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.

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