LTE Mobile Broadband Ecosystem:The Global Opportunity

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LTE Mobile Broadband Ecosystem:The Global Opportunity

  1. 1. LTE Mobile Broadband Ecosystem: the Global Opportunity UMTS Forum Report 42 UMTS Forum V1 May 2009 © Ovum 2009
  2. 2. © Ovum 2009
  3. 3. LTE Mobile Broadband Ecosystem: the Global Opportunity i UMTS FORUM REPORT 42 Table of contents 1 Executive summary ....................................................................1 2 Introduction ...............................................................................7 3 LTE enabled services ................................................................17 3.1 Mobile data applications will drive LTE............................................17 3.2 Consumer services ......................................................................17 3.3 Enterprise services – vertical sectors .............................................24 4 Devices and infrastructure........................................................27 4.1 Overview ...................................................................................27 4.2 Chipset vendor LTE roadmap ........................................................27 4.3 Device vendor LTE roadmap .........................................................30 4.4 Infrastructure supplier LTE roadmap ..............................................37 4.5 Test component ..........................................................................40 5 Drivers and barriers of the LTE ecosystem................................41 5.1 Reasons and drivers for the deployment of LTE ...............................41 5.2 Barriers to the adoption of LTE......................................................46 6 End user survey results ............................................................50 7 Conclusions and recommendations...........................................63 7.1 Drivers and risk factors for LTE deployment and adoption .................63 7.2 End user expectations and needs ..................................................67 7.3 Recommendations.......................................................................67 Annex A: LTE global ecosystem development...........................................70 A.1 Global LTE ecosystem roadmap .............................................................70 A.2 Regional ecosystem variations ..............................................................74 A.3 Impact of LTE standardisation ...............................................................82 A.4 Industry view on future LTE development scenarios..................................83 A.5 Trials and industry activities..................................................................84 Annex B: Supporting initiatives ................................................................87 © Ovum 2009
  4. 4. LTE Mobile Broadband Ecosystem: the Global Opportunity ii UMTS FORUM REPORT 42 Table of figures Figure 2.1 Illustration of LTE ecosystem ................................................................ 9 Figure 2.2 What does the ecosystem foundation group comprise?........................ 10 Figure 2.3 Each generation ecosystem increases in size ....................................... 12 Figure 2.4 Key components for service access...................................................... 14 Figure 2.5 Different services share common components ..................................... 15 Figure 2.6 Overview of LTE ecosystem roadmap................................................... 16 Figure 3.1 Consumer services enabled and enhanced by LTE................................ 17 Figure 3.2 Content / devices preferences ............................................................ 22 Figure 3.3 Business services enabled and enhanced by LTE.................................. 24 Figure 4.1 Overview of chipset vendor roadmap................................................... 28 Figure 4.2 Overview of device vendor roadmap.................................................... 30 Figure 4.3 Overview of infrastructure supplier roadmap....................................... 38 Figure 4.4 Public LTE and SAE vendor announcements ......................................... 39 Figure 5.1 LTE ecosystem interactions ................................................................. 41 Figure 6.1 Current/future preferred mobile broadband services by country ......... 51 Figure 6.2 Current/future preferred mobile broadband services by age ............... 51 Figure 6.3 Mobile broadband services growth ...................................................... 52 Figure 6.4 Service/application priority list ........................................................... 53 Figure 6.5 New services and applications by country ........................................... 54 Figure 6.6 New services and applications by age.................................................. 55 Figure 6.7 Device preferences for embedded mobile broadband ........................... 56 Figure 6.8 Preference for embedded mobile gaming............................................. 57 Figure 6.9 Preference for separate mobile phone and video/music device............ 58 Figure 6.10 Feature preferences for mobile device ................................................ 59 Figure 6.11 Preference for mobile netbook device ................................................. 59 Figure 6.12 Preference for mobile TV capability .................................................... 60 Figure 6.13 Price to pay comparing with current fixed broadband offer ................. 61 Figure 6.14 Price to pay comparing with current mobile broadband offer .............. 61 Figure 6.15 Adoption of higher performance mobile broadband............................. 62 Figure 7.1 Drivers and risks in LTE ecosystem..................................................... 63 © Ovum 2009
  5. 5. LTE Mobile Broadband Ecosystem: the Global Opportunity iii UMTS FORUM REPORT 42 Figure A.1 Overview of LTE ecosystem roadmap .................................................. 70 Figure A.2 LTE roadmap in US .............................................................................. 75 Figure A.3 LTE roadmap in Western Europe.......................................................... 77 Figure A.4 LTE roadmap in China.......................................................................... 79 Figure A.5 LTE roadmap in Japan ......................................................................... 81 Figure A.6 LTE roadmap in South Korea ............................................................... 82 Figure A.7 LSTI Proof of Concept - Predicted end user data rates ......................... 85 Figure B.1 Examples of NGMN requirements ........................................................ 88 Figure B.2 LSTI activity timing ............................................................................. 89 Figure B.3 Industry LTE demonstrations .............................................................. 90 © Ovum 2009
  6. 6. LTE Mobile Broadband Ecosystem: the Global Opportunity iv UMTS FORUM REPORT 42 Foreword Mobile broadband is changing the way the world communicates. The UMTS Forum helps all players in this dynamic new value chain understand and profit from the opportunities of 3G/UMTS networks and their Long Term Evolution (LTE). The UMTS Forum participates actively in the work of the ITU, ETSI, 3GPP, EC and CEPT as well as other technical and commercial organisations globally. It also contributes to the timely licensing and deployment of mobile broadband globally through regular dialogue with regulators and responses to public consultations. A strong promotional voice is maintained via a high-profile presence at conferences, seminars and workshops as well as regular briefings to the media, analysts and other stakeholders. Membership of the UMTS Forum draws together everyone with an interest in mobile broadband, including network operators, regulators and the manufacturers of network infrastructure and terminal equipment. Since its launch in 1996 The UMTS Forum has been supporting the interests of its membership with a range of studies, reports and other outputs. Principal focus areas include markets trends, mobile broadband services and applications, key growth markets, spectrum & regulation, technology & implementation. While centered around the promotion of 3GPP technologies and their long term roadmap, the studies of the Forum nevertheless embrace a range of complementary mobile and wireless access technologies that can deliver broadband multimedia and the personal Internet. This UMTS Forum report nº 42, “LTE Mobile Broadband Ecosystem: the Global Opportunity”, is a first step in understanding the critical enablers for LTE. Offering significant benefits in speed, capacity and support for new services, LTE will dominate the global market for mobile broadband as operators start to deploy networks over the next few years. LTE will be characterised by a complex ecosystem that includes not only operators, infrastructure providers, terminal vendors, standard bodies and regulators, but also chipset manufacturers and consumer electronics vendors, to name a few. Supported by a healthy ecosystem, LTE will also see the emergence of dynamic new business models not hitherto experienced in the mobile space. This report explores a number of key parameters and success factors, the level of readiness of the industry, and gives a series of recommendations for successful LTE deployments. It is also intended to serve as the foundation for further studies by the UMTS Forum that will examine specific elements of this new value chain in greater depth. I would like to thank the Ovum team for their extensive research work and in particular Stewart Anderton, Yim Ling and Lei Xue. I would also like to thank the UMTS Forum Steering Group and the following UMTS Forum colleagues for their dedication in the preparation and direction of this report: Eduardo Sánchez Fernández, Paul Le Rossignol, Bosco Fernandes, Jean-Paul Rissen, Jean-Paul Pallois and Colin Chandler. May 2009 Jean-Pierre Bienaimé Chairman, UMTS Forum © Ovum 2009
  7. 7. LTE Mobile Broadband Ecosystem: the Global Opportunity v UMTS FORUM REPORT 42 © Ovum 2009
