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1 LTE and the 1800 MHz opportunity Northstream White Paper March 2012 Executive Summary About this Paper This Northstream white paper examines the takeup and status of LTE two years after the first commercial launch and analyses the key aspects that will determine its future success. It is widely recognised that mobile data usage growth, whether on smartphones, laptops or tablets, will continue. In such a market situation, there are a number of challenges for the main stakeholders to cope with, operators, equipment suppliers and regulators alike. Mobile networks will need to accommodate significantly different volumes and types of traffic than today, adopt continuously evolving technologies and make more flexible use of the scarce resource of radio spectrum. Previous Northstream white papers have discussed the generic opportunities and challenges LTE technology brings to operators and how to adopt a suitable migration strategy. Two of the major concerns have been how and when voice services could be offered and the availability of ample device portfolios. Voice over LTE will indeed happen soon, and could bring a boost to operators’ dwindling voice business, but that is a topic for another white paper. In this paper we instead put our focus on analysing the critical availability of suitable and plentiful LTE spectrum and how that can enable, or inversely prohibit, a continued strong growth of mobile communication. Highlights LTE is recognised as the future mobile technology in all regions of the world, offering high enough data speeds and spectrum efficiency to satisfy the rising data traffic needs of demanding end users The two key enablers for the adoption and growth of LTE are: 1) the coordinated availability of spectrum, network solutions, devices and enduser services, and 2) spectrum refarming flexibility There are several spectral options for LTE, and in addition to the earlier recognised 700/800 and 2600 MHz bands, one trend today is to refarm the large spectrum resources in the 1800 MHz band for LTE The 1800 MHz band is widely used today for GSM but carries several advantages that make it suitable for LTE, among them its ready availability in many regions and its balanced capabilities to provide both capacity and coverage There are no technological barriers preventing deployment of LTE in 1800 MHz, and today already 15 operators have commercially launched LTE in 1800 MHz, with several other operators conducting on going trials, studies or consultations. Concurrently, the number of available LTE devices is rapidly increasing, including also support for 1800 MHz.

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Page 1: LTE and the 1800 Mhz Opportunity

 

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 LTE  and  the  1800  MHz  opportunity      Northstream  White  Paper  March  2012  

 Executive  Summary  

About  this  Paper  

This  Northstream  white  paper  examines  the  take-­‐up  and  status  of  LTE  two  years  after  the  first  commercial  launch  and  analyses  the  key  aspects  that  will  determine  its  future  success.    It  is  widely  recognised  that  mobile  data  usage  growth,  whether  on  smartphones,   laptops   or   tablets,  will   continue.   In   such   a  market  situation,   there   are   a   number   of   challenges   for   the   main  stakeholders   to   cope   with,   operators,   equipment   suppliers   and  regulators   alike.   Mobile   networks   will   need   to   accommodate  significantly   different   volumes   and   types   of   traffic   than   today,  adopt  continuously  evolving  technologies  and  make  more  flexible  use  of  the  scarce  resource  of  radio  spectrum.    Previous   Northstream   white   papers   have   discussed   the   generic  opportunities  and  challenges  LTE  technology  brings  to  operators  and  how  to  adopt  a  suitable  migration  strategy.  Two  of  the  major  concerns  have  been  how  and  when  voice  services  could  be  offered  and  the  availability  of  ample  device  portfolios.  Voice  over  LTE  will  indeed   happen   soon,   and   could   bring   a   boost   to   operators’  dwindling   voice   business,   but   that   is   a   topic   for   another   white  paper.   In   this   paper   we   instead   put   our   focus   on   analysing   the  critical  availability  of  suitable  and  plentiful  LTE  spectrum  and  how  that  can  enable,  or   inversely  prohibit,  a  continued  strong  growth  of  mobile  communication.      

   

Highlights  

LTE  is  recognised  as  the  future  mobile  technology  in  all   regions  of  the  world,  offering  high  enough  data  speeds  and  spectrum  efficiency  to  satisfy  the  rising  data  traffic  needs  of  demanding  end  users  

The  two  key  enablers  for  the  adoption  and  growth  of  LTE  are:  1)  the  coordinated  availability  of  spectrum,  network  solutions,  devices  and  end-­‐user  services,  and  2)  spectrum  refarming  flexibility  

There  are  several  spectral  options  for  LTE,  and  in  addition  to  the  earlier  recognised  700/800  and  2600  MHz  bands,  one  trend  today  is  to  refarm  the  large  spectrum  resources  in  the  1800  MHz  band  for  LTE  

The  1800  MHz  band  is  widely  used  today  for  GSM  but  carries  several  advantages  that  make  it  suitable  for  LTE,   among   them   its   ready   availability   in   many   regions   and   its   balanced   capabilities   to   provide   both  capacity  and  coverage  

There   are  no   technological   barriers  preventing  deployment   of   LTE   in  1800  MHz,   and   today   already  15  operators  have   commercially   launched   LTE   in  1800  MHz,  with   several   other   operators   conducting  on-­‐going   trials,   studies   or   consultations.   Concurrently,   the   number   of   available   LTE   devices   is   rapidly  increasing,  including  also  support  for  1800  MHz.  

