4G Operators March11

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© Copyright 2011. Yankee Group Research, Inc. All rights reserved.

MWC 2011: Operators Roll with 4G

March 2011

by Chris Nicoll, Distinguished Research Fellow, [email protected]

The Market Is on a Positive Trajectory

The 4G industry is growing at an incredible rate, with the

expectation that by the end of 2011, 400 million mobile broadband

users will join the 600 million users already connected for a total

of 1 billion users. The LTE ecosystem mirrors this growth, with

100 LTE devices expected by the end of this year, compared to 10

at the beginning. Despite the strong focus on LTE this year, HSPA+

looks to remain king of the mobile broadband market in terms of

size and revenue as a number of key operators see a service synergy

between their HSPA+ and LTE networks and more vendors look

to accommodate them (see the March 2011 Yankee Group Report

“MWC 2011: Vendors Look to 4G for Differentiation”).

The most common questions we receive from operators have to

do with the challenges of 4G: Should I deploy LTE? What about

HSPA+? What is the difference between the two? What deviceswill be available, and when will they be ready? How do I charge for

the service? Will my subscribers be able to roam? What does the

future hold? Yankee Group believes 4G is much more than just

a radio access network (RAN) technology—it is a fundamental

shift in the industry that touches every element of the operator’s

organization (see our February 2011 report “What’s Hot at

Mobile World Congress 2011”). This view was clearly borne out

by the breadth and depth of demonstrations, presentations and

discussions at Mobile World Congress (MWC) 2011 and by the

operators’ comments. This report highlights the key messages,

demonstrations and discussions from the show related to themarket for 4G and operator strategies in particular.

4G—ITU Definition or Otherwise— Has Arrived

Operators around the world are making strides toward 4G,

although the market varies widely across the global regions.

Europe was clearly f irst thanks to TeliaSonera’s network launch

in 2009, and that operator remains an LTE leader with the fastest

network in the world. Other European operators are competing

as well:

Telenor• is starting to launch competitive services, but over the

past year the service has been rolled out fairly slowly and has

remained dongle-based.

DT• in Germany is following regulations and rolling out rural LTE

coverage first.

Orange, Telecom Italia, Vodafone, Wind and others• are

evaluating their current spectrum positions or deciding whether

to bid on upcoming 4G spectrum.

The Asian market is proving to be unique, with mobile user

behavior and population density conditions seen nowhere else in

the world. Asian operators are starting to make forays into 4G:

NTT DoCoMo• launched Japan’s first LTE network in December

2010, with expected download speeds approaching 75 Mbps.

SoftBank• is upgrading its 3G network after moving all its 2G

users to its 3G network, and it signaled its intentions to develop

TD-LTE solutions with China Mobile, Vodafone and Bharti Airtel.

At Mobile World Congress 2011, it was clear the buzz is back in the telecom industry. Operators are talk ing about their next-generation networks, services and

solution implementations while taking advantage of a broadening ecosystem of 4G devices that are capturing user attention and driving the adoption of 4G services.

The Bottom Line

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© Copyright 2011. Yankee Group Research, Inc. All rights reserved2


KDDI• ’s strategy of running multiple networks to meet different

subscriber requirements seemed anathema at one time.

However, with so many operators around the world looking at

how LTE and HSPA+ will coexist, it is clear where the precedent

came from.

In the Latin American/South American marketplace, 4G looks very

similar to the early implementation of LTE in Europe: It’s primarily

dongle-based and used as a wireless replacement for fixed mobile

services. Smartphones are starting to enter the fray, but the

regulatory environment remains a barrier (see the February 2011

Yankee Group Report “Mobile World Congress: Key Takeaways

for Latin America”) .

This leaves the North American marketplace in a unique position.

It was not first to market, but it is now the leader in 4G network

deployment and competition:

AT&T, Clearwire, MetroPCS, Sprint, T-Mobile and•

Verizon Wireless are all currently running 4G networks,

defined as HSPA+, LTE and WiMAX.

Price points and go-to-market models vary widely, providing

device, coverage and price plan options to subscribers (see the

February 2011 Yankee Group Report “US Is Fast Becoming a Key

4G Proving Ground”) .

Operator focus at MWC was clearly on using 4G to provide the

best user experience. Notable for their focus were announcements

and discussions by LTE operators including TeliaSonera, Telstra and

AT&T, where it was clear that technology religion was taking a back seat to customer-oriented services. Each of these vendors discussed

a strong HSPA+/LTE dual-service strategy backed by device partners

such as Qualcomm and Sierra Wireless, which are committed to

providing seamless roaming between the two networks.