  8. 8. LTE Mobile Broadband Ecosystem: the Global Opportunity 1 UMTS FORUM REPORT 42 1 Executive summary The UMTS Forum commissioned this report from Ovum Consulting to provide a global analysis and insight into key issues surrounding the LTE/SAE1,2 ecosystem. The report considers the relationship between LTE and other mobile broadband technologies; the new services, devices and applications which will drive the success of LTE; and the drivers and risk factors in the LTE ecosystem. The report is based on over 30 interviews with operators, vendors, regulators and standards bodies, and end user research with 550 respondents in the US, Korea, Japan, Germany, France, Italy, the UK and Spain. The report is supported by Ovum’s insights derived from continuous analysis of the industry. LTE has industry commitment The report findings are very positive and show that there is considerable commitment and co-ordination across the industry, with most leading mobile network operators planning to deploy LTE. NTT DoCoMo in Japan is a very active supporter of LTE, driven by the demand for high speed data services in the country and the company’s commitment to deploying new, market- leading technologies rapidly. In the US, Verizon is a leading supporter of LTE, with plans to introduce the first commercial services in the second half of 2010. China Mobile is actively involved in LTE trials with vendors, and the company has announced plans to build a TDD (Time Division Duplex)-LTE pre-commercial network in China from the middle of 2010, followed by commercial trials in late 2010. It is Ovum’s assessment that commercial TD-LTE services will be launched in China in the first half of 2011. LTE is also active in Europe, where TeliaSonera has started network roll-out, with a commercial launch planned in 2010. NTT DoCoMo, Telia Sonera, KDDI and Verizon Wireless have all announced their LTE and SAE Evolved Packet Core suppliers. Many major operators have already declared their intent to deploy LTE as the ultimate stage of 3G Evolution. This will allow them to take advantage of performance improvements in the radio access network and the service and operational benefits of an all-IP core network. Nevertheless, global European operators such as Orange and Vodafone will rather deploy LTE in 2011-2012, optimizing their legacy investments and network costs. In the longer term, LTE, together with major business transformation by the operators, will provide the business environment which will allow capital and operational cost reductions in an increasingly competitive market. All major systems vendors have LTE product roadmaps and these companies are engaged in joint programmes of technology trials in line with their market and company strategies. Major alliances span the ecosystem which will enable end-to-end solutions, with devices and applications to be offered in the early markets before the broader 1 Long Term Evolution / System Architecture Evolution (LTE/SAE) is an evolution of the current 3GPP 3G wireless network standards. LTE relates to the radio access network and SAE to the core network. 2 References to LTE in this report relate to both the LTE radio access network and the SAE core network, unless it is only the SAE core network which is being referenced. © Ovum 2009
  9. 9. LTE Mobile Broadband Ecosystem: the Global Opportunity 2 UMTS FORUM REPORT 42 ecosystem emerges. The LTE standards are being implemented by chipset vendors and early pre-standard chipsets and devices are being used in interoperability and performance trials. These trial and testing initiatives receive cross industry support through the Next Generation Mobile Networks (NGMN) Alliance3 and the LTE-SAE Trial Initiative4 (LSTI), the latter being instrumental in the breadth of test and proving activities. Ecosystem drivers support LTE The introduction of icon-based mobile devices such as the iPhone has stimulated mobile broadband, which is increasingly being used as a fixed broadband substitute. The availability of higher quality content, including audio and video, will cause a significant increase in data traffic. A projected six-fold increase in global IP traffic between 2007 and 20125 (driven mainly by video) will impact mobile as well as fixed networks, with mobile data projected to double every year from 2008 to 20136. This growth projection will be supported by LTE operators' initial focus on data services. Network operators carrying this traffic will benefit from the increased radio network efficiency of LTE; indeed, a recent report published by the UMTS Forum7 indicates that the cost per megabyte for LTE services will be 83% lower than Wideband Code Division Multiple Access (W-CDMA) and 66% lower than High-Speed Downlink Packet Access (HSDPA). End users are enthusiastic for mobile broadband in laptops and netbooks and also in mobile phones and personal media players. An improved user experience is critical and devices must provide intuitive access interfaces to content and applications. The lower latency and higher capacity access inherent in LTE will reduce functional delays and render a wide range of applications and services more accessible. Survey results from regular users of 3G data services indicate that LTE will stimulate the greatest growth in demand in video and media services (35%–40%), but it is access to email, web browsing/search, online shopping and social networking that will be the most used consumer services with usage growth of 15%–25%. Location-based (GPS-linked) and in-car services are seen as major application areas that end users will find attractive. Broadband users are demanding increasingly higher bandwidths to enable them to access media-rich content. The primary demand for bandwidth is not just from music and video downloads: newspapers, blogs, social web sites, commercial and topic web sites are increasingly media-rich and benefit from being accessed through higher speed and lower latency connections. Whilst these and many other services will develop rapidly in an LTE 3 The Next Generation Mobile Networks (NGMN) Alliance: http://www.ngmn.org/ (see Annex B) 4 The LTE-SAE Trial Initiative (LSTI) is a global industry group which aims to drive industrialisation of 3GPP LTE and SAE technology and demonstrate its capabilities against 3GPP and NGMN requirements. These activities stimulate development of the LTE ecosystem. http://lstiforum.org/ 5 http://newsroom.cisco.com/dlls/2008/ekits/Cisco_Visual_Networking_Index_061608.pdf 6 http://www.cisco.com/en/US/solutions/collateral/ns341/ns525/ns537/ns705/ns827/white_paper_c11- 520862.pdf 7 Global Mobile Broadband: Market potential for 3G LTE. http://www.umts- forum.org/component/option,com_docman/task,doc_download/gid,1902/Itemid,12/ © Ovum 2009
  10. 10. LTE Mobile Broadband Ecosystem: the Global Opportunity 3 UMTS FORUM REPORT 42 environment, no one application (existing or new) will dominate the consumer or enterprise markets. This breadth of demand will significantly reduce the risk to the industry of LTE being dependent on only a small number of drivers. To support these service demands, end users will expect improved performance from their network, which LTE will provide. On 20 MHz bandwidth, it can offer a peak download rate of over 150 Mbit/s, a peak upload rate of 50 Mbit/s and up to 200 users per cell. This contrasts with HSPA+ over 5 MHz bandwidth which is typically limited to 28 Mbit/s per cell. In practical situations, modelling of typical user environments shows that typical LTE user data rates of 2-4 Mbit/s will be achievable, with capability to burst to far higher rates. It will be essential for LTE devices to be multi-standard capable—e.g. LTE/HSPA(+), CDMA/LTE, GSM/UMTS/LTE, UMTS/LTE—and also to be multi-band capable, depending on the target market for the device and the frequency bands used in that market. For example, devices for a North American market will require 700 MHz for the home market, and, if intended for roaming in Asia and Europe, at least the 2.6 GHz and 2.1 GHz bands also. The underlying capabilities are being developed by vendors and decisions on the mix of capabilities will be determined. Devices will become more complex, some with application-specific form factors which vendors will have to understand and develop. New devices will need improved characteristics: greater processing capability to deal with video processing and applications; larger screens to provide a clean, usable, multi-touch interface; multi-standard and multi- frequency band capable of operating in other networks for roaming and to increase coverage area; multiple antennas; improved battery life and higher processing capabilities. The industry will require focus to meet these challenges: fortunately, however, not all of them have to be concurrently met in every device. It is expected that high end smart phone devices will be a priority, although power management strategies will be needed to handle higher processing and video demands. There is a range of machine-to-machine applications currently supported by mobile networks. The higher capacity of LTE will enable new areas, e.g. remote healthcare file access and news reporting, but these will not be a major driver of LTE uptake. The all-IP architecture of LTE, with a core network architecture which is able to interwork with a wide range of radio access network technologies, will provide inherent operational advantages and long term reductions in operating expenses. With broad industry co- operation, the roadmaps of different sectors of the ecosystem are well aligned creating momentum for LTE, which will help the mobile industry develop the expected new business models to serve new vertical markets. A key factor for LTE deployment is spectrum availability. Alignment within and between regions is required to support roaming and create market scale for devices. The 2.6 GHz band has been reserved as a 3G extension band and is suitable for LTE, WCDMA/HSPA/HSPA+ and WiMAX. The interest for additional spectrum in the 2.6 GHz band lies in the availability of large channel bandwidth (up to 20 MHz bandwidth) which will enable LTE to fulfill its potential. In Europe, Norway and Sweden awarded 2.6 GHz spectrum to operators in 2007 and 2008, respectively, and other countries will follow suit from early © Ovum 2009
