Monday, 24 January 2011

Are Device Manufacturers Ready for LTE?

At CES this year, Verizon Wireless launched a series of devices, including four Smartphones: the LG Revolution, the HTC Thunderbolt, the Motorola Droid Bionic and the Samsung SCH-I520. A few other devices, a couple of hotspots - job done.

Speaking to many device manufacturers over the years, usually they wait at least six months after a network has launched before they even start to think about developing devices on any kind of scale. A key difference between 3G and LTE deployments is the time between the first tests and network launch is much smaller, so there is much less time for testing the network, QoS and devices. Operators will still be finding protocol and interoperability issues and will continue lab testing of devices and services because everything is new. So if network maturity has always been key, then why rush to get so many devices out into the market so early?

There are a few possible reasons. Samsung LG and HTC have been the most agressive device manufacturers for LTE and are keen to gain a piece of the smartphone market in which Apple so far has dominated. Samsung has already launched the first LTE dual-SIM smartphone with MetroPCS, so are keen to develop devices and be seen as leaders in the industry.

The more likely reason is that Verizon Wireless is keen to close the gap on AT&T in the US smartphone market, where AT&T has built a sizable lead largely due to the iPhone. In fact in 3Q10 AT&T had more than twice as many smartphone subscriptions as Verizon, with 49 million compared to 20 million at Verizon, according to Informa Telecoms & Media data.

It is an interesting strategy from VZW, as they have always touted the fact that the quality of thier network is far superior to that of AT&T, although this is unlikely to be the case early on with thier LTE network. One would have expected the likes of VZW to take their time to get the network to a good standard before they launching lots of devices. Instead they seem to have taken a leaf out of AT&T's book. Perhaps they have realised that customers don't care about the network or which technology an operator uses - its all about the devices.

Thursday, 20 January 2011

Will LTE Signal the End of GSM?

At the end of last year NTT DoCoMo launched their LTE network. They had announced back in May, at the LTE World Summit that they have a roadmap in place to migrate remaining customers on thier 2G network to 3G and LTE and plan to swich off the 2G network within 2 years. So we're looking at a switch off date of May 2012. This isn't as agressive and anmitious as it seems, as DoCoMo has an unusually high proportion of its subscrbers already on 3G. Coupled with the fact that DoCoMo uses the rather niche PDC technology for its 2G network, you can understand why they want to part ways with it.

So why aren't other mobile operators in mature markets as keen as NTT DoCoMo is on this strategy? Surely the cost of running a 2G, 3G and LTE network is not sustainable given declining revenues? The first reason is that no operator will switch of their GSM network until there is complete ubiquity of at least 3G. Secondly, GSM provides an excellent voice service and in markets such as the UK where customer bases are polarised either towards being very smartphone savy or just wanting a very basic mobile phone to make phone calls. In this case why should UK opeators go to the effort of migrating everyone to 3G/LTE when 65% of their revenue still comes from voice and the GSM network is so reliable? The third reason is that even though the difference in QoS between EGDE and 3G is considerable, EDGE is still good enough for basic web browsing etc (remember the first iPhone?)

If we start to see 99% coverage requirements for 3G as they have in France, then this will make the case for operators to commence a roadmap for 2G switch off. This however will not happen overnight. Coverage requirements such as the example in France can only really come in to place after the regulators have re-farmed the 900MHz band for UMTS or the 800MHz digital dividend band for LTE - or as in France's case, both.

Operators seem to be resigned to the fact that for now they will have to operator 3 different networks (4 if they operate a series of WiFi hotspots!). In this situation optimising traffic-flows across different networks and having the right policies in place for managing capacity effectively is essential.

If DoCoMo is successful then operators may think again, but for now is seems that GSM still has a long life ahead.