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 1. Introduction  

1.1. Growth  in  data  traffic  

The   telecom   industry   has   an   agreed   understanding   that  the  forecasts  of  massive  growth  in  mobile  data  traffic  are  materializing.   Mobile   data   traffic   is   expected   to   grow   to  10.8   exabytes   per   month   by   2016,   an   18-­‐fold   increase  from  20111.    

The  major  driving  forces  behind  the  growth  in  data  traffic,  besides  the  increasing  number  of  mobile  connections,  are  the  increased  availability  of  higher  speed  mobile  networks  and   the   proliferation   of   smartphones.   And   importantly,  data   usage   per   connection   is   rising   as   a   result   of   data-­‐intense   applications   and   content,   cloud   services   and   the  evolution  of  data  price  plans.    

Satisfying   the   rising   data   traffic   needs   of   demanding  consumer   and   business   users   by   providing   high   quality  mobile  broadband  offers  great  business  opportunities   for  the   telecommunications   industry.   However,   to   cater   for  and   monetize   on   this   need   while   keeping   competitive  advantages   and   profitability   at   reasonable   levels,   is  challenging.   In   order   to   deliver   the   fast   and   high   quality  mobile   experience   to   all   users,   technologies   such   as   LTE  and   later   on   LTE   Advanced   are   needed,   together   with  efficient  and  maximised  spectrum  usage.  

1.2. LTE  spectrum    

Most  people  in  the  industry  agree  that  LTE  is  the  next  step  in   the   network   evolution.   LTE   provides   advantages   such  as  higher  capacity,  data  rates  as  high  as  100Mbps  (DL)/50  Mbps   (UL),   lower   latency   and   improved   system   design.  The  data  rates  can  theoretically  be  even  higher  if  MIMO  is  also  applied.  

Compared   to   2G/3G   standards,   LTE   is   designed   to   be  deployed   in   a   variety   of   spectrum   ranges   in   different  frequency  bands.  For   the   initial  LTE   launches,  outside  US  and  Japan,  the  2.6  GHz  band  has  been  the  most  popular  as  this  band   is  available   for  mobile  services   in  most   regions  of   the   world   and   hence   internationally   identified   as   the  primary   band   for   LTE2.   However,   LTE   can   and   will   be  deployed   in   existing   2G   and   3G   bands,   in   the   digital  dividend   bands3   (700   or   800   MHz   depending   on   the  region),  as  well  as  in  the  AWS  band4  (1700/2100  MHz)  in  the  US  and  Canada.  NTT  DoCoMo  in  Japan  is  also  using  the  2100  MHz  band  for  LTE.  

                                                                                                                         1  Cisco,  Feb  2012,  ”Cisco  VNI:  Global  Mobile  Data  Traffic  Forecast  Update,  2011  –  2016”  2  Dotecon,  Jun  2010,  ”Fixed  or  flexible?  A  survey  of  2.6GHz  spectrum  awards”  3  Europe  –  800  MHz  band  (790  –  862  MHz);  US  -­‐  700  MHz  band  (698  –  806  MHz,  discontinuous);  APAC  –  700  MHz  band,  Source:  GSMA  4  Known  as  UMTS  band  IV  (UL:  1710-­‐1755  MHz,  DL:  2110-­‐2155  MHz)  

In  many  European  countries,  the  900  MHz  band  has  been  made  technology  agnostic,  and  while  it  is  still  widely  used  for  GSM  in  Europe,  operators  are  slowly  starting  to  reuse  the   band   to   address   the   needs   of   the   3G   market   and   to  complement   the  main  2100  MHz  band.  However,   there   is  little  evidence  of  operators  investing  into  deploying  LTE  in  the  900  MHz  band  in  short  to  mid  term.  

A   recent   trend   is   to   use   the   1800   MHz   band   for   LTE  deployments.   One   reason   is   that   the   1800   MHz   band   is  wider  (has  more  capacity)  than  700/800  or  900  MHz  and  offers  a  more  cost  efficient  way  to  cover   large  areas   than  the   higher   LTE   dedicated   2.6   GHz   band.   There   are  operators   from   all   regions   of   the   world,   except   the  Americas,   implementing   or   trialling   LTE   in   1800MHz.   In  North  America  the  1800/1900  MHz  band  is  dedicated  for  GSM,   similarly   to   the   900  MHz   band   in   Europe   and   until  GSM   usage   decreases   significantly,   these   two   bands   will  not   be   the   short   term   preferred   options   for   LTE  deployments.    

 

Figure  1:  Key  LTE  spectrum  bands  by  region  

1.3. LTE  technology  adoption  

When  comparing  the  number  of  operator  commitments,  LTE  is  the  fastest  developing  mobile  technology  ever.  By  the  end  of  2011  there  were  a  total  of  48  commercial  LTE  launches  worldwide.  301  operators  are  investing  in  LTE  in  95  countries,  forecasted  to  result  in  a  cumulative  total  of  128  commercial  LTE  networks  by  the  end  of  20125    (and  by  the  time  you  are  reading  this  paper,  all  those  numbers  have  likely  multiplied).  