  11. 11. LTE Mobile Broadband Ecosystem: the Global Opportunity 4 UMTS FORUM REPORT 42 2009. The key band in the US is 700 MHz, while the 2.1 GHz band will be most prevalent in China and Japan. During the 25 year growth of the mobile industry, many valuable lessons have been learned in terms of standards development, concept testing and ecosystem development. These have led to an essential, more structured approach being taken to develop the new ecosystem. The LTE ecosystem will incorporate a breadth of devices and components, software, applications and services, new business models and players in the value chain. These changes will build on Web 2.0 and its enhancements, which fundamentally change the way in which information and services are shared across the internet. All of these devices, applications and services will be part of an ecosystem which will be broader and deeper that that for any previous communications technology. The broadening of the ecosystem is itself a disruptive influence and one of which the industry needs to be continually aware. It will be a challenge to adapt to these and any new disruptions, but they must be responded to at all levels, not only to generate acceptable return on investment but to allow operators to survive. Risks for LTE The development of the LTE ecosystem is not without challenges and risks, which are discussed in more detail in Section 7 of the report. With the economic climate creating uncertainty in all markets, its impact on the LTE ecosystem specifically is difficult to judge and further assessment in this area is recommended. As well as influencing the attitude of end users to adopt new services, the economy may also impact the speed with which the majority of operators deploy LTE beyond the initial commercial installations. The scale of these deployments is crucial to device vendors, which need market scale and certainty to bring volume production economies. Operators and service providers have to decide how they can achieve the greatest return from their network and services. Expected revenue streams are threatened in two main areas. The first concerns the battle for the customer and how the services delivered to devices are controlled and managed. If the network operator controls its own application store, it will be able to retain a greater share of end-user revenue than if the applications are provided from an externally controlled managed device platform (e.g. Apple or Nokia application store). However, whilst the device vendors currently have the upper hand, network operators can make good returns on broadband access revenues and avoid all the store development costs. The second concerns lucrative voice services. If devices are allowed to support VoIP clients, then internet-based voice service providers will be able to channel revenues away from the operator. Operators will need to sustain their existing networks as LTE is rolled out. Some operators will continue to deploy their HSPA/HSPA+ and Evolution-Data Optimized (EV-DO) networks as they introduce LTE. If too many operators delay their LTE deployments due to competition for capex and focus primarily on HSPA/HSPA+, then the demand for applications and devices will impact the development of the LTE ecosystem. However, the applications developed for HSPA/HSPA+ networks will all contribute to and complement the eventual LTE ecosystem. © Ovum 2009
  12. 12. LTE Mobile Broadband Ecosystem: the Global Opportunity 5 UMTS FORUM REPORT 42 Having said this, consumers will expect a consistent end user experience, in terms of look and feel, as they operate across different networks. Relatively straightforward devices such as USB dongles and PC cards will come to market early. The full benefits of LTE will require handheld devices, which are expected to become available in 2011–12. The risk is that without an adequate supply of devices the ecosystem could replicate the slow introduction of 3G in the early part of this decade. We recommend that all players in the value chain assess and strengthen their partnerships, which are so important in this area. The cost of intellectual property rights (IPR) licensing has been an issue within the industry for many years. LTE devices will need to support pre-LTE standards (to allow non-LTE voice services and roaming to non-LTE regions), and may also need to include other licensed technologies such as video codecs and mobile graphic functions. These incremental IPR licensing costs will increase the costs of devices, which will be an inhibiting factor as the industry tries to get new devices and services accepted in the market. In summary, although the industry is well co-ordinated, wide-scale LTE deployment will take some years to achieve, during which time some of the advantages to operators (e.g. long term cost reduction) will only partially be achieved. To help manage the risks and enable LTE to be brought into wide-scale service, we recommend that the industry should consider further opportunities to strengthen and extend partnership arrangements at all levels. End user expectations and needs Services continue to move from fixed to mobile networks in all markets, and wireless is the access technology of choice for services in developing countries. We expect to see the trend of fixed to mobile voice migration replicated with broadband access bringing considerable national economic benefits. There is, however, no killer application for LTE. The capabilities of mobile broadband will serve a wide constituency of needs; in fact the access technology will become increasingly less important to the end user as applications and services become more uniform across different platforms. The breadth of services which might develop is no easier to foresee than it was for the internet at its inception, from which a wide range of applications and services have emerged. The main conclusions drawn from our end user survey are thus: • users in all regions expressed a clear interest in having their main fixed network internet services (email, browsing and information search) available on a mobile broadband device. Accessibility is the key. • access to music and video media rates highly. Mobile TV, video calling and video downloading show the strongest growth prospects. • users are receptive to new ideas and new technologies. However, the opportunities for enhancements to consumer devices are not yet understood or appreciated by consumers and it will therefore take time to fully develop this aspect of the market. By 2020, LTE is expected to be the dominant mobile technology and LTE-enabled device volumes will be higher than those for any other network technology. LTE users will be able to © Ovum 2009
  13. 13. LTE Mobile Broadband Ecosystem: the Global Opportunity 6 UMTS FORUM REPORT 42 access services over existing networks (e.g. HSPA/ HSPA+, EV-DO) which will be supported within their devices—even in the early days—enabling national and international roaming. In summary, the report findings indicate that rapid and effective progress is being made across the industry to bring the whole LTE ecosystem to market, with the necessary commitment from all parties to bring a major evolution of technology, devices and applications to market. © Ovum 2009
  14. 14. LTE Mobile Broadband Ecosystem: the Global Opportunity 7 UMTS FORUM REPORT 42 2 Introduction The Third Generation Partnership Project (3GPP) is defining the Long Term Evolution (LTE) standards for a new high-speed radio access method for mobile communications systems. These standards incorporate the System Architecture Evolution (SAE) which provides a much simplified all IP core network architecture and which is able to support multiple types of radio access network. The successful introduction of LTE to the market is dependent on a healthy and strong ecosystem, which will encourage competition and technology innovations. The UMTS Forum objective in commissioning this report was to help the industry understand the way in which the LTE ecosystem was developing: the products and services which will be enabled; the dependencies within the ecosystem; the relationships between LTE and other technologies; and the opportunities and risks facing the development of a buoyant ecosystem. What is LTE? Long Term Evolution/System Architecture Evolution (LTE), also called 3GPP E-UTRAN (Long Term Evolution of UMTS Terrestrial Radio Access Network), is an evolution of the current 3GPP 3G/UMTS wireless network standards, the technical aspects of which are well defined and there are many papers which describe the technical and systems characteristics. A main objective of the Evolved Packet System (EPS), consisting of LTE and SAE, is to support IP multimedia services, including VoIP and high speed data applications, with an “always-on” end-user experience comparable to that of fixed internet access, and at a lower cost per bit. This is achieved by a flatter network architecture, improved spectral efficiency, providing a more flexible spectrum deployment, lower opex costs and better integration with other open standards such as WLAN and WiMAX. A major benefit of LTE is that it has a flexible channel bandwidth requirement and can operate in channels of between 1.4 MHz and 20 MHz. The channel bandwidth is key for the delivery of higher access speeds. With a 20 MHz bandwidth, it can offer a peak download rate of over 150 Mbit/s, a peak upload rate of 50 Mbit/s and up to 200 users per cell. This contrasts to HSPA+ over 5 MHz bandwidth, which is typically limited to 28 Mbit/s per cell. In practical situations, modelling shows that typical LTE user data rates of 2–4 Mbit/s will be achievable, but with capability to burst to far higher rates. Thus the 3GPP LTE radio technology is optimized to enhance existing 3GPP networks by enabling significant new high capacity mobile broadband applications/services and providing cost-efficient ubiquitous mobile coverage. Operators are motivated to move to LTE as: • it supports a flatter network architecture which reduces the radio network controller (RNC) layer, leading to a more cost effective network, with reduced capex and opex • there is wide industry support to develop and build the essential ecosystem © Ovum 2009
  15. 15. LTE Mobile Broadband Ecosystem: the Global Opportunity 8 UMTS FORUM REPORT 42 • it enables higher performance, lower latency services to be offered to corporate and consumer customers • it provides a natural evolution path from UMTS (WCDMA and HSPA/ HSPA+). The initial standardisation of LTE was completed in 2Q 2009. The two UMTS Forum White Papers - Towards Global Mobile Broadband: Standardising the future of mobile communications with LTE (Long Term Evolution)8and Mobile Broadband Evolution: the Roadmap from HSPA to LTE - describe the technical aspects of LTE and its evolution in more detail. The LTE ecosystem – overview The ecosystem interest groups The LTE ecosystem will be larger than that for any communications technology to date. It is not only the operators, service providers, device and component vendors, application and platform developers, content and services providers which will enable end users to enjoy the performance benefits and wide-scale availability of LTE technology. The ecosystem will include the regulatory and standards bodies, the consumer and business markets served, and the business models of the participants. This latter point is one which will need to be grasped by the mobile network operators (MNOs). Just as device platforms have opened to allow thousands of applications and services to be developed and bought by consumers, the network itself will provide service development platforms which will allow third party developers to provide network-based capabilities. These points are discussed later in this section of the report. The collaborative initiatives being undertaken in the industry are co-ordinating these players to allow the full benefits of LTE to be brought to the world’s market efficiently and in-step. Figure 2.1 illustrates the major interest groups in the ecosystem and their relationships. 8 http://www.umts-forum.org/component/option,com_docman/task,doc_download/gid,1904/Itemid,12 © Ovum 2009
