Monday, 26 October 2009

Operators Don't Just Want to be a Dumb Pipe

The net neutraility argument continues. The FCC is due to vote on new net neutrality rules tomorrow whilst Verizon has warned the commission not to pass rules barring operators from favouring certain types of content or applications over others or from degrading traffic of Internet companies that offer services similar to those of the carriers. But does net neutrality understate the role of sound network management practices and ignore the real benefits that smart networks deliver?

Most operators are now seriously attacking the idea that they should be considered "dumb pipes" whose sole job is to neutrally push traffic from content providers. With user experience and the personalisation of services expected to be a key differentiator between networks, when operators do decide to invest in LTE, they plan to generate revenues from offering tiered pricing and an extensive API offering. Knowing what the customer is using his/her data for will be crucial to offering the right service to the right customer.

Taking away the operators' ability to favour certain content and to create tiered services may take away the financial incentive to invest in network upgrades. Again this is the argument being put forward by Verizon, if it is not able to make a return on the huge investment being made in it LTE network, then it seriously impacts on future investments and the future quality of service that operators can provide.

Thursday, 22 October 2009

TeliaSonera Offers a Single-Mode Modem Only for Its LTE Launch

TeliaSonera has signed a deal for LTE modems from Samsung for its launch in Sweden and Norway in the first half of 2010. The reason behind this single mode LTE only modem is simply because that's what's currently available.

Because the Samsung modem is LTE-only, TeliaSonera customers will need to use a second modem, either built into the computer or a separate USB dongle to access the Internet when they are not in an area covered by LTE, which at first will be limited to major cities. It's too early to say how the hand-off between the two modems will work, according to TeliaSonera. However, the operator expects that users in the inner-city parts of Stockholm and Oslo will be able to move around and surf using just the LTE modem.

TeliaSonera will have enough modems for a commercial launch, but isn't willing to provide exact quantities. It is hoped that the use of an LTE-only modem is a temporary measure. Samsung is working on a modem that will come out next year and support a multitude of mobile broadband technologies. Obtaining a supply of next-generation modems and phones continues to be the biggest challenge when it comes to rolling out new mobile technologies and is the main reason that operator are cautious of deploying LTE early. AT&T, NTT Docomo and Telefónica are just a few operators to have voiced concerns about vendors' ability to have modems ready by the end of next year.

TeliaSonera said its LTE launch will happen during first half of 2010, but wouldn't provide a more exact timeframe.

Tuesday, 13 October 2009

Cisco Wants a Piece of the LTE Market

Cisco Systems announced today its second multibillion dollar deal this month: a definitive agreement to acquire Starent Networks for about $2.9 billion. The buyout comes on the heels of Cisco's roughly $3 billion buyout of videoconferencing leader Tandberg announced just under 2 weeks ago

Starent makes products that manage access from 2.5G, 3G and LTE networks to a operator's packet core network. Starent's products are deployed in CDMA2000 (1X, EV-DO), UMTS/HSPA, LTE, Wi-Fi, and WiMAX networks.

Cisco has a significant investment in WiMAX, having bought Navini Networks in 2007 for $330 million, and winning a supply contract with Clearwire earlier this year. Lately, however, Cisco's been making overtures to address the LTE market. This is undoubtedly because almost all of the main tier 1 operators have committed themselves to LTE and they have much deeper pockets that the smaller or greenfield operators have to spend. Verizon and AT&T have already made public their plans to adopt LTE over mobile WiMAX.

Cisco claims that its maneuvers are "access agnostic" rather than a hedge on an earlier bet that may not pay off expected dividends. That may be where Starent fits in, its products have been deployed by over 100 mobile operators in 45 countries. And this is probably a good move for Starent too. One of the problems Starent has had is market reach, Cisco should be an enabler for Starent to take its technology global.