                                                                                                                         5  GSA,  Mar.  2012,  ”Evolution  to  LTE  report”  

NA ! 700 MHz ! AWS

Europe ! 800 MHz ! 1800 MHz ! 2600 MHz

APAC ! 700 MHz ! 800 MHz ! 1800 MHz ! 2100 MHz ! 2600 MHz

Lat. Am. ! 700 MHz ! AWS ! 2600 MHz

Middle East ! 900 MHz ! 1800 MHz ! 2300 MHz ! 2600 MHz

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 Figure  2:  Commercial  LTE  launches  globally  (GSA)    

2. Key  enablers  for  LTE  take-­‐up  

Learning   from   2G   and   3G   (and   the   sub-­‐steps   of   each  generation),   Northstream   sees   two   key   enablers   that   are  critical  to  a  successful  take-­‐up  of  LTE:  

1)  Coordinated  availability  of  eco-­‐system  components;  and    

2)  Spectrum  refarming  flexibility  

In   order   to   avoid   the   relatively   slow   initial   adoption  experienced  with  3G,  coordinated  availability  of  spectrum,  network  solutions,  devices  and  end-­‐user  services  needs  to  be   achieved   (see   Figure   3).   The   scarcity   of   the   radio  spectrum  often   leads  to  high  prices   in  spectrum  auctions,  and  to  justify  large  spectrum  investments,  operators  need  to  be  sure  that  at  the  right  point  in  time  there  are  network  components   as   well   as   devices   available   to   offer  commercial  services.    

 

 

 

 

 

Figure  3:  Coordinated  availability  

With   the   rapid   pace   of   market   and   technology  development   where   2G,   3G   and   now   4G   networks   are  simultaneously   in   commercial   use,   operators’   spectrum  needs   change   and   evolve.   The   traditional   practice   of  regulators   locking   spectrum   for   the   use   of   a   specific  technology   alone,   no   longer   reflects   market   needs   and  prohibits  efficient  use  of  the  spectrum.  Regulators  need  to  

ensure   that   operators   have   the   spectrum   they   need   for  new   technologies   such   as   LTE   and   at   the   same   time  introduce   the   flexibility   that   secures   a   continuously  optimal   usage   of   the   natural   resource.   These   goals   can  only  be  achieved  by  making  spectrum  technology  agnostic.  

The   two   key   enablers   we   address   above   are   inter-­‐dependent   but   with   the   difference   that   the   coordinated  availability  of  network  equipment,  devices  and  services  is  market   and   industry   driven,   whereas   the   spectrum   is  controlled   by   the   governments,   making   them   key  gatekeepers   for   the   success   of   LTE.   As   all   cellular  technologies  eventually  face  the  end  of  their  life  cycles,  an  early  refarming  of  spectrum  is  crucial  to  flexibly  phase  out  the  legacy  technologies.  

 

3. Technology  and  spectrum  analysis  

3.1. 2.6  GHz  and  700/800  MHz  bands    

As   mentioned   in   the   previous   chapter,   LTE   can   be  deployed  in  various  frequency  bands  –  3GPP  has  identified  over   20   paired   (FDD)   and   11   unpaired   (TDD)   bands   for  the   use   of   LTE   worldwide.   National   and   regional  differences  of  what  can  be  used  do  indeed  exist.  But  given  the   expected   traffic   growth   no   band   alone   can   provide  sufficient   amount   of   spectrum,   so   combining   different  bands  will  be  critical.    

The   2.6   GHz   band   (2500-­‐2690   MHz)   is   particularly  suitable   to   provide   capacity   in   traffic-­‐intense   urban  hotspots,   but   its   limitations   on   wide   area   coverage   and  indoor  penetration  often  necessitate  this  band  to  be  used  in  combination  with  a  lower  spectrum  band  for  more  cost  efficient  network  build  out.  The  widespread  support  of  2.6  GHz   naturally   provides   opportunities   for   economies   of  scale,  ease  of  roaming  and  interoperability  of  devices  and  services.  Spectrum  in  this  band  has  already  been  licensed  in  many  countries  in  western  Europe  and  Asia  Pacific,  and  although   auctions   are   still   pending   in   many   other  countries,   2.6   GHz   is   going   to   be   the   globally   recognized  LTE  band.  

The   transition   from   analogue   to   digital   TV   has   freed  spectrum   in   the   700/800   MHz   to   be   allocated   for  alternative   use,   such   as   deployment   of   LTE.   Spectrum   in  these   lower   bands   is   highly   valuable   due   to   superior  coverage   capabilities   (especially   useful   for   suburban   and  rural   areas)   and   the   ability   to   penetrate   well   into  buildings.   But   the   regulatory   process   of   freeing   up   and  licensing  spectrum  in  700/800  MHz  is  slow  and  complex,  and   in  many   countries   these  bands   are  not   an  option   for  LTE   deployment   for   many   years   to   come.   In   addition,  these   bands   are   not   particularly   wide   and   may   not   be  enough   to   satisfy   the   capacity   needs.   In   the   US,   this  spectrum  was   released   early   and   today   there   is   a   large-­‐

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scale   deployment   of   LTE   in   the   700   MHz   band.   In   Asia  Pacific,   Latin   America   and   the   Middle   East   and   Africa  many  of   the  700/800  MHz  band  auctions6   are  not   taking  place  until  2012  –  2015.  In  Europe,  the  situation  is  split  as  few   countries   in   northern   and   western   Europe   have  already  licensed  both  800  and  2600  MHz  while  other  parts  of  Europe  are  yet  to  start  the  process.  