  16. 16. LTE Mobile Broadband Ecosystem: the Global Opportunity 9 UMTS FORUM REPORT 42 Figure 2.1 Illustration of LTE ecosystem Source: Ovum The foundation group in Figure 2.1 will have the greatest number of contributors and will grow most strongly as LTE networks are deployed. The performance characteristics of LTE broadband will expand the number of applications developed and draw new vertical markets into the ecosystem, with sector-specific devices, interfaces and applications. As Figure 2.1 illustrates, there are interactions between many of the industry players. Information, interdependencies and collaboration flow in all directions. An example of the collaboration needed in the ecosystem, and of an application outside the traditional mobile phone domain, is the inGeo service development from Qualcomm - an application for use in existing cellular networks and LTE environments. The solution, with applications in non-cell phone personal location devices and related services, is based around cellular technology and assisted-GPS chipsets which will be incorporated into application- specific devices. Service control and application servers will provide the capabilities to deliver a complete solution. The service development and deployment requires cooperation across the ecosystem, between the chip vendor, mobile carrier, application service provider, device manufacturer and distributor to bring a complete end-user solution. The inGeo reference system will expand the ecosystem further. It will allow third party devices such as motion sensors or other systems to be incorporated into the end solution, which might be used for package tracking or perhaps location-based telemetry systems. In the US, Verizon is developing its LTE Innovation Center in collaboration with two of its primary vendors for initial LTE network deployments, Ericsson and Alcatel-Lucent. The centre will allow device and application developers to test their products during the development stage and leverage the centre’s expertise in deploying mobile broadband solutions, service integration and network hand-off issues. The centre will focus on three major product areas: consumer electronics and appliances; machine-to-machine products that wirelessly deliver information between devices specifically designed for fields such as healthcare, security and utility monitoring; and telematics applications, such as GPS solutions for vehicle fleet tracking. © Ovum 2009
  17. 17. LTE Mobile Broadband Ecosystem: the Global Opportunity 10 UMTS FORUM REPORT 42 The components of the broadening ecosystem are considered in Figure 2.2. Figure 2.2 What does the ecosystem foundation group comprise? Foundation Ecosystem components Group Infrastructure SAE/EPC, LTE radio access, antennas, power units, amplifiers, servers, enclosures. suppliers New niche vendors entering market with protocol stacks, specialist chipsets End user Personal devices: Handsets, personal media players, laptops and netbooks, games device vendors consoles, GPS/navigation, OEM devices and branded end user devices Consumer electronics: cameras, media centres, in-car entertainment, vehicle diagnostics, TV Industry-specific devices: telemetry, remote monitoring, security and surveillance/security, financial transaction/POS terminals; health monitoring/ display, control systems Service/ Services: voice, text/media messaging, broadband, video/TV, location-based services content Content: Music, video, games, special interest groups providers Applications: Software services, managed services, productivity services Integration with Web 2.0 content; portals; personalised delivery Managed device platforms Test For lab and field test of systems, devices, RF performance, software and hardware test, equipment integration, environmental, development, conformance, interoperability and acceptance manufacturers testing. Chipset and Baseband modems, baseband and power management, RF transceivers, application device processors, protocol stacks, embedded software, browsers, voice recognition, audio components and video codes, keypads, batteries. manufacturers Software Platforms and operating systems: Java, Linux, Palm OS, Symbian, Windows CE developers Windows Mobile, Android. Middleware and embedded software: browsers, native applications/games. Development tools and software development kits Applications: Tens of thousands and growing—social networking, video/photo sharing, music sites, blogs, news, games, travel, community and special interest groups Source: Ovum Non-voice mobile services will be increasingly important components within the mobile ecosystem, while voice and basic data (SMS) will become relatively less important and the widening ecosystem will become more complex. It will go beyond the ‘traditional’ mobile network ecosystem to incorporate a broad range of internet applications, new services, devices and content delivery mechanisms. This complexity brings with it a challenge for LTE. In a larger ecosystem, there are a greater number of relationships and dependencies which have to work effectively for the full opportunities for LTE to be realised. For the purpose of our analysis the ecosystem is divided into three component groups, shown in Figure 2.1: the foundation group; the enabler group and the momentum group. In reality, however, the boundaries between groups are not so strictly defined. • the foundation group is formed by the entire vendor community, including chipset component vendors, device vendors, infrastructure suppliers, test equipment manufacturers, software developers and service/application providers. Members of this © Ovum 2009
  18. 18. LTE Mobile Broadband Ecosystem: the Global Opportunity 11 UMTS FORUM REPORT 42 group work together to provide three LTE-related product groups: LTE infrastructure equipment; user devices, encompassing handsets, laptops, application specific devices, gaming consoles and consumer electronics, all of which provide access and interfaces to the third group; content, services and applications • the enabler group is formed by standardisation bodies, the regulators and industry bodies. Through their work, the group develops and provides the technology standards, provides the enabling regulatory framework and policy, and ensures industry alignment for LTE development • the momentum group is formed by operators worldwide. Their global support has built a strong momentum for LTE development, which has encouraged vendors to deliver the first commercial products to meet the operators’ deployment roadmaps in 2010. Once LTE is introduced, the healthy growth of the ecosystem is dependent on operators’ commitment to deploy their networks. This will create the momentum for all members of the ecosystem to invest in further development. The momentum and foundation groups are highly active in the ecosystem. They provide essential inputs to the enabler group for standardisation, regulatory decision making and the industry’s inter-operability test programmes. The progress made by the enabler group and the decisions that it makes will influence operators’ LTE deployment strategy. All groups are closely linked in the ecosystem and are working to achieve the first LTE commercial deployments. Previous generations of mobile network systems and infrastructure have been developed around vertically integrated technologies, services and applications i.e. based on specific devices/handsets, radio access network technologies and core network systems with associated support services. These have underpinned network operators' and service providers' core business. The ecosystem for these networks and services was bound by voice and basic data (SMS, MMS) services with low speed networking access. The availability of Universal Mobile Telecommunications System (UMTS) services—with their associated devices, applications and attractive service bundles—has caused the UMTS ecosystem to start to grow to support WCDMA and HSPA services. © Ovum 2009
  19. 19. LTE Mobile Broadband Ecosystem: the Global Opportunity 12 UMTS FORUM REPORT 42 Figure 2.3 Each generation ecosystem increases in size Source: Ovum As Figure 2.3 shows, the supporting ecosystem layers of the foundation group are expanding. To quantify one area of this growth, a recent audit of applications9 for Nokia phones counted over 60,000 total applications, broken down into the following types: • 9,000 Nokia S60 platform applications (only 1,000 are available on Nokia’s on-device download store) • 45,000 Java applications • between 5,000 and 7,000 widgets (build for Web Runtime) • between 5,000 and 7,000 Adobe Flash applications. The number of S60 (i.e. native) applications available on Nokia’s download store can be compared directly to Apple’s App Store. Estimates as of January 2009 suggest that there are over 15,000 applications available for the iPhone and iPod Touch. The Nokia S60 platform, meanwhile, is used in a wide range of Nokia and other vendors’ devices. This provides access to an addressable market for developers of over 180 million devices shipped. It is this scale which attracts so many developers to the market. With these numbers of developers involved, co-ordination is essential. Alcatel-Lucent has launched the 'ng Connect Program', to help create the ecosystem rapidly. It will provide an environment in which infrastructure, device, application and content companies can rapidly develop and deliver next generation services and applications to service providers, enterprises and consumers. New sources of revenue are needed There is inexorable downward pressure on voice revenues and mobile network service providers have to find alternate streams of income and/or reduce costs. In the fourth quarter of 2008, Ovum’s quarterly interconnect benchmark 2008 shows an average mobile 9 Source: Forum Nokia © Ovum 2009
