LTE-Operational Challenges & Deployment conundrum

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While LTE is the future in telecommunications, in light of the negative business case around 2.3/2.6Ghz deployments, the Indian roadmap looks a little less promising then it should be.

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LTE-Operational Challenges & Deployment conundrum

  1. 1. LTE: Charting the futureThe Operational and the Deployment challenges
  2. 2. What is LTE?LTE is Wireless broadband technology to support Internet (and eventuallyvoice as well). LTE offers significant improvements over current prevalentcellular communication standards and hence is sometimes referred to as4G (fourth generation) technology What is LTE? What will LTE imply? •Standard for wireless communication • Converging point for both CDMA and of high-speed data for mobile phones GSM and data terminals developed by the • Improved data speeds (>5X over 3G) 3GPP •All-IP network – inherently based on • Deliver enhanced video and Internet protocols multimedia for a better overall •Not technically 4G yet, LTE as specified experience in the 3GPP Release 8, 9 document • Improved Spectrum efficiency (data series does not satisfy the requirements carrying capacity per bandwidth) of ITU-R for 4G • Eventually, reduce data costs and voice costs • Support for multiple bands via multi- band chipsets and devices • Provides a global ecosystem of devices and network equipment
  3. 3. LTE: Implications Subscriber Operator• High-speed content sharing • High Spectrum Efficiency - with significantly improved more capacity, less opex throughput• Smoother multimedia cost/MB (assuming high interactions for applications like utilization) video conferencing, gaming, • Co-existence and through reduced latency convergence of other standards• Improved mobility and low interference, with better signal • Co-existence eventually of characteristics multiple frequency bands• Enhanced security for highly • Ability to leverage advanced sensitive data access applications – video calling,• Simplified roaming with telepresence, etc operators world-wide migrating to common standard
  4. 4. LTE: The Convergence of technologiesWCDMA Path HSPA+ HSPA- LTE WCDMA HSDPA LTE Rel HSUPA Advanced 8/9 Marketed by most carriers as 4G, but technically not 4G 2000 2002 2007-09 2009-11 2012…CDMA2000 Path CDMA20 EVDO LTE Rel LTE 1X EVDO 00 1X Rev.A/B 8/9 Advanced Technology Shift 1After"freezing", a Release can have no additional functions added. However, detailed specifications may not yet be complete 2LTE Rel. 8 with peak data rate of 300Mbps in downlink and peak spectral efficiency of 3.75 bps/Hz in uplink doesn’t meet the IMT-Advanced requirements for 4G technology (Peak data rate: 1Gbps, peak spectrum efficiency 6.75 bps/Hz in uplink) UMB/ EV-DO Rev. C discontinued by Qualcomm in November 2008 Source: CDMA development group; Lit. search
  5. 5. LTE- Data Thru-puts4G improves customer experience… but average experience likely below “claims”
  6. 6. Relative likelihood of using specific activities on a 3G/LTE network (Data users)Degree of Basic 3G activitiesimpact of 4G 2 5over 3G/EVDO % Note: Likelihood of usage values based on general population Significant difference Marginal difference Source: Bain Wireless Consumer Survey – April 2010 (n=3429)LTE will impact experience most profoundly for video applications, current user set more concerned about e-mail, social networking and basic activitiesFor most common current uses of internet (web searches, simple e-mail, etc) LTE will have only marginalexperience difference
  7. 7. LTE Telco Opex Dense Urban Urban Rural Key Assumptions • This is a theoretical exercise and represented as an ideal case • Utilization of BTS has been assumed to be 100%Not to scale • For EVDO Rev A, # carriers on a BTS =2; EVDO Rev B = 3; costs have been allocated proportionately • LTE throughput has been taken as 30 Mbps
  8. 8. Global LTE Deployments 9 commercial LTE TDD systems Countries with LTE TDD commercial networks launched Countries with LTE TDD studies, trials, deployments
  9. 9. LTE: Penetration LTE expected to reach subscriber traction only by 2015 in developed countries, emerging economies to be in nascence “In the case of LTE, although the initial boom is in developed markets, there will be a loud echo afterward as operators in developing markets start upgrading from 3G.” Developed countries Analyst, Heavy Reading, Sep 2011 “LTE will be deployed in developed markets first, with wide-scale deployments in emerging markets expected after costs for equipment & handsets begin to decrease. Although potential for Developing countries LTE in emerging markets in the next 5 years is limited.” Pyramid Research, July 2011 Countries with LTE roll out begun and commercial service available in some regions Countries with LTE spectrum auctioned but LTE deployments not yet commercial Countries with planned LTE commercial deployments but spectrum not yet auctioned Countries with LTE trial systems (pre-commitment)Source: Wireless Intelligence; Lit. search