3.2. 1800  MHz  band    The   fact   that   2.6   GHz   and   700/800   MHz   bands   are   not  available   in   all   regions   creates   a  higher  demand   for  LTE-­‐suitable  spectrum  than   there   is   supply.  Even   in  countries  where  spectrum  in  these  bands  has  been  licensed,  there  is  ambition  to  deploy  LTE  also  in  other  frequency  bands.  Re-­‐use  of  existing  2G  and  3G  bands  such  as  900,  1800  or  2100  MHz  for  LTE  is  already  reality  in  some  markets  and  under  consideration  in  others.    The  1800  MHz  spectrum  band,  in  particular,   has   come   into   focus   and  makes   a   strong   case  worth  evaluating.  

1800   MHz   is   one   of   the   largest   available   cellular   blocks  with   a   significant   amount   of   spectrum   in   many   regions.  Even  though  it  may  take  time  before  this  band  is  exploited  to   its   full   potential   for   LTE7,   Northstream   believes   1800  MHz   will   be   an   important   LTE   band   in   particular   in  Europe   and   Asia   Pacific,   but   likely   also   elsewhere,   as   it  offers  a  balanced  combination  of  coverage  and  capacity.    

Today,   the   1800   MHz   spectrum   band   is   widely   used   for  GSM   and   nearly   half   of   the  world’s   800+   operators   (351  mobile  operators   in  148   countries)   already  have   licenses  for   this   band8.   Operators’   spectrum   portfolios   vary   of  course;   for   some  operators,  1800  MHz   is   their  only  asset  while  others  use  it  to  complement  GSM  in  900  MHz.  As  3G  gradually   replaces   GSM   traffic,   it   is   logical   that   the   GSM  spectrum  is  freed  up  for  use  of  either  3G  or  LTE,  or  both.    

3.3. Characteristics  and  key  properties  of  LTE  1800  MHz      

One  of  the  specific  advantages  of  the  1800  MHz  band  (see  Table   1)   is   its   size   -­‐   2   x   75   MHz   in   most   markets.   The  spectrum  is  often  in  slots  of  10  MHz  or  wider,  typically  not  fragmented  and  often  only  partially  utilized9.  For  example,  in   the   six   key  European  markets10,   85%  of   the  operators  who  have  assets  in  the  1800MHz  band,  have  them  in  slots  of  10  MHz  or  wider11.      The   better   coverage   capabilities   of   1800  MHz  make   this  band  a  good  complement  to  LTE  2.6  GHz  particularly  for  a  cost-­‐efficient   deployment   of   LTE   in   rural   and   suburban                                                                                                                            6  GSMA,  2011,  “GSMA:  Digital  Dividend”  7  It  is  predicted  by  Informa  (2011)  that  7%  of  global  LTE  subscriptions  will  be  in  the  1800  MHz  band  in  2016    8  GSMA,  Jul  2011,  “Mobile  Broadband  in  the  1800MHz  Band”  9  Ericsson,  Jul  2011,  ”Mobile  Broadband  in  1800  MHz  Spectrum”  10  France,  Germany,  Italy,  Spain,  Sweden,  and  UK  11  ECO,  Jan  2012,  “The  licensing  of  Mobile  bands  in  CEPT”  

areas.  LTE  in  1800  MHz  allows  to  re-­‐use  optimally  located  existing  GSM  sites,  thus  reducing  CAPEX  due  to  savings  in  resources   otherwise   spent   on   building   new   sites.  According   to   GSA12,   it   can   be   as   much   as   60%   less  expensive  to  cover  the  same  area  with  LTE  1800  MHz  than  with   2.6   GHz.   Fewer   sites   naturally   also   result   in   lower  electricity,   maintenance,   rental   and   other   operational  costs.    

In   countries   where   2.6   GHz   and/or   the   700/800   MHz  bands  have  not  been   licensed  yet   (or  where  one  or  more  operators   have   no   such   license),   1800   MHz   gives   the  opportunity   to   deploy   LTE   in   line   with   market   needs.  Needless   to   say,   delays   in   LTE   deployment   can   hinder  growth   and   hurt   the   interests   of   both   operators   and  consumers.    

Sites   equipped   with   software   to   switch   between  technologies   can   be   remotely   controlled   as   end   users’  needs   evolve.   This   way   the   spectrum   currently   used   for  GSM,  for  example,  can  be  flexibly  and  gradually  moved  to  LTE   as   GSM   usage   decreases,   even  momentarily   to   cater  for  short  term  needs  and  specifics.  

