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Mobile Net Investment Seeking New Revenue

UMTS Long Term Evolution (LTE) will dominate the world's mobile infrastructure investment markets after 2011, according to a recent study from ABI Research.

While LTE will encounter competition from other mobile broadband technologies, its supporters point to its flat architecture, low latency, and IP Next-Generation Network (NGN) capability to provide a range of SIP (Session Initiation Protocol) services.

LTE brings to the market 25 years of operating experience using TDM and CDMA technology. Vendors and mobile phone operators aim to use that experience, combined with OFDM and other techniques, to provide the best of both worlds.

This also takes the industry from the current two-network approach of circuit-switching for voice and packet-switching for data to a single IP network for both services. But, will that be enough incentive to justify the required investment?

"LTE faces competition from other broadband wireless technologies and it will need to demonstrate clear technical and economic advantages to convince network operators," says ABI Research analyst Ian Cox. "The mobile variant of WiMAX will start to appear in 2007 as the WiMAX Forum Certification program ramps up. The industry is also working on HSPA+, which could offer the same performance in a 5 MHz bandwidth. Without additional spectrum, wireless operators could face a difficult choice."

Cox adds, "LTE is the NGN for the mobile industry and is being standardized by 3GPP with the full support of operators via the NGMN Group."

Long Term Evolution of 3G technologies is about to benefit from Release-8 of the 3GPP standard, planned for 3Q 2007. Again, ABI believes that the potential rewards of LTE are simplicity of operation, a flat architecture offering low latency, and spectrum flexibility.

Backwards-compatibility and roaming with 2G and 3G networks are added bonuses, along with lower power consumption and improved performance. LTE could potentially unite the W-CDMA and CDMA communities because of its spectral flexibility.

"For service users," says Cox, "LTE will enable broadband services, including VoIP, to be offered over SIP-enabled networks. Each service will be IP-based, offering high data rates and low latency, with online gaming becoming a reality along with mobile network data speeds comparable to those of fixed networks. For vendors, LTE will allow the development of a new market to replace declining 3G revenues."

That said, I find it a little odd to already be addressing declining 3G vendor revenue, while most mobile service providers are still struggling to develop an upward revenue momentum for their existing 3G investment. I'd anticipate that mobile operator CFOs will now be more closely scrutinizing any additional network investment -- given the current 3G adoption anticlimax.

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