Wireless Carriers Refine 4G Technology
By RUTH BENDER And GUSTAV SANDSTROM
Have you tried to download and watch a video on your smart phone? Chances are you had to wait a while.
Wireless carriers, faced with rapid growth in wireless data usage and subscriber demand for faster connections, are turning to a fourth-generation technology called Long Term Evolution, which boasts faster download speeds and has greater capacity than the networks supporting today's third-generation phones.
Backers say it will transform mobile handsets into terminals for high-definition video streaming and a new generation of online games, and help operators' search for new revenue sources to offset the decline in traditional voice and text-messaging revenue. Others caution, however, that the shift will be gradual, given the huge expense of setting up LTE networks and time needed to allocate new wireless spectrum. Moreover, the solution to boosting speed and easing network congestion may also have to include other technologies, such as the WiMax wireless broadband standard.
"LTE will be an even bigger shake-up than 3G [was]—because while with 2G and 3G we were clearly in the world of telecoms, with LTE we shift a little more into the world of information technology," says Frederique Pujol, head of radio technologies and spectrum practice at research institute IDATE.
As growing numbers of people use smart phones, such as Apple Inc.'s iPhone or Research In Motion Inc.'s Blackberry, industry experts warn that mobile data demand could outstrip network capacity as early as 2011 or 2012. AT&T Inc., the largest wireless operator in the U.S., has said wireless data traffic has expanded in volume by a factor of nearly 5,000 over the past three years.
The world's top telecom-equipment makers—in particular Telefon AB L.M . Ericsson of Sweden and the French-American company Alcatel-Lucent—are pushing LTE as the next technological leap.
Major wireless operators have also committed to the technology. TeliaSonera AB late last year launched the world's first commercial LTE service in Stockholm and Oslo, and Verizon Wireless said last week it is on track to deliver LTE to 25 to 30 U.S. markets by year end. NTT Docomo Inc. of Japan plans to launch the service in December 2010. AT&T, European operators such as Vodafone PLC and France Telecom, as well as China Mobile, are also committed to LTE.
While third-generation network upgrades to High-Speed Packet Access Plus, or HSPA+, will help increase network capacity and speed over the next few years, industry leaders say that the eventual transition to LTE is not only necessary to provide higher speed and increase capacity, but will also be an important tool in the industry's quest for new sources of revenue growth.
In contrast to 3G, LTE handles everything that is transmitted as data, similar to the Internet. Hence, in addition to the promise of landline-like Internet speeds for wireless, the Internet protocol-based architecture gives operators the advantage of better integrating mobile networks into fixed networks, according to IDATE's Mr. Pujol.
In 2010 there will only be a maximum of 100,000 LTE subscribers, mainly in Sweden, Norway and the U.S., according to IDATE. But IDATE estimates that 380 million subscribers are likely to have access to mobile data through LTE networks by 2015, mainly in the U.S. and Western Europe, but also in China, Japan and South Korea.
LTE can also be an important tool for reducing operators' fixed costs, said Hugh Bradlow, chief technology officer at Australia's Telstra Corp., as each LTE base station reduces the cost of delivery per byte of data transmitted. Still, he cautions, "From a technology perspective, LTE is certainly an improvement. But it's not a revolutionary improvement, it's an evolutionary improvement."
In order to make returns on their investment, operators may have to abandon flat-rate pricing and instead find models to charge users depending on how much data they use.
"Allowing subscribers to download multigigabyte HD movies with a $30 all-you-can-eat data plan does not seem like economics that is sustainable after the operator invested billions of dollars to deploy its LTE network," says Scott Siegler, an analyst at research firm Dell'Oro.
Not only will the rollout of LTE networks cost operators considerable amounts of money, deployment isn't likely to take off until new spectrum bands and LTE-based devices become available. As 2G and 3G frequencies won't be able to handle LTE, governments will have to sell new frequency bands through auctions, a process that can be long and complicated.