  20. 20. LTE Mobile Broadband Ecosystem: the Global Opportunity 13 UMTS FORUM REPORT 42 termination rate in the EU2710 countries of 8.1 euro cents per minute. In May 2009 the European Commission issued guidance on mobile termination rates indicating that rates should be reduced to be in line with fixed call termination and (with a few exceptions) that the guidance should be implemented by 2012. This would represent a reduction in the order of 40% from current levels. Not all of the thousands of applications will be revenue generating, but many are. Operators may create their own application platforms for device service delivery or partner with application platform operators/ owners. The latter option has the benefit for network operators that by working with an established platform owner they have access to stable service management, without reduced levels of capital and operational investment for the operator. Device platforms are considered further in Section 4.3 of the report. Within the core network, migration to LTE will need to be approached by MNOs in the same way that fixed network operators have viewed next-generation network (NGN) deployments - long term and holistically. It will be part of a process for transforming their business to adapt to an IP-centric world. To benefit from the efficiencies that LTE holds, mobile operators must undertake a major overhaul of their businesses, migrating from their legacy networks, systems, business processes and working practices. New operational systems and processes will be required to effectively manage the new architecture. Operators will need to shift their focus from being technology, product and network based, and move towards becoming software-led, service-driven and customer-centric businesses. The use of agile business processes and third parties (such as systems integrators and application developers) for outsourced, hosted or managed services will be needed to reduce costs and improve time to market. This transformation will enable operators to introduce service delivery platforms which will enable the core network to be opened up to third party developers to develop services accessible from a range of different end user devices - mobiles, televisions, laptops and other devices - spanning consumer and enterprise applications. The convergence of customer data storage will allow end users to flexibly access and control their network-delivered services across fixed and mobile networks, leading to new service opportunities and helping to reduce churn, as the customer experience becomes more integrated with the network. Common components in the ecosystem The performance characteristics of LTE will lead to many different types of end user device and consumer electronics systems in the ecosystem. Within these, there will be three major service components to provide access to most services: the local client or device, web-based or remote service resources, and a means of connectivity between them, as shown in Figure 2.4. 10 EU27 refers to Austria, Belgium, Bulgaria, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxemburg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the UK. © Ovum 2009
  21. 21. LTE Mobile Broadband Ecosystem: the Global Opportunity 14 UMTS FORUM REPORT 42 The form of the local client/device will be determined by its function. As the power of devices increases, applications become more complex and users expectations increase, so LTE will become the mobile access technology of choice. LTE has the advanced capacity and low latency to satisfy emerging market needs. Figure 2.4 Key components for service access • Chipsets • Power • Screen • User interface Local client / • Local content • OS / applications device and services • Memory • ADSL • LTE • Fibre • WiMAX Connectivity • 3G • WiFi • Shared content, • Cloud applications Web or remote data and media and services: service resources Source: Ovum The common factor which underpins the development of the consumer sector in the communications industry, and which is increasingly providing opportunities in the overall consumer electronics sector, is the need to be able to access the breadth and depth of applications, service and content available on the web. Moreover, we see consumers requiring increased access bandwidths with reliable performance. The trend in this direction is exemplified by the way in which users perceive and use new products. Many users initially considered the iPhone as an evolution of the iPod, to be used to listen to music (as previously), but with the additional capability to watch stored videos. However, the connectivity which allows access to web content, applications and services has transformed the way in which users view and use the device, which can access a much broader range of content and be used in ways that they had not anticipated. The PC/laptop category in Figure 2.5 is distinct in that nearly all of its capabilities are added after the purchase of the basic product. Application software (which may be bundled) is added as needed, and open platform initiatives are geared to fully open platforms. Netbooks are in a similar situation, but with the absence of a CD drive. The use of the web connectivity is increasingly apparent in phones/devices and games consoles, which, despite having most of their functions embedded, still allow applications and services to be downloaded. By contrast, the other devices shown in Figure 2.5 are only starting to evolve and incorporate networking connectivity. © Ovum 2009
  22. 22. LTE Mobile Broadband Ecosystem: the Global Opportunity 15 UMTS FORUM REPORT 42 Figure 2.5 Different services share common components TV/ media player/ Different categories Phone/ STB Common applications, of devices with voice Netbook services and content – unique functions device useable from the Common functions: Internet and user interfaces Web access (applications, services PC / and content) Surveillance laptop + An increasingly high speed LTE can serve each of the connection common functions and can E-book Games serve each of the device reader console Still and categories video camera Source: Ovum LTE will also be integrated with consumer devices, particularly those with inherent mobility. Just as mobile phones have incorporated cameras, so high performance cameras can integrate wireless for download of results to storage or direct to social web sites. Vehicles shall see online diagnostics, location-based information provision and in-car entertainment services, all of which require full mobility and national real-time capability. With regards to laptops, LTE can enable computer application and OS upgrades using software as a service platform. Smaller, lower cost consumer devices will be developed as component prices fall. The components of the ecosystem are discussed in more detail in Section 4 of the report. All areas of the ecosystem are under development and proof of concept testing is underway to assess the performance and interworking within the RAN and core network. Applications and services are being developed for current networks (e.g. HSPA/HSPA+), and these will develop further as LTE rolls out. Application-specific services and network-specific devices will become available in volume to meet forecast demand from network operators. LSTI and its testing work provides an efficient way to share experiences between the LTE players, and thus widens the LTE Ecosystem. Global LTE ecosystem roadmap The LTE global ecosystem roadmap from 2008 to 2013 is shown in Figure 2.6. This and regional variations are discussed further in Annex A. © Ovum 2009
  23. 23. LTE Mobile Broadband Ecosystem: the Global Opportunity 16 UMTS FORUM REPORT 42 Figure 2.6 Overview of LTE ecosystem roadmap Source: Ovum To explore the LTE ecosystem, we conducted interviews with major players from each group in which we discussed the following areas: • LTE development / deployment roadmap • views, plans and expectations for the LTE ecosystem • views on the future requirements for high speed mobile broadband • expectations for LTE device evolution • expectations for services and applications that will benefit from LTE. In this report we will discuss the roadmaps of each group in the ecosystem in the following sections: • Section 3: LTE enabled services • Section 4: Devices and infrastructure • Section 5: Drivers and barriers of the LTE ecosystem • Section 6: End user survey results • Section 7: Conclusions and recommendations. © Ovum 2009
  24. 24. LTE Mobile Broadband Ecosystem: the Global Opportunity 17 UMTS FORUM REPORT 42 3 LTE enabled services 3.1 Mobile data applications will drive LTE LTE networks, with their high capacity, high data rate capability and low latency, will provide a better platform for many varied services and applications. Our industry survey indicates general agreement that LTE networks will provide the best opportunity to date for existing and new services and applications to benefit from mobile broadband networks. This is reinforced by the growing support for LTE within the operator community. One major European operator is reported to be planning to move from HSPA to LTE, without incurring the costs of HSPA+ upgrades. The industry was also in common agreement that increased data usage on mobile broadband networks will drive the deployment and take-up of LTE services. In this section of the report we discuss a number of services and applications that received the most interest in our survey, namely general data services, voice services, video services, interactive services, location-based services and machine to machine services. 3.2 Consumer services The industry would like certainty about where its user demand will come from. However, as with successful internet services, the certainty is not possible to predict. Figure 3.1 identifies some important LTE characteristics and potential consumer services. Whilst it is possible to support many of these on pre-LTE networks, it is the wide-scale availability, the capacity, the performance characteristics of the access and core networks, and the considerably broader ecosystem that will differentiate LTE from its predecessors. The results from the consumer survey are provided in Section 6. Figure 3.1 Consumer services enabled and enhanced by LTE Sector LTE Ecosystem Consumer services Components/characteristics at service, (Note: * indicates machine to machine application, device level service) Devices and Innovation in all components: OS, protocol Compelling content delivered to 1000s of user stacks, processors, antennas, batteries, market segments. interface displays, large and multi-touch screens. Application/ Intuitive interface; accessible services service Open or managed device platforms enable specific new applications, services, content, portal access Partnering key to success Devices for broad and narrow markets Internet All that Web 2.0 comprises: communication, Social networking, video/photo sharing, music interoperability, sharing, collaboration sites, blogs, news, chat, games, travel Wide base of data for consumer added value, information, community and interest groups marketing Internet TV, media streaming and download Personalised and discovery services © Ovum 2009