Under terms of the agreement, Cisco will pay $35 per share in cash in exchange for each share of Starent Networks and assume outstanding equity awards for an aggregate purchase price of approximately $2.9 billion. The acquisition has been approved by the boards of directors of both companies. The acquisition is expected to close during the first half of calendar year 2010; however, the close date is subject to customary closing conditions and regulatory reviews. Prior to the close, Cisco and Starent will continue to operate as separate companies.

Friday, 2 October 2009

Calculating the Cost of LTE, Can Operators Afford LTE in the Economic Downturn?

We have seen in the last 6 months or so that some tier 1 operators have been quietly delaying their plans for LTE, some by a few years. T-Mobile is a good example, having stated their plans to roll out LTE in 2010 and replace 3G, they are now looking to stick with HSPA for a little longer.

Aircom launched their LTE cost calculator and published estimated capex investments facing a tier one mobile operator in the first year of rollout in each of four regions. The figures will of course vary by region, the legacy equipment operators have in place and the spectrum they have available. The estimated cost in the
US came to $1.78bn, Europe $880m the Middle East $337m and Asia Pacific lowest with $232m.

The economic crisis is the main reason for operators seeking to limit CAPEX committments, but this is also leading to operators taking a differnent approach to LTE network roll out, with network sharing cited as an example alongside the automation of key optimisation processes through the roll out of self-organising networks (SON) and the deployment of femtocells to cost effectively provide macro network offload capabilities as well as indoor coverage. Operators don't want to deploy LTE unless it can be shown that it will save them money in the long term and selling LTE to shareholders can't be easy right now. HSPA is becoming an increaslingly attractive interim solution.

LTE has the potential to become the first radio access technology that is used by all the world's major mobile operators, which means that it could eventually gain massive economies of scale. Some operators may be thinking that it might be worth waiting for the costs to go down before deploying LTE. If the operator's current base stations were deployed fairly recently, they may also be able to move to HSPA+ with just a software upgrade. Operators with a relatively new HSPA network are likely to upgrade it to HSPA+ to ensure they maximise their ROI on HSPA and again this makes it difficult to justify the cost of LTE.

Thursday, 1 October 2009

Has Telefonica Been Lagging a Little too far Behind with LTE?

Telefonica has become the latest global operator to LTE trials and has has selected six vendors to launch test projects in six different countries in preparation of rolling out LTE-based networks

Alcatel-Lucent, Ericsson and Nokia Siemens Networks will represent Europe while Japanese vendor NEC and Chinese vendors Huawei and ZTE will fill out the remaining three slots making the selection of vendors quite the East-West mix.

Telefonica isn’t limiting its trials to Europe. In addition to building networks in Spain, the UK, Germany and the Czech Republic, Telefonica will also run trials in Argentina and Brazil, interesting as they have only recently rolled out HSPA and it seemed to most that LTE is still a really long way off. Each vendor will be given a different country and will deploy its e-Node B base stations this year for the six-month testing period. Telefonica also said that the trials won’t necessarily be limited to six vendors or six countries. It will be open to other suppliers, which could leave the door open to players like Fujitsu and Motorola of Telefonica does indeed decide to cast the net wider.

Telefonica has no projected timeline for deploying LTE and in most of its markets doesn’t even own free spectrum. In fact, Telefonica said that the results of the trials will largely inform its LTE rollout strategy rather than the other way around.

Telefonica is certainly not a leader in the the market, an example of this was when it was named and shamed in the UK for not meeting the regulator's requirement of having 80% coverage in the UK. It is more likely that they just want to have a strategy in place for when the handsets and devices are ready (leaving the voice over LTE problem for everyone else to sort out?) This could be years away, or if other operators such as Verizon Wireless continue to push for handsets and devices then this "critical mass" that needs to be reached for the followers in the industry to start deploying LTE, may be sooner than we all think.

The announcements of new devices from LG, Samsung and Nokia has probably made executives at Telefonica sit up and take notice of how the Industry is rallying around LTE - and that their competitors are perhaps a little too far ahead of them than they would like.