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Wednesday, December 29, 2010

LTE Wireless Network Investment to Proceed Slowly

When mobile network infrastructure comes to mind in 2011, 4G LTE is likely the focal point. Yet the very meaning of the acronym -- Long-Term Evolution -- is a hint that the required network investment will proceed slowly.

LTE's deployment as the mainstay 4G technology will take place gradually, and won't even begin to gather real momentum until 2013. Nonetheless, LTE is forecast by ABI Research to generate more than $11 billion in service revenue in the U.S market in 2015, with nearly a further $650 million to come from Western Europe.

"The LTE service revenue growth curve for Western Europe is practically a straight line," notes ABI Research director Philip Solis.

That contrasts sharply with constantly accelerating revenue growth in the US, and is largely due to the sometimes exorbitant amounts European network operators paid for their 3G spectrum -- many of those operators want to squeeze every drop of value from their 3G investments before migrating to 4G.

In the U.S. market, though, carriers such as Sprint deployed WiMAX, and began advertising 4G as each city rolled out starting in late 2008. Other carriers, not wanting to be left out in the cold, started jumping on the 4G bandwagon, with Verizon Wireless already launching LTE, and AT&T Wireless bringing its announced launch date forward in 2011.

"Although carriers will appreciate LTE's bandwidth efficiency and users its higher data speeds and lower latency, voice will only start to enter the LTE picture in a meaningful way in 2013 or 2014," adds ABI research analyst Xavier Ortiz.

Existing networks still provide voice services with great coverage and reliability. Using LTE for voice will mean completely abandoning the tried-and-true legacy TDM backhaul and replacing it with IP backhaul at considerable cost.

Carriers will only make that leap when 4G can truly replace 2G and 3G for voice -- although ABI Research recommends making the investment sooner, rather than later.