  25. 25. LTE Mobile Broadband Ecosystem: the Global Opportunity 18 UMTS FORUM REPORT 42 Navigation, GPS and cell location data Location-based content location GIS services Presence/location information Mapping data Location-based push-marketing Service directories In-transit travel updates to itinerary Transport Vehicle manufacturers Car performance, efficiency and service Government agencies monitoring* In-car entertainment systems Automatic updates to in-car applications / Bespoke chipsets and devices data bases Vehicle service centres Location-based real-time info. for navigation and traffic updates* Content providers Road tolling (maybe variable)* Radio /TV services adapted for in-car use In-car networking for entertainment games Wide base of data for consumer added value, and media* marketing Financial Banks, credit card and financial sector Online mobile banking and e-commerce* companies Integrated near-field communications* Vending machines Mobile wallet for payments, entry, vending Point of sale terminals machines, public transport* Scanning and entry systems Personalised payments based on Associated manufacturing and applications circumstances* Health Health and dental practices, hospital services Mobile access to health advice sites Insurance company records Personal data access*: clinical records, scans, Monitoring devices x-rays Scanners and display systems Remote diagnostics with video support* Advice and diagnosis web sites National and international coverage* Journalism Newspapers, journals, radio and TV stations, Personal news reporting blogs First to market – blogs and news Still and video cameras Storage Home and server-based storage systems Personal directory services Cameras – still and video Remote user – auto backup for laptop, Device and web storage applications, social camera, audio* networking Auto archiving* Security and Building or car alarm In-building alarm monitoring / reporting control monitoring/reporting/security systems Cameras – store and forward, or online Scanning and entry systems Heating and air conditioning control Camera interfaces Integration with control centre Heating and air conditioning control Switches and cameras integrated* Security applications built into many services HD surveillance/security* Long term, high capacity storage* Consumer LTE and user interfaces Remote access to home network: printing, electronics Applications: media centre, home gateway, security applications Home gateway integration: printers, media Broadband TV connection servers, TV, gaming consoles Managed services for consumer electronics Multi-room; user-segmented Camera backup: still and video Home nodes/femtocells Online gaming Cloud-based software/software as a service Cloud/web hosted applications E-book reader Content rich E-book applications Machine to See items marked with * above machine Source: Ovum © Ovum 2009
  26. 26. LTE Mobile Broadband Ecosystem: the Global Opportunity 19 UMTS FORUM REPORT 42 General data services and applications General data services include online browsing, email, information searching, blogging, social networking, etc. which are already supported by existing mobile data networks such as HSPA and EV-DO. Although these services do not require the high network speed and low latency connections that real-time video and gaming services might require, the user experience is always improved when a true broadband service with higher capacity and lower delay is used. The respondents to our industry survey expect LTE to complement existing network services, and expect that the improved quality of service will be particularly attractive to premium corporate customers and high-end consumers. Although faster access to web content is more of a convenience rather than a necessity, the faster browsing speeds offered by HSPA+ and LTE networks will encourage users to view more content and feed the desire for higher performance services (e.g. media rich services). Users will not only increase their mobile network usage by volume, they will also change their behaviours and come to increasingly rely on mobile data services as they have accessibility on the move. They will require information searches, news access and communications to replicate their use of fixed network broadband. Users, especially those keen on social networking, will also want to retain online connections to their personal networks. Applications such as RSS feeds and instant messaging will keep mobile users updated all the time, and, with the growing use of video in news feeds and messaging, will generate increased capacity demands on the network. All of these services will be enhanced by improved user interfaces. The advent of higher performing mobile broadband will lead to converged applications and media—a trend which has already started—and will encourage fixed and mobile network convergence. Voice services Although voice over IP (VoIP) capability is expected to become available on the LTE devices, the options on how VoIP calls will be handled, including handover, require review and agreement. There is wide-scale agreement in the industry that legacy 2G and 3G networks will continue for many years and interworking with these networks will be sustained, which sets the question of voice continuity across different access types. Voice services may be handled in several ways: • multi-mode devices can be configured with GSM and UMTS capability, enabling voice traffic to be carried over an existing GSM or UMTS radio access network. This will enable LTE devices to roam nationally and internationally beyond LTE coverage area. • LTE network operators who run their own GSM or UMTS networks may choose to go down the route of voice over LTE via generic access (VoLGA). The recently formed VoLGA Forum aims to define a set of specifications for enabling delivery of voice services over LTE access networks based on the current 3GPP Generic Access Network (GAN) standard, which will enable mobile operators to deliver mobile voice and messaging services over LTE access networks based on upon this. By means of an access controller in the LTE evolved packet core, VoIP voice calls and SMS data originated over the LTE radio interface can be routed and handled by associated GSM or UMTS core networks. This © Ovum 2009
  27. 27. LTE Mobile Broadband Ecosystem: the Global Opportunity 20 UMTS FORUM REPORT 42 approach means that the GSM network (and, in time, the UMTS network) can be gradually run down as users migrate to LTE networks, enabling operators to benefit from earlier opex cost savings. Other technical solutions can be foreseen, such as Circuit Switched (CS) Fallback (when a voice call which is being established is handed over from the LTE network to the 2G or 3G network) or Voice over IMS, however, the recommendations for these have not been yet finalised within the 3GPP arena. The main issue to be solved is to find a good solution which minimises the interruption gap in the call which is caused by the swap between circuit and packet modes. Thus, it is highly recommended by the UMTS Forum that 3GPP Release 9 be not frozen before a proposal for a good solution to integrate voice in LTE is included. • VoIP over broadband, support for which is included in the LTE standards. Since LTE will be an overlay network on top of the established 2G and 3G networks, it will be the operator’s decision whether or not to implement or allow VoIP on its LTE network. With voice still remaining the major revenue generator for operators and service providers, the main push for internet-based VoIP will come from those LTE operators which do not have complementary 2G or 3G networks and from third party VoIP services, such as Skype. Mobile network operators and service providers will wish to retain and protect voice revenues, but will be under regulatory pressure to match mobile termination rates against actual attributable network costs. The uptake of VoIP will mainly depend on an operator’s strategy, and of the implementation of IP Multimedia Subsystem (IMS) if a fully featured service set is required. Multi-mode handheld devices (which support LTE for data and UMTS for voice) are expected to be the main end user product, as operators generally consider that LTE will be used primarily for data-only services for several years after introduction. Video related services and applications Our industry survey indicates that video services, especially high quality video, will be one of the services to enjoy greatest benefits from LTE, as they demand high capacity, high speed and low latency network support. Pre-HSPA mobile networks struggle in every one of these aspects to deliver a satisfactory video service to end users. HSPA is already embedded in personal media players and video handset devices, developing the market in which LTE will provide an ideal network to support further take up of mobile video services. There are two primary types of video service, namely streaming video and live video. Streaming video services normally use a ‘cache and play’ method to minimise the impact of a poor network connection, as users can accept some delay at the beginning of the service. Some video on demand services (i.e. IPTV) allow users to download the full video content to their local drive and play it as and where they wish. Streaming video services are becoming increasingly popular for mobile broadband users. Live video service, on the other hand, requires high network speed and low latency, and because of the bandwidth required, operators normally prefer to introduce live video as a © Ovum 2009
  28. 28. LTE Mobile Broadband Ecosystem: the Global Opportunity 21 UMTS FORUM REPORT 42 broadcast service. Users who are willing to pay for live video services are not tolerant to interruptions, and they expect high quality, live video service on demand. Mobile-TV services will include both streaming and live video services, which our end user survey indicates will be among the most popular LTE-enabled services. In due course these will drive network use but operators currently do not feel that there is demand for such services. The success of mobile-TV will depend on the operator’s evolving business model and relationship with content providers. The business model will, however, be subject to the current trends in the traditional broadcast markets, in which subscription and advertising based channels are under pressure from multi-channel broadcasting and internet-based content (catch-up TV, social networking, user-generated content, blogs, news sites). Operator respondents recognise that there will be a market for high-quality mobile broadcasting to meet user expectations. The technology of choice (e.g. MediaFlo, DVB-H, DVB-SH, MBMS, IMB [Integrated Mobile Broadcast], etc.) will depend on region, and has still to find real traction. Those requiring a dedicated overlay network may find the business case to be more challenging. Unicast and internet-based TV and media will become extremely popular over HSPA, HSPA+ and LTE. Users will have raised expectations of internet-based TV services (broadcast programmes and catch-up TV) because of their experience of the services available on their fixed network broadband internet access. The current availability of mobile devices with Wi-Fi capability provides an alternate means of accessing internet-based video content. In a recent global survey, Ovum found that 89% of users who use their mobile phone to access online video did so using their mobile network, and 20% accessed the service via a Wi-Fi connection (a small proportion of respondents use both access methods.) Given that Wi-Fi access has only been widely available on phones since 2007—and even then, mainly on phones with an open OS platform such as Microsoft or Symbian—Wi-Fi is being adopted fairly rapidly in some markets. As mobile operators have been slow to roll out flat-rate data packages on their high-speed networks, Wi-Fi has provided a cheap alternative means of accessing multimedia content on the phone. With vendors such as Nokia pushing Wi-Fi access on Ovi, Wi-Fi based services may become more of a threat to the operator channel in future. However, the advent of faster-speed networks coupled with flat-rate affordable data packages should alleviate this threat to some extent, providing operators get to market quickly. As the LTE market develops, operators will have to assess the market take-up of Wi-Fi network devices, which may influence strategy for in-building and hot-spot femtocell deployment, and decisions regarding incorporation of Wi-Fi capability within the femtocell. © Ovum 2009
