LTE Markets & Strategies

MNOs commercial positioning & wholesale models - ready for take-off

This report provides an overview of the latest trends in the fast growing LTE market and the reasons driving MNOs' migration to LTE. It also analyses operators' roll-out strategies, LTE networks, technical hurdles, the regulatory environment and LTE spectrum issues, in addition to spotlighting the key players' different strategies and what will change with LTE.

Key Questions:

- LTE ecosystem is growing fast - TD-LTE is now available commercially. Will it complement LTE FDD? LTE Advanced will arrive sooner than expected - what impact will this have on MNOs' strategies?

- More than 14 frequency bands are already in use for LTE around the World. How will operators manage LTE spectrum?

- What mobile CAPEX and strategies can we expect the different operators?

- How are MNOs making the switch to LTE and how will their LTE strategies differ?

- Who are the main LTE wholesalers model and how will they position themselves?

>This report is an extension of IDATE's LTE Watch Service including:
- A database covering 40+ countries, 100+ operators and their current deployments and future plans
- Monthly Insights providing analyses of key LTE events and issues
- Direct access to lead LTE analysts

Players' profiled & Case Studies

LTE Wholesale models:
- LightSquared (USA)
- Clearwire (USA)
- Dish (USA)
- Yota (Russia)
- Aero2 (Poland)
- Kenya
- Net4Mobility (Sweden)
- NBN (Australia)

MNOs case studies:
Methodology
1. Overall presentation
2. Spectrum
3. Investments and deployments
4. Devices and services

Player sheets
- AT&T
- DoCoMo
- China Mobile
- Clearwire
- LightSquared: a new comer with a wholesale model
- Orange
- Telefonica
- TeliaSonera
- T-Mobile
- Verizon Wireless
- Vodafone

Contributors:

Frédéric PUJOL, Head of Radio Technologies & Spectrum Practice

Frédéric Pujol joined IDATE in November 1992. As head of Mobile Services Practice, he is responsible for coordinating mobile industry forecasting and technical-economic analysis reports.

Previously, Frédéric acquired solid experience in mobile network architecture working for the France Telecom Group (Sofrecom, Telesystems).

Mr. Pujol holds a post-graduate degree in engineering from ISEN (Institut Supérieur d'Electronique du Nord, Lille, 1986), where he majored in Telecommunications, and from CITCOM (Centre d'Ingénierie des Technologies de la Communication, Paris, 1987), where he majored in Network Architecture.

