Analysis - Alternatives in LTE
Watch out WiMAX.
LTE is no longer just a long-term proposition, but it is time for a new name.
Timing is Everything. Long Term Evolution (LTE) announcements from AT&T Mobility and Verizon Wireless are accelerating the competitive outlook for 3G and 4G. AT&T said it would deploy LTE in 2013 across the 1700/2100 MHz Auction 66 AWS spectrum it obtained in 2006, the 700 MHz spectrum it acquired last year from Aloha Partners and most recently in Auction 73. It intends to evolve its HSPA network in the meantime.
Verizon Wireless then trumped AT&T with its more aggressive plans for the first commercial deployments of LTE in its Auction 73 spectrum in 2010. NTT DoCoMo also is expected to be a front-runner with LTE.
WiMAX is nominally ahead in 4G with various small deployments around the world and is in a 3-horse race against the two LTE aspirants in the United States. Sprint Nextel’s commercial WiMAX launch, following delays, is still most likely to take place this year. It will probably merge with Clearwire. Although time-to-market is critical for any new technology, you have to wonder how this will factor in as a key determinant for success?
Speed and Capacity. WiMAX and LTE both claim to outperform 3G when deployed in 10 MHz -20 MHz bandwidths. Sprint Nextel is starting with TDD in 10MHz of unpaired spectrum. CDMA2000 and HSPA aficionados counter-claim that similar speeds will soon be possible with these 3G CDMA technologies. Either way, spectrum availability will be tight for many carriers worldwide that might need to re-farm their scarce 2G spectrum resources. AT&T and Verizon, however, have plenty of latitude to increase speeds and mobile broadband subscribers with about 20 MHz apiece of prime, new, paired spectrum. Verizon’s plans for its AWS spectrum are unclear.
Coverage and Mobility: AT&T and Verizon have enormous advantage because the cell site density required for full mobility at 700 MHz is around one-fourth that required by Sprint Nextel at 2.5 GHz. Nevertheless, until at least 2015 in the United States and probably a lot longer in most countries, neither LTE nor WiMAX will be able to provide full coverage and mobility unless offered in conjunction with established dual-mode terminals on 3G networks. This requirement will be acceptable for incumbent cellular operators, but will be awkward for Xohm or others that seek to pursue a business model that is different from the costly cellular service approach. These factors will drive Xohm to quasi-fixed and low mobility solutions.
Standardization and IP. The competitive climate will focus both camps to proceed rapidly on independent paths. Vodafone CEO Arun Sarin’s desire to merge WiMAX as the TDD mode for LTE is likely to go nowhere. It’s reminiscent of UMTS standardization a decade ago when TD-CDMA was forced – at great commercial cost – into the unpaired spectrum, while W-CDMA grabbed all of the prime, paired spectrum. There’s little to choose between the two 4G contenders on the intellectual property front. Fred Wright, senior vice president of cellular networks and WiMAX for Motorola estimates 75%-80% reuse between WiMAX technology and LTE. If that’s the case – it seems like a reasonable estimate given OFDMA and other commonalties – I expect IPR overlap and costs also will be very similar.
Economics and Strategy. 4G spectrum costs are now sunk for the top three U.S. cellular operators: The economics of incremental costs and revenues will prevail. Expected demand, economies of scale and competition will drive decisions. Infrastructure market leader Ericsson has put all of its eggs in one basket with LTE because it regards the WiMAX opportunity – even as projected by its advocates – as just too small. Nokia, Nokia Siemens Networks, Motorola and Alcatel Lucent are hedging their bets with both technologies. A macroeconomic slowdown for a year or two in the United States will help LTE catch up with WiMAX. Only modest expenditures are required in the frugal times prior to costly infrastructure rollouts.
Ecosystem. There’s plenty of heavyweight support on either side. LTE’s solutions will be most phone-like. WiMAX will differentiate with a more computer and Internet-like environment, with relatively high access speeds and significantly lower price points than full mobility services. Take your pick.
What’s in a Name? Ultra Mobile Broadband (UMB) would be a very suitable moniker for LTE because it emphasizes the mobility that WiMAX will struggle to deliver. But UMB is already taken. Following GSM’s success in Europe, its acronym was skillfully preserved while renaming it from Group Speciale Mobile to Global System for Mobile communications. What alternatives can you propose for LTE?
Mallinson is founder of WiseHarbor, solving commercial problems
in wireless and mobile communications. www.wiseharbor.com