 

Table  1:  Key  properties  of  LTE  1800  MHz  

3.4. Refarming  of  spectrum  in  1800  MHz  for  LTE  

Already   in   2009,   the   EU   issued   a   decision13   to   allow   the  use   of   UMTS   in   900   and   1800  MHz   as   a   technology   that  can  coexist  with  GSM.  The  decision  was  complemented  in  April  2011  to  include  4G  and  specific  technical  guidelines  on  frequency  separation  between  GSM  and  LTE,  UMTS  or  WiMax   when   these   networks   are   deployed   in   proximity.  However,   the   regulatory   landscape   in   Europe   is   very  fragmented   and   although   many   EU   countries   have  acknowledged   this   decision   and   allow   technology  neutrality   in   900   and   1800   MHz,   full   Europe   wide  refarming  will  take  some  time.      

                                                                                                                         12  GSA,  Nov  2011,  ”Embracing  the  1800  MHz  opportunity”  13  EU  Commission  Decision  2009/766/EC13  

Key properties of LTE 1800 MHz !  Good availability of the spectrum

!  In total 2 x 75 MHz available in most markets !  Mainly in slots of 10 MHz or more

!  Offers balanced combination of coverage and capacity

!  Increased coverage (2x the coverage of 2.6 GHz)

!  Less regulatory barriers !  Accelerates the deployment of LTE (auctions

of 2.6 GHz and/or 700/800 MHz pending)

!  Possibility to reuse optimally located BTS’s (optimal coverage)

Page 5: LTE and the 1800 Mhz Opportunity

 

 

5    

Potential   setbacks   can   arise   if   refarming   1800   MHz  impacts  the  national  market  and  its  competition  landscape  as   spectrum   is   not   always   equally   distributed   among  operators   (e.g.   Austria,   the   Netherlands,   UK,   etc.).   This  complexity,  however,  should  not  stop  the  process;  merely  delay   deploying   LTE   in   the   1800  MHz   band   in   the   short  run.    In   Asia,   many   countries   already   allow   or   consider   to  permit  refarming  of  1800  MHz,   though  not  yet  China  and  India   who   seem   not   to   have   refarming   of   1800   MHz   on  their  agenda,  likely  due  to  continued  GSM  growth  and  the  focus  on  2300  and  2600  MHz  bands  for  LTE.        LTE   has   been   commercially   launched   in   1800   MHz  spectrum  in  12  countries  by  15  operators14  (See  Table  2).  Giant  multi-­‐country  operators   such   as  Deutsche  Telekom  have   launched   LTE   1800   MHz,   thus   paving   the   way   for  smaller   operators   and   communicating   to   the   device  market   that   LTE   1800   MHz   is   a   true   and   immediate  option.  

In   addition   to   the   commercially   launched  LTE  1800  MHz  network   deployments,   trials,   studies   and   consultations  have   been   or   are   being   conducted   in   over   25   countries,  including   Brazil,   France,   Sweden,   and   the   UK.    

 

Table  2:  LTE  1800  MHz  commercial  launches  

3.5. Potential  challenges  to  deploying  LTE  in  1800  MHz  

                                                                                                                         14  GSA,  Mar.  2012,  ”Evolution  to  LTE  Report”;  Northstream  research  

 As   for   any   refarming,   using   1800   MHz   for   LTE   poses  potential   technical   and   deployment   related   challenges.  Their   extent   naturally   depends   on   the   situation   in   the  particular  country.    

With   LTE   Advanced   in   sight,   deploying   LTE   to   its   full  potential  would  require  ample  spectrum  resources  -­‐  with  bandwidths   of   10   to   20   MHz   the   benefits   are   best  leveraged,   at   least   when   it   comes   to   future   bandwidth  intensive   services.   However,   the   flexibility   of   LTE   allows  the   technology   to   be   implemented   even   in   lesser  bandwidths   such   as   1.4,   3   and   5   MHz.   The   smaller  bandwidth  naturally  affects  the  capacity  and  speed,  but  on  the   other   hand   -­‐   and   herein   lies   a   strong   advantage   -­‐   it  enables   efficient   spectrum   usage   and   tailored   frequency  scenarios.   Still,   the   capacity,   or   data   speed   is   essentially  proportional   to   the   bandwidth   in   use.   For   example,   if   20  MHz   bandwidth   gives   90   Mbps,   3   MHz   would   give   an  adequate  13  Mbps.    

Another   question   regarding   spectrum   refarming   for   LTE  in   1800   MHz   (or   refarming   in   general)   is   the   potential  degradation   of   existing   GSM   services.   Wireless   solutions  are   always   affected   by   interference   from   other   usage   of  the  spectrum,  and  traditionally  guardbands  have  been  set  in  between  adjacent  spectrum  bands  to  avoid  interference  of   different   radio   technologies.   Although   technology  advancements   allow   narrower   guardbands,   inter-­‐   but  more  importantly  intra-­‐band  interference  becomes  a  non-­‐negligable   consideration   when   1800   MHz   is   gradually  transformed  from  GSM  to  LTE  use.    