  29. 29. LTE Mobile Broadband Ecosystem: the Global Opportunity 22 UMTS FORUM REPORT 42 Figure 3.2 Content / devices preferences 80% 60% 40% 20% 0% Hollywood TV Sport Home Music Adult Short film programme movie video clips TV device 63% 58% 33% 32% 27% 17% 10% PC 47% 43% 27% 28% 32% 19% 18% PMP 17% 16% 11% 10% 20% 6% 9% Mobile phone 9% 13% 11% 7% 15% 5% 9% Source: Ovum - Video trends: the mobile story. March 2009 Figure 3.2 illustrates the findings of recent Ovum research, which indicated the device preference for viewing different types of video content. With three of the device categories— PC/laptops, personal media players and mobile phones—all having inherent mobility, the results demonstrate latent potential for mobile TV and video content. As LTE service plans mature over the next few years, further market research can identify content requirements and regional differences at a more granular level. A recent report from Cisco11 projects that mobile data traffic will double every year from 2008 to 2013, and that almost 64% of this traffic will be due to mobile video at the end of the period. Furthermore, the report indicates that by 2013, 80% of traffic will come from mobile devices and handsets which are connected at access speeds greater than those offered by 3G mobile. The Asia Pacific region is projected to account for one third of mobile data traffic by 2013, while Western Europe exhibits the highest level of mobile video traffic, with a projection that 73% of mobile data traffic will be due to video services. The take up of mobile TV services, whether broadcast or streamed internet-based content, should be monitored over the next two years. Mobile service providers will need to segment their offerings and encourage access to free sites to generate mobile broadband traffic, offering some advertising-supported content and providing premium content packages where possible. The former will target the mass market, while the latter will appeal to a smaller segment of users. Service offerings will also need to be packaged for mobile phone users and those using personal media players, as viewing expectations will be different. The availability of subscription packages which do not impose monthly download limits will be essential. If 11 http://www.cisco.com/en/US/solutions/collateral/ns341/ns525/ns537/ns705/ns827/white_paper_c11- 520862.pdf © Ovum 2009
  30. 30. LTE Mobile Broadband Ecosystem: the Global Opportunity 23 UMTS FORUM REPORT 42 these services become popular, then the high traffic demand generated by such services will be a major driver for increased LTE rollout to increase national coverage and to drive greater cell density. Real time and interactive services Our end user survey identifies interactive services as another type of service that will place demands on LTE service providers. Voice services and video telephony/video conferencing are prime interactive real-time services. Mobile gaming is a typical interactive service which requires a low latency network and high capacity data storage, and backup will require network capacity. Mobile gaming has not been successful on the current generation of 2G and 3G mobile networks. The majority of handheld mobile gaming consoles choose Wi-Fi to support network group gaming, and our survey indicates that operators recognise that the market demand for mobile gaming is low. Operators are concerned that there are factors beyond the network which will influence the gaming community. The network operator will provide the gaming market with network performance and will help create device availability (probably games- specific) to support the end user demand. However, the end user requirement for low end- to-end latency will also require the gaming server and the gaming device to have performance to meet the end users’ expectations. Although gaming server performance is improving as the popularity of network supported gaming consoles increases, mobile gaming device manufacturers are expected to focus on improving their device performance, especially in the areas of graphics design and game design. It is clear that the gaming industry is currently less focused on mobile gaming, but it has made rapid developments to improve the performance of standalone, fixed internet and Wi-Fi consoles which have already become features for standard gaming consoles. Given their powerful performance, it is questionable how much value mobile broadband will bring to these devices. It should be noted that mobile gaming does not necessarily mean that all games will require powerful handheld terminals. Internet gaming—along with many other internet applications— will move to the mobile internet domain. Games such as World of Warcraft, Second Life (a virtual social world) and WAR (Warhammer Online: Age of Reckoning) attract tens of millions of users worldwide. With mobile broadband support, users will increasingly be able to play games away from their fixed network access. All they will need is a laptop/PC with mobile broadband (via a USB dongle/data card or embedded chipset). High capacity data storage and back up capabilities are already being built into digital cameras and video cameras with the introduction of HSPA into the devices. Other applications in real-time monitoring and surveying services will also benefit from immediate download of data to server and are being considered by the vendors and service providers. Location based services A major difference between mobile broadband networks and fixed networks is that the former can be subject to location changes. This provides a huge opportunity for location based services (LBS) which have very broad potential to integrate with high performance © Ovum 2009
  31. 31. LTE Mobile Broadband Ecosystem: the Global Opportunity 24 UMTS FORUM REPORT 42 mobile services. General LBS include the updating of maps, provision of information on the location of shops, service points, etc., depending on the location of the user. As LBS become more intuitive to use, require regular updates when on the move and have access to the sophistication of applications like Google Maps and Google Earth, they are expected to drive network traffic to considerable volumes. Operators are strongly interested in LBS as a route to providing true personalised services, and, with true broadband connectivity, they will be able to take advantage of devices with embedded GPS to offer their own and third party services, e.g. using Google Maps or similar. Services such as these raise the possibility of new business models to be developed for charging users or specialist service providers for use of network capacity. 3.3 Enterprise services – vertical sectors Whilst the business sector will use many of the consumer services, the flexibility to offer new services to vertical markets (as shown in Figure 3.3) will require service providers to reassess their approach to marketing, which includes many non-traditional markets and service delivery. Figure 3.3 Business services enabled and enhanced by LTE Sector LTE Ecosystem Business services Components/characteristics at service, Note: * indicates machine to machine application, device level service Refer also to Figure 3.1 (consumer services). Many components, applications and services identified in the previous consumer service review also apply to the enterprise sector. Devices and Applications, services and content, portals Industry-specific applications (based on user and devices developed for specific vertical standard architectures): health, logistics, interface market sectors. emergency services, retail, finance, etc. Internet All that Web 2.0 comprises: communication, Corporate VPN access interoperability, sharing, collaboration Service delivery on the web - content Wide base of data for consumer added formatted for mobile broadband delivery value, marketing Transaction services with customers and industry partners Personalised content for customers Targeted marketing Navigation, GPS and cell location data Location-based content location, GIS services Presence/location information* transport Mapping data Location-based push-marketing Service directories In-transit travel updates to itinerary Dispersed enterprise resources Fleet monitoring – speed, location* Logistics control* Health and safety (driving time)* Public transport – in fleet services* Road tolling* Emergency service command and control National Emergency services; utilities Live relay of incident* utilities and Telemetry* services © Ovum 2009
  32. 32. LTE Mobile Broadband Ecosystem: the Global Opportunity 25 UMTS FORUM REPORT 42 Financial Banks, credit card and financial sector Online mobile banking and e-commerce companies Integrated near-field communications Vending machines Transaction service Point of sale terminals Associated manufacturing and applications Health Mobile access to health advice sites Full-scale clinical records – scans, x-rays, Medical devices and records personal data access* Health and dental practices, hospital services Remote diagnostics with video support* Insurance company records National and international coverage* Monitoring devices Scanners and display systems Advice and diagnosis web sites Journalism Video and audio reporting tools adapted for High speed/low latency news gathering mobile delivery (without news gathering satellite services) High definition capabilities Storage , Corporate storage networks Back-up storage for field workforce* security and In-building alarm monitoring/reporting Corporate security/CCTV archive* control Scanning and entry systems Integrated with control centre Cameras – store + forward, or online Switches and cameras integrated* Heating and AC control HD surveillance/security* Long term, high capacity storage* Industry Interfaces for telemetry devices Remote office working applications Remote polling systems Push-to-talk/video Emergency services support Machine to See items marked with * above machine Source: Ovum Note: * Indicates machine to machine service Machine to machine services Machine to machine communications services are currently used in public safety, finance, healthcare, utilities, etc. They require only low speed, low capacity network support, for which GPRS/EDGE and 3G networks are well suited. Our industry and end user survey indicates that machine to machine services will not be a major driver of LTE uptake. There is general agreement that low capacity requirement applications will stay with GPRS/EDGE and 3G networks for many years. Any machine to machine applications which require a high capacity LTE network are expected to develop over time, but specific examples are not identified, and current HSPA networks should be able to provide a good data service for emerging machine to machine services. Ultimately, service costs and total cost of ownership will influence the demand for and take up of LTE machine to machine services. © Ovum 2009
