LTE-Advanced to be finalized, before LTE even has a clear business case

(Mar 1 2011) LTE , QoS

1. LTE-Advanced managed to take a prominent role at last week’s Mobile World Congress, even though it is not yet officially a standard, and its predecessor is only deployed in a dozen places. The wireless community took a significant step to putting the first of these right last Friday, when it agreed on the final specs for the purportedly 1Gbps system.

   After five days of talks in Taipei, about 800 representatives from vendors, carriers and other mobile players agreed on the technical details of the standard – officially 3GPP Release 10 - which will now be submitted to the body for final approval, hopefully in late March at a US-based meeting. “Despite some hopefully minor exceptions, the freeze date is therefore March 2011,” said the 3GPP.

   There were also discussions about patents and cross-licensing, though harmony on those subjects may be more elusive than on specs. Companies like ZTE, Huawei and Ericsson, and institutions like Korean research body ETRI, have already claimed significant IPR. And despite high profile demonstrations, most carriers will not deploy the new platform until towards the end of the decade, and for now, are preoccupied with ensuring a return on their investment in the first round of LTE.

   The next LTE specification has already been accepted by the ITU as an official IMT-Advanced platform, along with WiMAX2. These technologies are supposed to achieve 1Gbps on the downlink when stationary and 100Mbps when mobile, plus 200Mbps on the uplink. Of course, it remains to be seen just how ideal the conditions need to be to make that happen in real life. To deliver 1Gbps speeds, an operator would need 40MHz of spectrum and 8×8 MIMO antenna arrays (or about 100MHz of spectrum without MIMO).

   It is clear, however, that the appetite for ‘true 4G’ (as opposed to the various systems now marketed under that banner) may be whetted earlier than expected, given the race to add mobile data and broadband capacity while adopting more affordable and modern network designs – LTE-Advanced is heavily focused on small cells and the kind of deconstructed RANs that Alcatel-Lucent and others were showcasing in Barcelona. It will also be self-optimizing and self-healing, responding to faults in the network or to changes in demand by taking actions, such as adding power to a base station or decreasing its radius, automatically.

   LTE-Advanced will also support multicarrier implementations across non-contiguous spectrum bands, as demonstrated in Barcelona by Nokia Siemens, as well as easier hand-offs between different networks like 3G and Wi-Fi, for roaming and offload. On the backhaul front, the standard allows for some over-the-air backhaul via a macrocell, reducing cost in some lower capacity sites, and opening the way to new topologies – for instance, running small cell access in one band and macrocell backhaul in another.

   The standards setters need to move quickly, since several vendors and institutions are already claiming LTE-Advanced products – Nokia Siemens offered a compelling demonstration of the pre-standard on its Flexi platform at MWC, while NTT DoCoMo has already carried out various tests under its SuperG initiative, followed by similar activity by Korea’s ETSI.

   Another government sponsored laboratory with significant LTE-Advanced activity, Taiwan’s ITRI, is hosting the 3GPP summit and its wireless communications director, Feng Wen-Sheng, pointed out that LTE-Advanced applications will go far beyond consumer services and handsets or tablets. The technology will be important in giving machines a new way to communicate among themselves, he said, for instance by using temperature sensitive sensors in emergency situations.

   "Mobile voice technology is pretty advanced already, so this time it's all about data transfers," Feng told IDG News. "We've been trying to get LTE-Advanced out there for some time, and in Taipei we expect to confirm a final version." However, he struck a note of caution about timing – “As for when it will be deployed, not that fast. "Release 8 has just gotten started, so this one will come a bit later.

   However, operators have far more pressing concerns for their first generation LTE networks. One of these is, once they have ploughed all the resources into rolling out a live system, how to push users onto the new network. LTE was supposed to be the solution to the carriers’ fatal mismatch between declining data rates and higher usage levels, allowing them to support superior quality of service and new applications, and so command higher or tiered rates. So why are many early adopters emulating the same tactics used when 3G was new – wooing users with discounts and huge subsidies?

   In the early days of 3G, operators hoped to score a double whammy – reducing the cost of supporting services with the greater spectral efficiency of the modern networks, while charging more because they could offer new functions such as video. This was badly thought out – until HSPA came along, the networks were limited in how much multimedia they could actually deliver, and users were generally lukewarm about the new offerings anyway, especially when the first wave of devices were so unappealing. This drove carriers, especially in Europe, to fall back on the efficiencies of their new infrastructure to reduce prices and introduce flat rate data, relying on their lower cost of delivery to retain margin, while stealing customers from rivals.

   This brought short term gains, but created the problems cellcos face today, of huge data volumes combined with a flat rate price war. Yet they should be able to harness LTE to change the situation – this time around, consumers are ready for new services and the technology can handle huge multimedia and data volumes, and even promises some attractive smartphones soon. The new problem is that so much consumer activity is now web-based, that carrier applications are a limited incentive to customers to move to a new network, especially if it comes with data caps or higher fees. The advent of blockbuster handsets will help, but in the meantime, carriers are having to resort to the old price cuts to ensure that they push customers quickly to their new systems, to reduce their costs of delivery and make best use of the new capacity.

   For example, Vodafone Germany is offering a heavily discounted rate to customers who sign up for LTE by the end of April, according to local paper teltarif. These users can gain a cut-price deal of €19.99 for download speeds of up to 7.2Mbps for the first three months of a two-year contract, a reduction of €10 a month. The company also is offering 50Mbps service for €39.99 a month for the first three months, down from the usual rate of €59.99. The aim is not just to convert 3G subscribers but to woo DSL customers to the 50Mbps offering, which the carrier says can outpace copper broadband for fixed access. It will offer DSL users discounts related to the amount of time remaining on their fixed line deal.

   Such carriers will hope that, once attracted by the initially good terms, customers will stay loyal and start to spend more on value added services or the increased data consumption that fatter pipes tend to generate. But many remain concerned that LTE is not shifting the business model in the way they had hoped. All those discussions of using the new all-IP networks to reduce reliance on the subsidy model, because subscribers would bring their own devices to the superfast system, have subsided amid the usual races to unveil eye-catching phones and compete for two-year contracts.

   As Mark Liversidge, CMO at Hong Kong carrier CSL, said in recent speech: "We've done an effective job of supporting the business model of device makers". He called on fellow operators to learn from the disappointments of 3G, and be careful not to devalue their 4G services from the start. He told a recent TM Forum Management World event that his biggest fear was the industry falling into the 3G trap of launching new services at the same price as existing ones, or even undercutting them.

   CSL now covers over half of its territory with LTE, but has not yet done any above-the-line advertising or offered any introductory deals. "This isn't because the products aren't ready. They are. Frankly, we're very nervous about our services, which required major capital expenditure, being devalued before given a chance to take off,” he told the audience. Instead, CSL plans to take the time to engage with content providers and other partners to build up a value proposition that will not involve heavy subsidies or reduced tariffs, and it will drop its current minute- and volume-based pricing models to focus on access to content, and charges based on the quality of delivery of that content.

   Bookmark or Share this article

Login to comment