However,  GSM  and  LTE  can  well  coexist  in  the  same  band,  even  in  multi-­‐operator  uncoordinated  operations  200  kHz  separation   between   the   channel   edges   is   sufficient   to  prevent   interference15.   As   discussed   above   LTE   can   be  deployed  with  as   little   spectrum  as  1.4  MHz  allowing   co-­‐existence  even   in   fairly  narrow  bands.  When  spectrum   is  used   in   coordinated   operation   no   channel   separation   is  needed15   as   operators   can  minimise   the   network   quality  impact   by   careful   network   planning.   Interference   issues  can  also  be  mitigated  with  LTE  specific  interference  filters  in  place.   In  either  case,   the  ability   to  successfully  manage  the   two   technologies   in   the   same   band   is   important,   as  GSM  traffic,  will  still  be  a  significant  technology  for  several  years  to  come.  

Albeit   the   challenges   discussed   above   need   to   be  addressed   by   operators,   none   of   these   constitutes   a  technological   barrier,   and   the   advantages   of   deploying  LTE   in   1800   MHz   are   significant   and   outweigh   the  potential  drawbacks.  

                                                                                                                         15  CEPT/ECC,  Nov  2010,  “Compatibility  study  for  LTE  and  WiMAX  operating  within  the  bands  880-­‐915  MHz  /  925-­‐960  MHz  and  1710-­‐1785  MHz  /  1805-­‐1880  MHz  (900/1800  MHz  bands)”  

Operator Country Launch Coverage (at launch)

Aero2 / Mobyland

Poland Sep 2010 3 cities

Omnitel Lithuania April 2011 5 cities

M1 Singapore June 2011 Financial district

DT Germany July 2011 1 city

LMT Latvia May 2011 1 city

TeliaSonera Finland Aug 2011 2 cities

Zain Saudi Arabia Sep 2011 3 cities

Telstra Australia Sep 2011 Capital CBDs, +30 regional centres

Telia Denmark Oct 2011 -

Elisa Finland Nov 2011 -

CSL Hong Kong Nov 2011 -

DNA Finland Dec 2011 4 cities

SingTel Singapore Dec 2011 City centre

T-Mobile Hungary Jan 2012 10 districts in capital

KT South Korea Jan 2012 1 city

Page 6: LTE and the 1800 Mhz Opportunity

 

 

6    

3.6 Spectrum  portfolio  strategies  

When  reviewing  the  case  for  deploying  LTE  in  1800  MHz,  it  is  important  to  evaluate  it  in  the  context  of  an  operator’s  overall   spectrum   portfolio   and   network   technology  strategy.   One   sample   illustration   on   how   to   exploit  spectrum  efficiently  can  be  seen  in  Figure  4  below.    

Operators  have  two  practical  alternatives  of  how  to  use  their  1800  MHz  spectrum:  Continue  to  use  solely  for  GSM,  or  gradually  deploy  LTE  in  co-­‐existence.  

Provided   the   regulator   permits   technology   neutrality,  choosing   between   these   alternatives   is   essentially   a  commercial   decision.     The   route   an   operator   selects   is  largely   dependent   upon   the   access   to   and   amount   of   2.6  GHz  and  700/800  MHz  spectrum.    

In   theory,   there   is   a   third   option   -­‐   to   deploy   3G,   but   in  reality  operators  have  not  chosen  to  deploy  3G  in  the  1800  MHz   band   and   the   device   ecosystem   is   currently   not  supporting  such  a  choice.    

In   the   long   run,   as   3G   will   eventually   be   phased   out,  operators   can   start   to   reuse   the   900   MHz   spectrum   for  LTE.   The   time   frame   is   uncertain,   but   in   the   future   LTE  900  MHz  will  catch  up  with  LTE  1800  Mhz.    

Operators   may   also   re-­‐allocate   GSM   traffic   between   900  and  1800  MHz   in  order   to   continue  serving  existing  GSM  customers  while  reusing  spectrum  in  these  bands  for  new  technologies.    

These  are  of  course  simplified  examples,  and  in  reality  the  options   are   manifold,   driven   by   spectrum   assets.  Operators’   choices  will   be  based  on  a   combination  of   the  regulatory  situation,  the  market  needs,  and  the  existing  as  well   as   potential   spectrum   allocations.   But   in   the   end,  having   the   flexibility   of   choosing   the   optimal   technology  for  any  and  all  spectrum  assets  allows  operators   to   focus  on   the   commercial   aspects   and   satisfying   customer  demand  and  growth.  

 

Figure  4:  Evolution  of  frequency  band  allocation16  

   

                                                                                                                         16  Based  on  data  from  Ericsson,  ”Mobile  Broadband  in  1800  MHz  spectrum”,  Jul  2011    

4. Device  and  end-­‐user  services  availability  

4.1. LTE  1800  MHz  devices  and  chipsets    

The  high  spectrum  flexibility  and  adaptability  of  LTE  is  not  only  an  advantage  -­‐  the  flipside  is  the  challenge  for  device  and   chipset   vendors.   There   is   widespread   industry  acknowledgement   that   multi-­‐band   multi-­‐mode   devices  that  can  seamlessly  operate  in  various  modes  (such  as  LTE  FDD,  LTE  TDD,  GSM,  HSPA/and  or  CDMA  EV  DO  as  well  as  Wi-­‐Fi   and   GPS)   and   in   multiple   frequency   bands   are  needed   in   order   to   ensure   smooth   services   both   in   all  situations   in   the   home   country   and   when   roaming  internationally.  We  are  still  at  the  early  stages  of  LTE,  and  although  more  than  half  of  the  LTE  mobile  devices  support  only   a   single  band,   there’s   still   an  encouraging   (ca.)  20%  which  are  dual  band  and  over  25%  support  three  bands  or  more.17   There   are   strong   reasons   to   believe   that   devices  will  increasingly  carry  multi-­‐band  chipsets.  