HSPA+ vs. LTE

So much has been written regarding the International

Telecommunications Union (ITU) definition of 4G and the

role of HSPA+ (see the October 2010 Yankee Group Report

“Early 4G Leaders and Followers”). Operators at MWC 2011strongly weighed in with their views on the subject, with unusual

agreement: When the panel was asked if it considered HSPA+

a 3G or 4G technology, both Telstra and Vodafone Germany

commented that they are not selling technology, they are selling

services—and it does not really matter what the technology is as

long as it’s the right service for the user. TeliaSonera and AT&T

have taken the same stand. Bravo! Thus a number of carriers are in

the vanguard pursuing both HSPA+ and LTE, but with a smart eyetoward interoperability. The discussion is moving from “HSPA+ or

LTE” to “HSPA+ and LTE.”

However, with so much attention being paid to LTE, a bit of a level-

set regarding the ecosystem was also provided: By the end of 2011,

Ericsson expects 100 LTE devices to be available, up from just 10

at the beginning of the year. Compare that to approximately 2,000

available HSPA devices. How best to gauge the intersection of

HSPA+ and LTE is a consistent question we hear from operators,

and it was a hot topic on the MWC floor this year.

Operators at MWC: 4G Is Less About theTechnology and More About the Service

With all the activity around the operators at MWC, AT&T,

TeliaSonera, Telstra and Verizon Wireless provide a good

representation of operator issues presented at the show.

AT&T

AT&T did not focus much on its upcoming LTE launch to augment

its HSPA+ network, but instead focused on its views of the

embedded market, which it termed the fastest growing marketsegment. The idea that connectivity can be embedded in nearly

every common device opens a wide range of service opportunities

that will benefit consumers and allow for more seamless and

automatic operation.

While perhaps not shown to best effect at MWC, AT&T

highlighted the “huge and important” role of Wi-Fi in its strategy.

Our own figures bear this out , showing significantly higher data

usage on Wi-Fi compared to cellular connections. Clearly, 4G is

not diminishing the role of Wi-Fi for consumers or enterprises, and

we will see more developments in this area.













3© Copyright 2011. Yankee Group Research, Inc. All rights reserved .

March 201

TeliaSonera

TeliaSonera, the No. 1 operator in Sweden and No. 2 in Finland,

operates HSPA in the 2.1 GHz band. The operator maintains

a nationwide HSPA+ network and is using LTE for urban high-

speed mobile broadband (MBB). Its LTE provider, Nokia Siemens

Networks (NSN), did a booth interview with TeliaSonera’s Senior

VP Indra Asander, head of Product Management, Mobility Services,

who provided several keen insights. Her position is that 4G is

about moving pictures (video and still), which is pretty astute given

that video numbers are steadily increasing to nearly two-thirds of

Web traffic according to Cisco’s Virtual Networking Index (VNI).

This also may come from the fact that this operator’s experience

has been exclusively dongle-based: Dongles are a means of getting

early (and heavy) traffic onto the network while minimizing the

traffic engineering issues involved with a lot of inter-cell traffic.

However, with experience gained from the past year and an

ecosystem that is rapidly expanding, Asander announced that

Samsung will be providing TeliaSonera’s first LTE smartphone in Q3

of this year. Samsung is going places with 4G, providing handsets to

MetroPCS, Verizon Wireless and now TeliaSonera.

Along with TeliaSonera’s first-mover status with LTE, Asander

also highlighted a pricing strategy Yankee Group sees as the

future for 4G services: Since TeliaSonera’s customers initially did

not understand tiered pricing, the operator moved to flat-rate

pricing. Given that flat-rate pricing is not sustainable in the face of

enormous data growth, TeliaSonera is now looking at a value-

based pricing plan. Subscribers pay a base rate, then additionalfees for packages they want to use. Think VoIP (yes, TeliaSonera

will charge for it), sports, movies, gaming, etc . Dongle-based plans

based on speed and volume may be offered, keeping in line with

dongle-oriented services.

An interesting observation made by Asander regarding

TeliaSonera’s HSPA+ and LTE networks is that the latency

improvements in LTE are noticeable to users and the experience

just “feels better.” Clearly TeliaSonera is crafting a careful strategy

of HSPA+ and LTE coexistence, which we saw repeated by other

operators—notably Telstra.

