to ABI, LTE base stations could reach 600,000 units by 2015 (see note below on TI's just announce Base Station Soc).  But it will be expensive for operators to upgrade to LTE.  Saunders said mobile operators could well be writing out checks for $1 billion in 2011.

LTE Carrier Roundup

MetroPCS was the first domestic carrier,to launch a commercial LTE network. Metro PCS is best noted for its low cost, flat-rate pricing plans for cellular voice and SMS.  At this week’s LTE North America 2010 conference, Metro's CTO Malcolm Lorang touted the operational efficiencies inherent in LTE (3GPP Release-8 standard). Lorang explained that LTE's OFDMA spectrum utilization and cost savings were particularly important.   As a result, MetroPCS was able to reuse many of its current cell sites and other facilities when rolling out LTE.  The company decided to go with an all-IP backhaul solution several years ago that Lorang said was originally done as a way to cut out costs in the long term.

MetroPCS has so far launched LTE services in Las Vegas, Dallas, Detroit, Los Angeles and Philadelphia, and is delivering service using channels as small as 1.4 megahertz.

US Cellular is the latest US mobile operator to reveal LTE plans. At a conference in New York this week, the company's CFO said they are planning one test market next year with a full fledged rollout in 2012. This announcement follows MetroPCS, AT&T and VZW which have all disclosed LTE plans for this year and next.  In fact, VZW plans to have LTE operational in 38 US cities and 100 airports by the end of this year (even though there's only 6 weeks left in 2010).

There are many LTE deployments occurring overseas too.  TeliaSonera has had LTE running in Sweden for a full year.  They recently picked Nokia Siemens Networks and Ericsson for the rollout of its LTE network in Finland starting in December. Marek Hintze, chief of TeliaSonera's mobile operations in Finland, told a news conference, "What's slowing us down is the availability of modemsl"  He said that many companies had unveiled LTE modem plans, but so far only Samsung Electronics was supplying them.  Hintze said that in addition to its LTE buildout, TeliaSonera would increase investments into its Finnish 3G network in 2011.  "It is clear that the total investments next year will be higher," Hintze said.  In 2010 the group is set to spend around 200 million euros ($275 million) in Finland.

Also this week, NTT DoCoMo – Japan's largest cellular carrier – announced it will start offering LTE data service under the "Xi" brand name (read "Crossy") on December 24th.  Like all other LTE carriers, voice will be transmitted on the existing cellular network (GSM, CDMA) for the immediate future.

DoCoMo will offer download speeds as fast as 37.5Mbps and uploads at up to 12.5Mbps in general use, but these are increased to 75Mbps downloads and 37.5Mbps uploads inside buildings that are fitted with LTE antennas and equipment. During a demonstration of the service in central Tokyo on Monday, a PC equipped with an LTE modem was measured streaming data at around 56Mbps.

The new LTE data service will cover Tokyo, parts of Osaka, Nagoya and a handful of other areas near these cities. NTT DoCoMo built the launch network at a cost of ¥35 billion ($430 million) and plans to spend an additional ¥270 billion over the following two years to roll out service to other parts of Japan.  Most users will pay only slightly more for LTE than they already do for 3G data.

A "4G" Base Station on a Chip?

TI has announced the industry's first wireless base station System-on-Chip (SoC) with "4G class performance."  Built as a wireless data engine from its inception, the TMS320TCI6616 SoC is based on TI's new TMS320C66x digital signal processor (DSP) generation using TI's new KeyStone multicore architecture, and delivers more than double the performance of any 3G/4G SoC in the market. The TCI6616 also boasts the industry's first multicore DSP that processes both fixed- and floating-point math, an innovative capability that simplifies wireless base station software design.

Implemented as configurable coprocessors, TI PHYs enable Software Defined Radio (SDR) which allows operators to migrate to emerging standards without needing external components. Autonomous packet processing in the TCI6616 manages packets from both core and radio networks, offloading packet processing and freeing cycles for algorithms that enhance spectral efficiency. The autonomous operation of the packet coprocessors simplifies design and reduces costs for developers. Together, these configurable coprocessors, which target all major wireless standards, yield the performance equivalent of over 250 DSPs.

Viodi View Managing Editor,Ken Pyle, asks:  With this chip, would it be possible for a base station manufacturer to use a firmware upgrade and not have to change out RF modules?  Or, would this only deal with data protocol and there still might have to be swapping for a WiMAX-to-LTE migration?"

Implications: 

While we don't know the answer to that question, we do see a huge change in telecom equipment design- from dedicated hardware to multi-core processors and DSP co-processors with RF front ends.  While this will potentially simplify equipment design, it will very likely result in fewer hardware design engineers employed by equipment companies and the need for a much smaler number of firmware engineers. 

Another important implication is that components like this one will result in lower cost network equipment (e.g. base stations), hence driving down CAPEX and OPEX for telcos.  That may make it easier for telcos to justify network upgrades in light of meager revenue growth.