Tiana RAMAHANDRY, Consultant

Basile CARLE, Consultant

Christoph PENNINGS, Head of Regulatory Practice

1 Executive Summary
1.1 The LTE wholesale model: high-speed dumb-pipes?
1.2 LTE spectrum: already too much fragmentation
1.3 LTE network strategies and technical hurdles
1.4 Capex strategies
1.5 Service strategies for LTE
1.6 Conclusions on LTE strategies
2 Methodology
3 Introduction
4 The LTE wholesale model: high speed dumb-pipes?
4.1 LightSquared (USA)
4.2 Clearwire (USA)
4.2.1 The LTE-Advanced switch
4.2.2 Market development
4.3 Dish (USA)
4.4 Yota (Russia)
4.5 Aero2 (Poland)
4.6 Kenya
4.7 Net4Mobility (Sweden)
4.8 NBN (Australia)
4.9 Summary: Interest is growing in LTE wholesale model
5 LTE spectrum: too much fragmentation?
5.1 LTE spectrum: fragmentation increasing worldwide
5.1.1 New mobile spectrum for LTE deployments
5.1.2 Availability dates for LTE spectrum
5.1.3 Frequency bands for LTE: the fragmentation risk and consequences
5.2 Digital dividend: “golden spectrum” for LTE
5.2.1 Europe
5.2.2 Digital dividend in rest of world
5.3 Refarming - Why is LTE 1800 attracting such strong interest?
5.4 Various strategies regarding spectrum for LTE
6 Network strategy and technical hurdles
6.1 Technology aspects: towards more complementarity between LTE-FDD and TD-LTE
6.1.1 The rise of TD-LTE (FDD and TDD convergence)
6.1.2 WiMAX to TD-LTE migration
6.2 LTE-Advanced: time table and early tests
6.2.1 Tests and early selection by mobile operators
6.2.2 LTE-Advanced: technical characteristics
6.3 Interworking with 2G and 3G networks
6.3.1 General options for operators launching LTE services
6.3.2 3GPP specifies CS Fallback
6.4 Voice and SMS over LTE
6.4.1 Technological enablers
6.4.2 Roadmap for VoLTE
7 Capex strategies
7.1 The access revolution: small cells and femtocells
7.1.1 Small cells are seen as the inevitable complementary network infrastructures to macrocells
to meet the mobile broadband capacity crunch
7.1.2 Network equipment provider pushes small cells
7.1.3 The migration from macro-cells to small cells is under way
7.1.4 Femtocells will be a critical part of LTE network deployments
7.1.5 Multi-RAN adoption
7.2 Investments by major players
7.2.1 Mobile capex slightly on the rise
7.2.2 Several LTE investment approaches
7.3 Network sharing, outsourcing and wholesale
7.3.1 Network outsourcing
7.3.2 Network sharing
7.4 Backhauling needs and implications - LTE is driving need to upgrade backhaul
7.5 Migration costs
7.6 LTE costs: Capex + opex per MB of data
7.6.1 LTE: lowering the cost of capacity
7.6.2 LTE unit cost per MB is declining over years
8 Service strategies
8.1 Traffic forecasts – When do MNOs need to implement LTE?
8.1.1 Mobile traffic growth: 4G usage close to DSL usage
8.1.2 IDATE traffic forecasts
8.2 LTE pricing
8.3 North America
8.3.1 USA
8.4 Asia
8.4.1 Japan
8.4.2 South Korea
8.4.3 Hong Kong
8.5 Europe
8.5.1 Germany
8.5.2 Austria
8.5.3 Sweden
8.5.4 Norway
8.5.5 Finland
8.5.6 Denmark
8.6 LTE Service differentiation and strategies
8.6.1 Rather data-only services at the beginning
8.6.2 Available devices determines the level of service
8.6.3 LTE as a tool against white spots in rural areas
9 Cases studies
9.1 AT&T
9.1.1 Overall presentation
9.1.2 Investments
9.1.3 Spectrum
9.1.4 Devices and services
9.2 DOCOMO
9.2.1 Overall presentation
9.2.2 Investments
9.2.3 Spectrum
9.2.4 Devices and services
9.3 China Mobile
9.3.1 Overall presentation
9.3.2 Investments
9.3.3 Spectrum
9.3.4 Devices and services
9.4 Clearwire
9.4.1 Overall presentation
9.4.2 Investments
9.4.3 Spectrum
9.4.4 Devices and services
9.5 LightSquared: a new comer with a wholesale model
9.5.1 Overall presentation
9.5.2 Investments and agreements
9.5.3 Spectrum
9.5.4 Devices and services
9.6 Orange
9.6.1 Overall presentation
9.7 Telefonica
9.7.1 Overall presentation
9.7.2 Spectrum
9.7.3 Investments and deployments
9.7.4 Devices and services
9.8 TeliaSonera
9.8.1 Overall presentation
9.8.2 Spectrum
9.8.3 Devices and services
9.9 T-Mobile
9.9.1 Overall presentation
9.9.2 Spectrum
9.9.3 Investments and deployments
9.9.4 Devices and services
9.10 Verizon Wireless
9.10.1 Overall presentation
9.10.2 Spectrum
9.10.3 Investments and deployments
9.10.4 Devices and services
9.11 Vodafone
9.11.1 Overall presentation
9.11.2 Spectrum
9.11.3 Investments and deployments
9.11.4 Devices and services
9.12 Other players: Net4Mobility, MetroPCS
9.12.1 Net4Mobility
9.12.2 MetroPCS
10 Conclusions for MNOs
10.1 Total number of LTE subscriptions – 2011-2015
10.1.1 North America
10.1.2 Asia
10.1.3 Europe
10.1.4 Other regions
10.2 The LTE migration drivers
10.2.1 Costs reduction
10.2.2 Gain additional capacity
10.2.3 Increasing ARPU and potential new revenue streams
10.2.4 Provide higher data rates
10.2.5 Competitive pressure
10.2.6 Change technology path
10.2.7 LTE drivers for main LTE operators
10.2.8 National strategies
10.3 Future trends
11 Glossary
12 Annex: LTE wholesale model
12.1 Presentation of LTE deployment model
12.2 What is the cost of LTE deployment?
12.2.1 Setting
12.2.2 Base case results: EUR 5.9 billion Capex over the 2012-2022 period

Tables
Table 1: Main LTE frequency bands by geographical area
Table 2: LTE commercial networks
Table 3: LightSquared and GPS frequency bands
Table 4: Pre-launch agreements reached by LightSquared
Table 5: Agreements reached by new Clearwire
Table 6: LTE wholesale and sharing agreements
Table 7: Main LTE frequency bands by geographical area
Table 8: Early LTE launches (September 2011)
Table 9: Main characteristics of frequency bands for LTE
Table 10: Availability dates of LTE spectrum
Table 11: Most likely bands for LTE international roaming
Table 12: Use of frequency bands by LTE device type
Table 13: Digital dividend timetable in Europe
Table 14: Digital dividend timetable outside Europe
Table 15: State of LTE 1800 deployments and trials (as of September 2011)
Table 16: Technical aspects associated to LTE 1800
Table 17: Main TDD and FDD bands
Table 18: TDD and FDD mode advantages and drawbacks
Table 19: TD-LTE adoption
Table 20: Mobile WiMAX to TD-LTE migration plans
Table 21: LTE-Advanced performances
Table 22: LTE fallback schemes
Table 23: Base station shipments estimates
Table 24: Potential gains and risks of network outsourcing
Table 25: Benefits and risks of passive mobile sharing
Table 26: Benefits and risks of active mobile sharing
Table 27: Elements of potential savings to reduce network costs for a LTE network
Table 28: Network capacity units
Table 29: Verizon Wireless rates
Table 30: AT&T rates
Table 31: Clear rates
Table 32: Rover rates
Table 33: Sprint 4G device portfolio
Table 34: NTT DOCOMO Xi rates
Table 35: UQ Communications rates
Table 36: Current major data rates
Table 37: LG U+ LTE plans
Table 38: SK Telecom LTE plans
Table 39: CSL LTE data plans
Table 40: Telia rates
Table 41: Telenor LTE rates
Table 42: Sonera rates – Finland
Table 43: TeliaSonera rates – Denmark
Table 44: AT&T data-only rates
Table 45: AT&T smartphone data rates
Table 46: NTT DOCOMO Xi rates
Table 47: Clear rates
Table 48: Rover rates
Table 49: Telia rates
Table 50: Telenor LTE rates
Table 51: Sonera rates – Finland
Table 52: TeliaSonera rates – Denmark
Table 53: Verizon Wireless rates
Table 54: MetroPCS rates
Table 55: ‘National’ LTE drivers
Table 56: Area, population and density of base case scenario
Table 57: Sensitivity analysis