Telstra

Australian operator Telstra brought partners Ericsson and Sierra

Wireless into its press conference to announce not just LTE and

HSPA+ upgrades, but the capability for seamless roaming between

its national 850 MHz HSPA+ 21/42 network and the 1.8 GHz LTE

network. LTE is positioned in denser urban areas for coverage

and capacity, while HSPA+ is the broader coverage technology

where capacity is less of an issue. The operator stated it will

not have to add a single base station to its network to support

the LTE build-out. Telstra is committed to continued HSPA+investment in the network, with a particular focus on providing a

seamless experience between the two services, as its customer

surveys indicate that reception/signal quality is users’ top concern

(followed by ease of use, screen quality and battery life).

With partners Ericsson and Sierra Wireless handling the technology

part of the solution, Telstra expects to have dongles available for the

handover by the end of 2011, with hotspots, smartphones and voice

over LTE (VoLTE) arriving in 2012. HD voice is also in the works,

with Ericsson specifically pointing out the need not just for data

capacity planning, but signaling capacity planning as well.

Verizon Wireless

2011 marked the f irst time Verizon Wireless exhibited at MWC, and

demonstrations highlighted not just key advancements in VoLTE, but

also other service-oriented capabilities including video quality, live

multi-player gaming and a breadth of devices. Of particular note was

that the booth was all about 4G LTE, not Verizon Wireless services

in general. It was small in size, but had a razor focus.



© Copyright 2011. Yankee Group Research, Inc. All rights reserved4


One consistent message coming out of Verizon’s demos was that

“4G” means multi-user or multi-device. At every demo station, it

specifically pointed out that its 4G LTE smartphones support up

to eight Wi-Fi users, while its netbooks support up to 10. This is

old news to Sprint and its hotspot-integrated devices, especially

the still-cool HTC EVO 4G phones, but this feature seems to be

important to Verizon Wireless as well. Perhaps to blunt some of the criticism the company has garnered because its iPhone cannot

support simultaneous voice and data sessions, from day one all

Verizon Wireless’ LTE smartphones will support simultaneous

circuit voice (via the CDMA network) and data (over LTE). It is

not yet clear what this will do to battery life and heat, but the

expectation is that four smartphones (the HTC Thunderbolt,

Motorola Droid Bionic, LG Revolution and a Samsung phone) will

launch between February and June 2011, in addition to hotspots

from Samsung and Novatel in the same time period. Verizon

Wireless is also paying close attention to the user experience,

focusing on providing a relatively smooth handover from LTE toCDMA and back. Initial transitions will not be seamless, with

CDMA-to-LTE requiring the devices to go idle first.

Also notable is the operator’s apparent embrace of over-the-top

(OTT) players and its move to open an Application Center in San

Francisco, Calif., this year to facilitate partner collaboration. Verizon

Wireless sees OTT players as an opportunity, not just competition,

since it believes devices plus applications equal differentiated

services. AT&T has a similar developer-friendly outlook.

Conclusions and RecommendationsWith so few operators actually deploying 4G networks at this

point, a clear message about the move to the next generation was

being sent at MWC—by both equipment vendors and operators.

Each operator claimed being f irst to market is a key differentiator

for them. For operators and regulators looking to understand

the key issues, challenges, benefits and business models around

4G, MWC provided many key insights. It was not just about LTE.

Yankee Group recommends:

AT&T should talk LTE/HSPA+• . A key benefit of HSPA+ is

the ecosystem, and now that Telstra and TeliaSonera are drivinginteroperability, AT&T should join in and launch seamless global

roaming and interoperability capabilities.

TeliaSonera should push the pricing models forward• .

With smartphones arr iving in Q3, TeliaSonera should push its

value-based pricing plan with aggressive content packages that

are clearly defined and include VoIP.

Telstra needs to keep up the progress• . With a leading view

on HSPA+ and LTE roaming, Telstra needs to follow up its early

announcement with speedy execution if it wants to drive the

global ecosystem and roaming standards.

Verizon Wireless must show that global roaming is a•

priority. Booth staff highlighted the global nature of LTE and

made it clear Verizon Wireless was there to sign up roaming

partners. Now the operator needs to follow up with truly globa

devices and roaming agreements to avoid remaining the CDMA

island it is today.



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Chris Nicoll, Distinguished Research Fellow

Chris Nicoll, distinguished research fellow, is a member of the Yankee Group Research Council and ischartered with the responsibility of providing thought leadership to the research organization. Comprisingsenior research leaders, the Research Council provides outreach to clients and the broader Yankee Groupcommunity, as well as ensures that the company’s research agenda addresses the needs of business leaders.Chris drives the strategic thinking of the research organization and helps shape the researchdirection. His expertise involves working with customers to establish competitive positioningin their markets and to gain and maintain a leadership position.

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4G Operators March11