Technology  development  has  allowed  chipsets  and  devices  to   support   greater   ranges   of   both  multi-­‐mode   and  multi-­‐band   systems.   Even   though   it   is   technically   possible   to  include   “everything”,   in   reality   device   vendors   are   facing  the   decision   of   how   many   combinations   of   technologies  and  frequency  bands  to  incorporate  in  a  single  device.  The  trade-­‐off   is   typically   the   physical   size   of   the   device,   the  BoM,   the   power   consumption   and   possibly   also  performance   degradations.   Nevertheless,   the  advancements   in   chipsets   and   devices   have   been  impressive  and,  it  is  expected  that  the  1800  MHz  band  will  be  widely  supported  in  most  LTE  devices.    

In   fact,   the   availability   of   devices   supporting   LTE   1800  MHz  is  rapidly  increasing.  Even  though  most  LTE  network  launches  so  far  have  been  in  the  2600  and  700  MHz  bands,  ca.   20%18   of   all   the   LTE   devices   available   on   the  market  today  are  LTE  1800  MHz  compatible19.    

                                             

Figure  5:  LTE  1800  device  types  (GSA)  

                                                                                                                         17  Informa,  Aug  2011,  ”A  global  analysis  of  LTE  spectrum  requirements  and  business  models”  18  If  devices  targeted  for  the  US  market  (700  MHz  band  devices  –mainly  single  band)  are  excluded,  the  percentage  of  LTE  1800  devices  is  much  higher  (ca.  40%)  19  GSA,  Jan  2012,  “Report:  Status  of  the  LTE  Ecosystem”  

LTE 700/800 MHz 900 MHz

1800 MHz 2100 MHz 2600 MHz LTE

3G

GSM/3G

Urban Suburban Rural

LTE/GSM

Router'32%'

Dongles'30%'

Module'26%'

Smartphone'8%'

Tablet'4%'

LTE$1800$MHz$Devices$

Page 7: LTE and the 1800 Mhz Opportunity

 

 

7    

One   challenge   with   respect   to   smartphones   has   been   to  merge   3G   and   4G   into   a   single   chipset,   which   would  overcome  some  of  the  shortcomings  above.  Manufacturers  (e.g.  HTC  with  Thunderbolt)  have  had   to  strike  a  balance  between  the  design  and  size  in  order  to  allocate  a  separate  space   for   an   LTE   chipset.   In   addition   to   the   phone   size,  battery-­‐life   is   also   affected.   Nevertheless,   leading   device  vendors   such   as   Samsung   have   launched   smartphones  supporting   LTE   and   the   volumes   are   increasing.   Chipset  vendors   are   already   offering   solutions   that   enable   dual  mode  HSPA  and  LTE  1800  MHz  (Qualcomm,  for  example).  

In   the  past   year   the  LTE  device   range  has  more   than   ten  folded20.   Given   that   the   proportion   of   LTE   1800   MHz  capable  devices  has  increased  within  the  overall  growth  in  LTE   devices,   and   given   the   operator   interest,   it   is   fair   to  assume   that   support   for   1800MHz   in   LTE   devices   will  become  “standard”,  thus  supporting  the  adoption  of  1800  MHz  as  a  major  band  for  LTE.  

4.2. End-­‐user  data  services    As   the   final   component   in   the   key   enablers,   end-­‐user  services   play   an   important   part   in   driving   the   LTE  ecosystem   forward.   As   the   digital   lifestyle   continues   to  evolve,   devices   become   more   sophisticated   and   the  networks  become  capable  of  further  increased  data  rates,  the   services   get   more   advanced,   faster   and   data-­‐intense.  Unlike   the   2G   to   3G   transition,   the   3G   to   LTE   will   be  subtler   for   the   end  users   and  mainly   –   at   least   initially   –  visible   in   the   form   of   improved   versions   of   the   services  consumed  over  3G  networks.  The  key  improvements  end-­‐users  will  experience  with  services  on  LTE  networks  will  be   the   lower   latency   and   greater   data   speeds,   qualities  that  are  especially  beneficial   to,   for  example,  video  based  services   and   gaming.   But   the  mere   existence   of   LTE  will  also   create   momentum   for   new   and   innovative   services  that  exploit   the  capabilities  of  LTE,  to  be   introduced  both  by  operators  and  OTT  (Over-­‐the-­‐top)  providers.      As   forecasted   by   Cisco21,   already   before   LTE   becomes  widely   available,   mobile   data   traffic   will   predominantly  come   from   mobile   video   oriented   services.   According   to  Cisco,   mobile   video   will   generate   71%   of   mobile   data  traffic  by  2015,  followed  by  mobile  browsing  at  20%.  With  an   increased   LTE   penetration,   there   will   be   both   a   push  and   a   pull   effect   on   that   trend.   Informa   surveys18   also  confirm   the   forecast   that   the   greatest   traffic   volumes   on  LTE   networks  will   come   from   video   (incl.   streaming   and  downloads).    

