Editor's note: This SearchTelecom.com Expert Lesson, LTE: The preferred 4G solution for wireless operators, provides a comprehensive look at Long Term Evolution (LTE). This article looks at the revenue-generating services opportunities LTE can create if done right. The guide also looks at why many mobile operators are choosing LTE, how to optimize metro infrastructure for LTE performance, and analyzing the geographic and customer requirements for LTE deployment planning.
In terms of services, LTE 4G technology has three distinctive advantages over 3G.
President, CIMI Corp.
mobile wireless offering in the great majority of cases. Given that, the first question to ask about the transition to LTE is what customer driver or business opportunity provides the stimulus? In short, why now?
In terms of services, LTE 4G technology has three distinctive advantages over 3G:
- LTE provides better spectrum utilization to support more users per cell.
- LTE is a pure packet technology and carries the assumption that a migration to VoIP will provide the primary LTE voice service framework.
- LTE provides considerably higher data bandwidth, which means more data capacity per user, as well as more total data capacity per cell.
LTE adoption drivers cover wide range of issues
All three of these factors can drive an LTE transition; the priority will depend on the market situation, however. Wireless operators should look at their geographies and customer bases to analyze the services-revenue opportunity.
- Cell density. Every operator would agree that the most fundamental cost-side issue for mobile wireless is cell density, which can be analyzed as the number of active users you can support per cell or the number of cells needed per square mile to support the users in your geography. Because LTE has better spectral efficiency than 3G technology, it can support 200-400 users per cell, which reduces the pressure on cell segmentation. The higher user-per-cell count may be critical as the number of cellular users and devices multiplies for both voice and non-voice services.
- VoIP advantages. LTE voice efficiencies are also compelling. Circuit-switched voice infrastructure is expensive, power-hungry and generally nearing end-of-life in many networks. Furthermore, wireline voice services are increasingly threatened by over-the-top voice, at least for the more costly long-distance and international calls that provide most of the profit. For many network operators, the erosion in wireline voice profit and revenue is a strong reason to look at reducing infrastructure investment in voice services. VoIP is almost universally accepted as a lower-cost means of providing voice communications. Packet voice is already used by cable operators, creating additional competitive incentive.
- Cross-network bundles. The potential benefits of fixed mobile convergence (FMC) and femtocells are also a factor. Fixed-mobile convergence is an opportunity for telecom carriers to create functional service bundles instead of simply bundled pricing. Functional bundles are "stickier" because they condition customers to service features that cross between wireline and mobile voice and therefore tend to be available from few if any competitors. Functional bundles may also be better able to hold up in the face of regulatory reviews on whether pure price bundles are anti-competitive. Finally, femtocell voice backhaul is far easier (at the very least) if VoIP is used rather than circuit-switched voice.
Data services: Where LTE dives deep
While there really are compelling values to LTE voice services, most network operators would agree that data justifies their interest in LTE.
Media interest in 4G of any sort is buoyed by promises of over 100 Mbps wireless broadband. But most operators realize that speeds of that level per handset aren't likely to provide any economically sustainable application model. Portable devices simply can't use that capacity effectively, and with loss of efficiency comes loss of willingness to pay incrementally for the bandwidth.
A better reason for LTE is the larger per-cell capacity, which means more data users can simultaneously operate in a given geography without micro-segmenting cells at a much higher cost.
The applications that drive LTE data services vary significantly. Email is likely the compelling application for enterprise/business users, and there is some statistical evidence that these types of users are also likely to invoke applets for simple things like location/navigation and finding restaurants, weather, news and stock market quotes. For younger users, particularly students, social networking and music and video are widely popular. Significant variations are also emerging in how LTE-based data services could be used through enhanced cellphones, smartphones and netbooks.
LTE: Driving a mobile netbook nation
The centerpiece of any data service, obviously, is Internet access. Mobile users like "widgets" or applets to get quick and structured information more than they like general browsing, because the latter is difficult in a mobile environment. Plans for LTE deployment should include operator-hosted services accessible through applets and widgets that will attractant customers, rather than plans to rely on blocking services from over-the-top competitors. Even on smartphones and netbooks, these applications have considerable value as a differentiator and revenue generator.
The netbook creates a whole new class of user, the "migratory" user, again, a portable user with regular movement between preferred resting places. Students or riders of mass transit are particularly likely to fit into this category. Because netbooks are on the rise, LTE's ability to support a netbook base with better per-cell bandwidth and a higher user count is important. A netbook population is likely to be concentrated at social points that create a larger data (or user) load per cell. Even today with limited-browser cell devices, mass-transit student populations can cause significant congestion in metro cells -- congestion that LTE could largely alleviate without adding cells.
It is important to understand that LTE is the logical path of evolution for wireless operators, even without substantial new reliance on non-voice services. Where non-voice services will impact LTE plans is in advancing the transition point based on increased revenue opportunity.
About the author: Tom Nolle is president of CIMI Corporation, a strategic consulting firm specializing in telecommunications and data communications since 1982. He is the publisher of Netwatcher, a journal addressing advanced telecommunications strategy issues. Check out his SearchTelecom networking blog Uncommon Wisdom.