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.

Motorola Making a Success with TD-LTE Trials in China

Motorola has just successfully completed a joint over-the-air trial with operators in China (including China Mobile) as part of ongoing collaborative TD-LTE trials continuing throughout 2009. Key trial results include:

• First company to complete download throughput up to 70 Mbps in a 20 MHz bandwidth channel
• Mobility and hand-over with live applications
• Multi-User Equipment (UE) testing under one sector

Globally, Motorola is working on both TD-LTE and FDD-LTE solutions as are all of the major infrastructure manufacturers, with initial commercial products due out in Q4, as TD-LTE is said to be about 3-6 months behind FDD. This latest trial success follows other milestones during 2009, which included the launch of an LTE advanced self-organizing network (SON) solution back in May, deployment and demonstration of a live LTE network at CTIA in April, and the opening of a new testing centre in the UK back in February. As far as the Asian market goes, Motorola currently provides GSM/GPRS/EDGE, CDMA2000, and WCDMA network solutions in China.

China Mobile has been the main operator globally that is pushing for TD-LTE, which Bill Huang, GM for China mobile Research Institute giving a keynote at the LTE World Summit in London in November. China Mobile will also have a strong presence at the LTE Asia conference in September in Hong Kong with over 15 participants confirmed.

For more information on Informa's LTE Asia conference, please visit www.lteconference.com/asia

Are Operators Really Taking Self Organising Networks Seriously?

Self organising networks referred to by the industry as SON will be a key feature in LTE networks. T-Mobile has been the operator pushing for this the hardest, stating that they will not deploy LTE if it s not self organising.

A self organising network would mean that the network is plug-n-play, zero touch and automatically configured. SON is a very useful feature that will allow for the automation of several tasks lowering the OPEX and CAPEX costs. Plug-n-play would mean that expensive site set up costs could be eliminated and automatic neighbour recognition would mean lower optimisation costs. The ultimate goal of SON would be to bring drive testing to an end.

17% of wireless operator’s CAPEX is spent on engineering and installation services. SON’s self-configuring functions are expected to eliminate many on-site operations for the basic settings and subsequent updating of network equipments, and thus reduce CAPEX

It is also known that about 24% of a typical wireless operator’s revenue goes to network OPEX, which are the cost of network operation and maintenance, training and support, power, transmission, and site rental. SON’s self-optimizing functions will reduce a workload for site survey and analysis of network performances, and thus reduce OPEX. Moreover, SON’s energy-saving functions reduce the costs of power consumed by the equipment.

3GPP has introduced SON items in its standardization path as required features for LTE deployments. Release 8 includes the first specifications on requirements, integration with operators’ processes, and identification of main use cases. Release 9 is expected to define advanced features, which will introduce self-healing and self-optimization capabilities into LTE.

However, it does seem like some operators are happy to just go with LTE because it is a bigger pipe. I asked a panel of operators at MWC in February, how important was SON going to be for their LTE deployments. Kris Rinne, VP Architecture & Planning at AT&T as well as Bill Huang, General Manager at China Mobile Research Institute both said that they had no plans for SON!

It is possible that LTE is being sought after because operators need more capacity, are trying to keep up with their competitors and the costs savings that deploying LTE brings with SON is secondary and just makes it easier to justify building a new network.

Kris Rinne will be giving a keynote speech at the LTE Americas conference which takes place on the 4th and 5th of November in Dallas. See www.lteconference.com/americas