Figures
Figure 1: LTE wholesale players
Figure 2: Mobile voice and data traffic 2010-2020
Figure 3: LTE subscribers' forecasts
Figure 4: Main LTE commercial networks
Figure 5: LTE wholesale players
Figure 6: Timetable for LTE spectrum in Western Europe
Figure 7: CSL spectrum holdings in Hong Kong
Figure 8: The 1800 MHz frequency band
Figure 9: Site coverage in suburban areas
Figure 10: Selected operator spectrum strategies
Figure 11: Migration paths to TD-LTE
Figure 12: LTE-Advanced experiment
Figure 13: New features in LTE-Advanced
Figure 14: LTE deployment scenario of NTT DOCOMO
Figure 15: Moving multimode User Equipment (UE) in the network
Figure 16: LG U+ core network evolution
Figure 17: CS Fallback architecture
Figure 18: Voice over IMS
Figure 19: The Alcatel-Lucent LightRadio
Figure 20: NTT DOCOMO RAN architecture evolution with Remote Radio Head
Figure 21: Femtocells operator commitments and deployments
Figure 22: Comparative power consumption of the NEC 3G and LTE base stations
Figure 23: Comparison of cost between SingleRAN and non SingleRAN
Figure 24: MNOs capex in value and in growth rate, 2006-2010
Figure 25: Hybrid Terrestrial /satellite wireless network
Figure 26: Capital expenditure phasing
Figure 27: Evolving trends in TeliaSonera capex 2006-2010
Figure 28: NTT DOCOMO LTE capex plan, 2010-2015
Figure 29: Verizon rapid national rollout
Figure 30: Comparative network outsourcing scope
Figure 31: Passive sharing
Figure 32: Active sharing
Figure 33: Theoretical backhaul capacity and radio capacity requirements
Figure 34: LTE capex lower than current mobile capex
Figure 35: Potential costs savings for a typical MNO in developed markets (brownfield case)
Figure 36: Comparison of performance and cost for today and LTE networks
Figure 37: LTE increases capacity while lowering cost per MB
Figure 38: Capex and opex per MB, eurocents (EUR), 2010-2015
Figure 39: Mobile traffic usage is getting close to DSL
Figure 40: Average mobile monthly traffic consumption per user observed in 2010
Figure 41: Mobile voice and data traffic 2010-2020
Figure 42: Mobile traffic enablers and rating trends
Figure 43: NTT DOCOMO Xi rates (commercial launch)
Figure 44: Number of bands used for each RAN technology in FDD mode
Figure 45: Comparison between LTE network deployments in frequency bands and devices available
Figure 46: LTE WLAN router and LTE modem for Vodafone LTE Zuhause service
Figure 47: My Ford Mobile App presented at the CTIA Wireless 2011
Figure 48: SK Telecom plans for future LTE services
Figure 49: T-Mobile’s LTE devices
Figure 50: Vodafone Germany LTE Zuhause devices
Figure 51: Net4mobility deployment plans
Figure 52: MetroPCS initial LTE coverage
Figure 53: LTE subscriber forecasts
Figure 54: LTE drivers for MNOs
Figure 55: Selected operators strategic positioning
Figure 56: Basic requirements for mass market adoption of LTE
Figure 57: Network cost model calculation of RAN elements needed for LTE coverage
Figure 58: Cumulated population and area in selected European countries
Figure 59: Subscribers with LTE-enabled handset
Figure 60: LTE population coverage over time
Figure 61: LTE CapEx for base case scenario
Figure 62: LTE investment breakdown for base case scenario
Figure 63: Base case economics
Figure 64 : Economics with 70% backhaul to RAN Capex ratio
Figure 65: Economics with 50% RAN sharing

- AT&T
- DOCOMO
- China Mobile
- Clearwire
- LightSquared
- Orange
- Telefonica
- TeliaSonera
- T-Mobile
- Verizon Wireless
- Vodafone
- Net4Mobility
- MetroPCS

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