The U.S. is pivotal in the emerging LTE ecosystem because U.S. CDMA carriers are frontrunners in LTE.
Upon return from the Mobile World Congress (MWC) in Barcelona, I met for a debriefing with 30 members of the Massachusetts Network Communications Council, including the six of us who attended the show. With excitement, I announced to my local colleagues that the town for our meeting was, by coincidence, to become the global epicenter for LTE developments.
In addition to announcing Verizon Wireless’ LTE vendor line-up, MWC keynote speaker Dick Lynch, chief technology officer at Verizon Communications, said his company was opening an LTE Innovation Center in Waltham, Mass. This will attract consumer and medical electronics companies, among others, to evaluate their LTE-based prototypes in real-life radio and user experience conditions, such as in the home and on the street.
Verizon Wireless selected Alcatel-Lucent and Ericsson as its LTE radio access network suppliers. It was inevitable that one vendor would be an incumbent CDMA2000 supplier, given the engineering challenges in migrating and interworking between the two technologies. These vendors are also partners in the Innovation Center.
EXAGGERATED RUMORS
The Financial Times put a damper on LTE at the MWC by erroneously reporting that LTE is delayed. Few carriers were ever hoping to start deploying LTE before 2012. Most were quite happy for the time being to stick with their current technologies, including a succession of enhancements in HSPA. In addition to a few Asian carrier exceptions, Verizon and MetroPCS in the United States are notable with their plans to add LTE rapidly rather than upgrade on CDMA.
Technology providers cannot afford to let others take leadership in LTE. Carriers want future-proofing and flexibility even if they do not yet have LTE deployment plans. LTE needs to be on product roadmaps because customers will demand LTE-upgradeable network equipment long before they actually deploy LTE. Similarly, chipset and handset vendors must show a pathway to LTE products or risk customer defections.
Early adopter carriers will significantly help their technology suppliers. Expertise obtained by the first implementers becomes a barrier to entry for competitors. These, so called, experience curve effects are particularly important in devices, as illustrated by Nokia’s new deal with Qualcomm. Nokia told me it needed Qualcomm chipset supply because Qualcomm has so much influence on North American carriers. Whether it is influence or understanding, the need to be better engaged with carriers could not have been more strikingly and embarrassingly illustrated than with Nokia’s recent recall of its 5800 XpressMusic smartphones from U.S. stores because they could not connect properly to AT&T’s 3G network.
Ultimately, the biggest prize in LTE is with migrating GSM and UMTS carriers, but the crucial action initially is elsewhere. As if UMTS isn’t difficult enough, the leading LTE market for the first couple of years will be the United States and invariably require dual-mode devices, including CDMA. Nokia’s chipset agreement with Qualcomm is only for UMTS so far. Whereas establishing technological leadership in LTE with independent initiatives is strategically important for Nokia where it is already strong, for example in Europe, increasing the scope of the agreement to include CDMA and LTE for the U.S. market would benefit both companies.
DISRUPTIVE BUSINESS MODELS
For Verizon, AT&T and most mobile operators worldwide, LTE provides an opportunity to incrementally increase speed and capacity while also harvesting investments in existing technologies, including wireless and wireline.
New network technologies also can create opportunities for commercial disruption by challengers. For example, market latecomer “3” in the United Kingdom competed by offering plentiful, cheap voice. It has extended this approach to data and claims the largest wireless broadband network in the United Kingdom. It is driving U.K. wireless broadband adoption with low prices such as $70 and no contract for an HSDPA dongle and 1Gbyte of prepaid airtime.
With no wireline network, it is likely MetroPCS will disturb the status quo in broadband. Its proposition in voice is cord cutting with low cost, unlimited usage and no contract. A similar positioning in broadband data with its planned LTE deployment from 2010 seems likely.
IT’S SHOW TIME
Paradoxically, as the United States becomes more important in the increasingly global mobile industry, the MWC – formerly the 3GSM World Congress – becomes more significant at the expense of CTIA shows. CTIA organizers used to hold the events where CDMA carriers from around the world would hang out, but they mostly now look to 3GPP standards and shows such as MWC for their planning. Consensus at the MassNetComms debriefing was that while MWC attendance was significantly less than last year due to the economic downturn, CTIA attendance also will reflect the show’s decreasing importance globally.
At least in Las Vegas, lodging is much cheaper and (one-armed) robbery is more likely to be self-inflicted than in Barcelona. See you there!
Mallinson is founder of WiseHarbor, solving commercial problems in wireless and mobile communications. www.wiseharbor.com