  33. 33. LTE Mobile Broadband Ecosystem: the Global Opportunity 26 UMTS FORUM REPORT 42 It should be noted that machine to machine users are not the usual business or consumer groups. Their network requirements are often constant and, if the capacity demand is high, this would lead to high charges on a standard tariff. However, if operators have predictable demand, they may be flexible and offer service to these users at a lower price, which could encourage machine to machine services. An example of public safety service can be considered with regards to the control and data from thousands of CCTV cameras being gathered. Each camera may demand a constant 1-2 Mbit/s support which, as a proportion of a cell’s uplink capacity, equates to about one fiftieth for an LTE cell, one tenth for an HSPA Evolution and one fifth for an HSPA cell, this improvement being one of the advantages of the lower interference inherent in OFDM technology used in LTE, compared to W-CDMA. The mobile operator community perceives machine to machine as a long term strategic market opportunity for LTE and, although not one that will initially drive high volumes of product, one which provides an opportunity for mobile network operators to expand their market. The vision for machine to machine is that LTE’s higher capacity combined with a large penetration of LTE modules in various device form factors in the consumer market and in several vertical markets will generate a huge market opportunity for machine to machine connectivity services. This vision may only fully materialize in 10 years from now, but is a perspective that is certainly in operators’ minds. © Ovum 2009
  34. 34. LTE Mobile Broadband Ecosystem: the Global Opportunity 27 UMTS FORUM REPORT 42 4 Devices and infrastructure 4.1 Overview The vendor community provides the foundation of the LTE ecosystem. Vendors work very interactively in partnerships and alliances to help build their own success and that of the industry. During the early stages of standards development, architecture design and systems development, the vendors are the main drivers in the ecosystem. In this section of the report we will discuss the chipset, user device, infrastructure suppliers and test system vendors. The timing of demand, the variety of services, applications and content, and the volumes of LTE related chipsets will have a direct impact on the range and sophistication of LTE enabled devices. However, this aspect of the industry is very intertwined and successfully so, as it allows new innovative companies to bring new ideas to market. Device vendors and software developers interact to define and develop mobile operating systems and applications. With the introduction of mobile data services, service and content providers have increased in importance as they cooperate with device vendors, software developers and operators to bring more services/applications to the mobile user market. Test capability is hugely important to enable clean, functional products to be brought to market and equipment manufacturers provide product testing support to user device vendors and infrastructure suppliers. The test community plays an especially important role in the early stages of new technology introduction as it provides verification and functionality tests. Any new devices and handsets developed for the LTE market will have to be compatible with the existing network technologies deployed by the LTE network operator (which will most likely be W-CDMA, HSPA+, EV-DO, or TD-SCDMA in China). However, the availability of devices with a compelling overall user experience (size, screen, usability, features, etc.) will generate the most market interest. A wide range of devices is anticipated: data-only dongles and cards; LTE embedded in laptop; voice handsets; gaming consoles; internet-connected media players; mobile internet devices and consumer goods; cameras, security and surveillance devices. All of these devices are already being brought to market with HSPA capability: a move which will help the ecosystem of applications, devices and services develop prior to the commercial launch of LTE services. 4.2 Chipset vendor LTE roadmap Roadmap overview Chipset vendors are fundamentally important in any mobile industry technology development, especially those for end user devices. Figure 4.1 shows the roadmap for chipset vendors associated to the device support. © Ovum 2009
  35. 35. LTE Mobile Broadband Ecosystem: the Global Opportunity 28 UMTS FORUM REPORT 42 Figure 4.1 Overview of chipset vendor roadmap Current activities Expected activities First commercial ready Embedded devices Small handheld Data only device support device support support Test & trial Test & Test & trial Development trial 2008 2009 2010 2011 2012 2013 Source: Ovum 2008–09: in-house development before being commercially ready Chipset vendors are in general agreement that they will initially introduce LTE/HSPA+ and LTE/EV-DO dual-mode chipsets to satisfy the needs of the initial multi-mode devices. Multi- mode chipsets for the Chinese market will need to include TD-SCDMA. In the future it is expected that LTE will be embedded with EDGE, UMTS and CDMA, but the vendors would not be drawn on specific timescales as, after the current initial development phase, their developments for further multi-mode chipsets will depend on device vendors’ requests, which are in turn driven by the demands of network operators. The testing of LTE chipsets will continue through 2009 as new variants are released. During 2008, vendors were focused on frequency division duplex (FDD) mode and they expect to have hardware support for both FDD and time division duplex (TDD) modes in 2009. Chipsets are baseband products, so current tests are conducted independently from frequency bands and the majority of vendors use the 2.6 GHz band and a 20 MHz channel for test purposes. Tests for other bands and channel bandwidth will be conducted with device vendors in 2009. In terms of MIMO support, it is commonly agreed that 2X2 MIMO for the downlink will be a popular choice for initial LTE deployment and hence the initial focus for chipsets. It is expected that general user device will have up to 4X2 MIMO support, allowing improved diversity performance, with an associated 2x data rate increase, whilst 4X4 MIMO can be introduced for femtocell devices. Engineering chipset samples are expected to be available in mid-2009. The first fully standards compliant, multi-mode commercial chipset products will become available as early as the second half of 2009, or early 2010 at the latest. Pre-standard chipsets could be made available 2–3 months earlier if device vendors indicate an intention to bring early, pre- © Ovum 2009
  36. 36. LTE Mobile Broadband Ecosystem: the Global Opportunity 29 UMTS FORUM REPORT 42 standards devices to the market first. Chipsets for LTE femtocells will become available in the second half of 2009. The many options for multi-band support and MIMO configurations will be reviewed during these early days, as chipset and device vendors seek to achieve the right balance between performance, size, power consumption, product volumes and costs. It is clear that different devices will be needed for different markets. 2010: standard-compliant chipset ready It will take the vendors very little time to finalise their chipsets once the standards are ratified. Initially, multi-mode chipsets will be used on data-only devices, such as USB dongles and PC data cards. Once the initial releases are available, the time to implement new standards-compliant data-only devices will be reduced and new versions should become available within three to six months of the initial chipsets. Chipset vendors work very closely with device vendors to increase the level of integration for embedded devices and small handheld devices. The timing of these chipsets will depend on the device vendors’ roadmaps. LTE femtocells will appear in the second half of 2010, with deployment determined by the operators' strategies and the popularity of LTE devices. Some operators will choose femtocells to compensate for the lack of network coverage, but for this to be a successful strategy will require LTE devices to be adopted to create demand for femtocells. Dual/triple- mode femtocell chipsets (incorporating LTE, Wi-Fi and other cellular standards such as EV- DO or HSPA+) are expected by the end of 2010 or early 2011, with commercial availability in mid-2011. Size and cost of these devices will be critical, as they will have to meet consumer expectations for form factor and price. Impact on the ecosystem Chipsets are a very important part of the ecosystem. According to the chipset industry, standard-compliant product will be ready as early as the second half of 2009 or the first quarter of 2010 the latest. This timeline will be a problem for user device vendors who wish to have standards-compliant devices ready for early LTE deployment. They can however use pre-standard chipsets for initial LTE devices, such as USB dongles and PC cards. There should be a low impact on the main commercial deployments since these devices are used only to support data services, and given that such devices have a simple form factor, vendors can quickly ramp up production to introduce standard-compliant devices. It is expected that a standard-compliant LTE device will initially become available with the smallest form factor i.e. a USB dongle, but it will take another six to nine months for vendors to test and integrate an LTE chipset into embedded devices. For small handheld devices, the test and integration period will be at least 12–18 months. Issues such as size and power consumption must be solved before small handheld devices can be sold to the general consumer. © Ovum 2009

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