                                                                                                                         20  Pyramid  Research,  Jan  2012,  ”LTE  Devices  and  Applications”  21  Cisco,  Feb  2012,  ”Cisco  VNI:  Global  Mobile  Data  Traffic  Forecast  Update,  2011  –  2016”  

         Figure  6:  Mobile  Data  services  in  2016  (Cisco)  

Even  though  today  3G  can  accommodate  comparable  data  rates   to   LTE   (when   deployed   in   small   bandwidth),   going  forward   the   greater   efficiency   of   LTE   networks   will  provide  good  opportunities  for  the  evolution  of  a  range  of  other   services   that   exploit   and   benefit   from   the   lower  latency   and   increased   data   rates.   Subsequently,   LTE  Advanced   will   be   the   real   differentiator,   bringing   along  tremendous  opportunities  for  end-­‐user  services.  Look  out  for  a  future  white  paper  on  this  topic…      5. Future  considerations  and  conclusions  

While   the   industry  has  endorsed  LTE  as   the  next   cellular  technology,   one   of   the   biggest   uncertainties   lies   in   the  spectrum   availability   and   the   potential   fragmentation   of  LTE   spectrum.   The   EU,   as   well   as   the   FCC   with   their  flexible   refarming  policy,   have   given   their   support   to   the  technology  agnostic  use  of  spectrum.  Operators  need  this  in   order   to  proceed  with   commercial   LTE  deployments   –  and  even  more  to  exploit  LTE-­‐A  for  that  matter.    

While  2.6  GHz  has  been  the  most  popular  spectrum  band  for   the   initial   LTE   launches,   there   are   convincing  indications   that   1800  MHz  will   gain   strong   interest   as   it  offers  significant  savings  in  network  costs  due  to  its  better  coverage  capabilities.  Nonetheless,  most  regions  will  need  to   use   combinations   of   spectrum,   whether   due   to  economics,  spectrum  availability  or  legislation.  1800  MHz  will   be   one  of   the   key  LTE  bands   in   the   future   as   almost  half  of  the  operators  globally  are  already  in  possession  of  spectrum  in  this  band.  With  flexible  and  speedy  regulatory  adaptations  this  resource  can  be  very  instrumental  for  an  efficient  LTE  deployment  and  growth.      

Operators  are  keen  to  deploy  LTE  as  the  current  networks  are   struggling   to   cope   with   the   increasing   data   usage.  Smooth   transitions   from   one   technology   generation   to  another   have   always   been   challenging   for   the   industry.  

Mobile'Video'70.6%'

Mobile'Web/Data'20.0%'

Mobile'File'Sharing'3.3%'

Mobile'M2M'4.7%'

Mobile'Gaming'1.1%' Mobile'VoIP'

0.3%'

Mobile'Data'Services'in'2016'

Page 8: LTE and the 1800 Mhz Opportunity

 

 

8    

This   time,   having   not   only   one   but   two   generations   of  legacy  technologies,  whose  services  need  to  be  maintained  for   quite   an   extended   period,   the   complexity   increases  significantly.  Regulators  can  remove  a  potential  bottleneck  by   promptly   and   justly   refarming   and   reallocating   the  spectrum  resources.  In  the  end,  the  flexibility  of  combining  spectrum  bands  and  technologies  to  satisfy  market  needs  is  principal  to  reap  the  growth  opportunities.  By  speeding  up   the   regulatory   processes   the   telecommunications  market  as  a  whole  could  seize  this  opportunity  and  benefit  from  what  LTE  technology  can  offer.  

 

 

 

 

 

 

 

 

 

 

 

About  Northstream  

Founded  in  1998,  Northstream  is  an  experienced  management  consulting  firm  providing  strategic  business  and  technology  advice  to  the  global  telecom  and  media  industries.  We  help  our  clients  through  independent  and  objective  analyses,  advice,  problem  solving  and  support  that  are  tailor-­‐made  to  our  client’s  situation.  Our  work  is  based  on  a  well-­‐balanced  combination  of  innovation,  industry  best  practices  and  in-­‐house  methodologies.  Northstream  typically  works  with:  

• Business  strategy  development  and  planning  • Strategic  sourcing  of  systems  and  services  • Technology  &  product  strategy  evaluation    • Operational  review,  optimization  and  support  • Investment  analysis  and  due  diligences  

Clients  across  the  world  include  mobile  operators,  network  and  device  suppliers,  application  providers,  investment  banks,  regulators  and  industry  fora.  Contact  us  to  learn  more  about  how  we  can  work  together  to  ensure  your  success  in  the  mobile  voice  and  broadband  business.  

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