0 thoughts on “LTE Market Forecasts Up as Operators Announce Deployment Plans

  1. Thanks for a very informative and concise summary of LTE activities.  Considering it's a "fork lift upgrade" that costs a lot of money, do you really think these bullish forecasts will be realized?  In particular, how will the network operators pay for the LTE CAPEX plus new provisioning and OSSs?  Their revenues are growing much slower than mobile data traffic

    1. There are a few macroeconomic facts that should help put our LTE forecast in perspective:
      – Total worldwide telecom capex for 2010 are expected to bottom out at $289 billion, and slowly crawl back to $321 billion by 2014
      – Total mobile infrastructure spending (2G and 3G currently), are expected to decrease to $50 billion this year from $55 billion last year, and by 2014, they’ll stay flat with LTE offsetting the 2G/3G decline — but only making 23% of the total!
      – Service providers’ free cash flow is at a historical high with the big guns generating between $5 billion and $12 billion a year
      – Even a network like Sprint's requires at least a $5 billion investment to have WiMAX in every company’s nationwide footprint
      Bottom line: Although the raw LTE spending number looks impressive, it’s just a drop in the worldwide capex ocean, made up of cash-rich big-gun telcom operators. Some of them could even buy the debt of countries like Greece, Ireland, and Portugal if they wanted to.

  2. Nice summary of what is going on with LTE. It is still not clear to me how the revenue flow to the operators will support their investment in 4G. As a user, I will like the higher data speeds at lower cost, but as an investor in Telcom, I am cautious. I think usage based pricing is inevitiable.  

  3. Where does all this LTE activity leave mobile WiMAX? Is that industry dependent on Clearwire, which is having severe financial difficulties? Can small operators in Japan (UQ), Russia(Yota),,Taiwan (many), Korea (2) etc create enough global market traction to enable WiMAX to survive as anything but a niche market, e.g. for WiFi backhaul and high bandwidth M2M communications like video surveillance?

    And what will be the fate of WiMAX 2.0 (IEEE 802.16m)- one of two ITU-R blessed 4G technologies?  Only UQ Communications in Japan (where Intel is a major equity owner) has announced plans for it.

    Many unanswered questions here.

     

  4. IDC Market Forecasts for Mobile Broadband and LTE

    IDC Analyst Chua 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. 

    http://community.comsoc.org/blogs/ajwdct/idc-market-forecasts-mobile-broadband-and-lte

  5. Great article, but I think more doubt has to be cast on these optimistic LTE forecasts.  Where will the CAPEX for build out and OPEX for operations and maintenance come from.  And how can take rates be high when they are no hand held devices, tablets or PCs with embedded LTE?

  6. Will the LTE network be deployed before there are sufficient devices?  If so, who will use it?
    Cox LTE trials ongoing
    In January, Cox announced it had conducted 4G trials in San Diego and Phoenix in collaboration with Alcatel-Lucent and Huawei. Bye said those trials "continue to do very well," but there needs to be a more robust ecosystem for 4G devices.
    "We're very encouraged in terms of what we're seeing with the network performance," Bye said. "One of the challenges when you go to a new technology is oftentimes the network is there before the devices and the ecosystem are in a place to make it a viable consumer product."
    Cox invested $550 million in acquiring Advanced Wireless Service (AWS) and 700 MHz spectrum a few years ago in the Federal Communications Commission's auctions.

    1. Huge CAPEX build out cost may be a deterent for Cox –
      Could more "committed" LTE providers have 2nd thoughts as well?
      Stephen Bye, Cox's VP of wireless services, told FierceWireless the company plans to expand its wireless service to its other cable and broadband markets, but it does not appear to be on an urgent schedule like Verizon with LTE. Its first three markets have taken a long time to go live and there is no timetablet for the rest of the cable footprint, nor for the network Cox is building in its AWS and 700MHz spectrum.
      Indeed, there is some doubt over whether the cableco will stick with its brave plan to build out its own systems, given the cost involved – at a time when other cable providers are relying on partnerships, and even network owners like T-Mobile may do so for the next generation. Bye said: "What's important to us is how we deliver the services and experiences [customers] need, whether it's through our network or wholesale partnerships, provided that quality is what we need. We have the means and spectrum to move to our own facilities. But I wouldn't say it's a necessity to do so."
      http://www.rethink-wireless.com/2010/11/20/cox-reverse-plans-build-networks.htm

  7. In its first commercial touting its "4G LTE" service, Verizon claims that the network is the "most advanced 4G network in the world." The company has not said when it will launch service or what its pricing will be, and has only indicated that it will launch service in 38 markets and at 60 airports by year-end.
    The TV ad, which debuted Sunday, touts the network as "lightning fast." Verizon has said that the network will deliver real-world downlink speeds of 5-12 Mbps and uplink speeds of 2-5 Mbps. The first LTE devices will be USB dongles, followed by other devices next year. Verizon Communications CEO Ivan Seidenberg last week said that Verizon's first LTE smartphone will be available in February
    Video: Verizon Wireless' first 4G LTE TV commercial
    http://www.fiercemobilecontent.com/pages/video-verizon-wireless-first-4g-lte-tv-commercial#ixzz162B3a39i
     

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