  10. 10. LTE & 3G – The US CaseEven in the US, 3G subscription expected to maintain healthy growth through 2015 Source: Kagan, Network Coverage & Subscriber Unit Projections (Dec 2010); Gartner, Forecast: Mobile Devices, Worldwide (4Q09, 4Q10)
  11. 11. Global data traffic break-up LTE TO HAVE 2.4X & 44X DATA USAGE PER USER OPERATORS EXPECT LTE TO HAVE SIGNIFICANT COMPARED TO WCDMA AND GSM RESP. SHARE OF DATA TRAFFIC “SK Telecom predicts that around 65% of its total data traffic will be handled by its LTE network by 2014, and it expects to have 10 million LTE users by 2015.” Unwired Insight, Nov 2011 “The average smartphone user on their (Teliasonera) network consumed 375MB/month of data. The average broadband user on their network, largely 3G data cards, consumed 5 GB/month. But the average LTE consumer (essentially all data cards) used 14 GB – 15GB/month of data.” Gigaom, Nov 2010 *GSM, WCDMA, HSPA & LTE together expected to comprise ~90% share of all technology subscriptions by 2015; **1 EB=10^18 bytesNote: GSM share of data traffic is low because a GSM subscriber would mainly utilize a basic phone for access and thus wouldnot exceed 60 MB data traffic per subscriber per month, even in 2015Source: Ovum, Jan 2011; Gartner, Jun 2011; Bain analysis; Lit. search
  12. 12. Global LTE deployments 2300 TDD LTE spectrums to gain traction only by Currently, most devices support FDD 2016 TDD FDD“Most commercial/trial FDD LTE networks deploy the 2.6GHz band, but there are still a few rollouts including a couple of large ones using other bands (such as 700MHz, 800MHz and 2GHz) while for TDD LTE, *Forecast calculated using average of estimates by HR and Ovum 2.3GHz and 2.6GHz are expected to be the two major bands for global Source: Global Opportunities for LTE TDD, Ovum, Feb 2011; White TDD LTE rollouts.” Paper, Heavy Reading, March 2011; Bain Analysis; Informa Goldman Sachs, June 2011 Telecoms
  13. 13. LTE economics in India
  14. 14. LTE in India- Limited scope in near future City Sub density Attractiveness Mumbai 4505 Profitable Delhi 5689 Profitable Bangalore 2760 Profitable Chennai 1825 Profitable Hyderabad 2190 Profitable Kolkata 1678 Profitable Pune 1968 Profitable Ahmadabad 1103 Profitable Surat 1292 Unprofitable Coimbatore 1962 Profitable 11-50 1111 17 out of 40 cities profitable 51 -150* 366 7 out of 74 cities profitableEconomics suggest that a rational roll out would be limited to select cities over next 3-5yearsProfitability is function of subscriber density and data usage characteristics* Data not available for 26 citiesSource: Lit searches, Client materials; Bain analysis
  15. 15. LTE in India- Building scale • Staggered launch schedule across 33 cities will limit LTE share of data traffic in the next 2 years to within 5- 10% • LTE on 2300MHz will require high density of BTS to offer sufficient coverage – LTE on 2300MHz has limited coverage with lower wall penetration • Customers unlikely to perceive high value in LTE vs 3G • Other LTE spectrum holders like Aircel, Infotel not likely to launch immediatelyEconomics of 2300Mhz could strain LTE • BSNL, Qualcomm looking to givebusiness case in short-medium term away their spectrum slot
  16. 16. LTE in India- The operational challenge• Economics of 2300Mhz could strain LTE business case in short- medium term• LTE on 2300MHz will require high density of BTS to offer sufficient coverage – LTE on 2300MHz has limited coverage with lower wall penetration• 2300MHz LTS solution – unlikely to benefit from a scale ecosystem as this will be among few 2300 MHz• LTE coverage likely to be pocketed, with fallback on 3G – User Experience is limited because of nomadic coverage through mix of LTE/3G• Voice services not expected or planned for. Internationally voice services (VOLTE) over LTE have not been developed fully
  17. 17. LTE Deployments: India• LTE deployments will in • Focus target segments: India will target heavy users – Enterprises and early adopters – SMEs (SME dense• Pricing per MB basis for clusters) heavy users at parity to 3G – High-end/professional or even lower residential areas• To offset nomadic coverage, • Will try to uptrade, switch heavy users and early 4G solution will partly be an adopters  cream the indoor fixed Wi-Fi type 3G/EVDO data market solution (via CPE equipment/ IBS)
  18. 18. India LTE Deployments – Possible Roadmap• 700 MHz Digital Dividend – key to economically sustainable deployments – Low CAPEX can trigger faster penetration – Larger eco-system support – Greater carpet area  enhance broadband penetration outside metros
  19. 19. Thank You

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