Whereas LTE and LTE Advanced will surely be on the network upgrade paths for most operators, there are impediments to rapid and widespread switching in Europe. Unavailability of new spectrum is the major temporary barrier, though there are other impediments as well. Spectrum caps will fragment bands and could prevent the full spectral-efficiency benefits that can be derived from large LTE channel widths of 20MHz or more; HSPA-based technologies are continuously being improved to include many of the same capabilities that are in LTE; and spectrum refaming in the 900MHz band will be mainly with HSPA.
With exceptions in Scandinavia and rural Germany, most of Europe has been relatively slow with LTE deployment. Commercial services have been available since 2009 in Scandinavia via Telenor and Tele2's partnership and from TeliaSonera. In the U.S., MetroPCS was first to launch and Verizon Wireless following before year-end 2010 with service in 38 major metropolitan markets and 60 commercial airports across the country. Verizon Wireless plans to cover two-thirds of the U.S. population by mid-2012, and offer LTE from coast to coast - everywhere it offers EV-DO service today-by the end of 2013. Japan's NTT DoCoMo's also launched its Xi-branded LTE network by yearend 2010 in Tokyo, Nagoya and Osaka. Germany's largest mobile operator, Deutsche Telekom, went live with its LTE network, with an initial focus on providing broadband services to underserved rural areas. DT is obliged by its 800MHz licence conditions to deploy LTE into so-called 'white spot' areas, or those without DSL access, before making the service more generally available across Germany. LTE provides operators with a cost-effective solution in delivering broadband to these rural areas, but these will not generate the high volumes of subscriber uptake that are occurring in the speed- and capacity-driven urban deployments identified above.
Whereas the U.S. auctioned off its 700MHz digital dividend spectrum- which became available with the switch from analogue to digital TV- in early 2008, Europeans have mostly yet to decide how to allocate their 800MHz digital dividend spectrum. The full European Parliament will vote in June 2011 on the European Commission's proposal to release a significant amount of spectrum, including that from the digital dividend. Under the plans, EU countries would have to make the 800MHz band available for the harmonised use of wireless broadband services by the end of 2012. Ofcom, the UK telecoms regulator, has decided the forthcoming LTE spectrum auction will come with strict conditions for how much spectrum operators can purchase. Controversy on spectrum allocations in the UK, with challenges from operators, has delayed the process. Similarly, the prospect of France Telecom Orange dominating the bidding for LTE spectrum has provoked calls from the smaller French operators for limits on the amount a single operator can buy.
It remains to be seen whether spectrum caps--particularly below 1GHz, where spectrum is most scare and where operators already have GSM and are refarming with HSPA (i.e., UMTS 900) in the 900MHz band--will prevent the full benefits of LTE's wide channel widths being achieved. LTE comes into its own with highest spectral efficiency when 20MHz channels are employed and LTE Advanced offers the possibility of even better performance using up to 100MHz channel widths. Notwithstanding AT&T's large spectrum holdings as U.S. market leader, it significantly justifies its proposed acquisition of T-Mobile USA with the opportunity to aggregate spectrum. Perhaps European regulators will allow the contradiction of spectrum sharing while capping outright ownership and outlawing operator consolidation?
Spectrum costs might also be problematic. The millennial 3G spectrum auctions across Europe raised around $150 billion for governments, but the cost had a crippling effect on the sector that drove KPN close to bankruptcy. The UK government aims to raise £5 billion ($8 billion) from the forthcoming spectrum auction. The U.S. 700MHz auctions raised a total of $19.6 billion dollars, with one spectrum block remaining unsold. AT&T Wireless and Verizon Wireless accounted for $16.3 billion of these proceeds.
HSPA Evolved is proving a formidable rival for LTE with many complementary technologies associated with LTE also being incorporated. These include 64QAM higher order modulation, MIMO, beamforming, carrier aggregation and an all-IP core. None of these are unique to LTE's OFDMA core technology.
Following recent lifting of regulatory restrictions requiring exclusive GSM use in the 900MHz and 1800MHz bands across Europe, the highest priority for refarming the 900MHz band is with HSPA. Many handsets on sale from a wide variety of manufacturers include this capability. Once HSPA is in, it will be a long time before it is displaced by LTE. In the meantime, this refarming will be a priority and account for a significant proportion of operator capital expenditures.
Despite all the impediments, migration to LTE and LTE Advanced is inevitable. Most of the new spectrum bands, including 700MHz, 800MHz and various other bands earmarked for LTE will never be standardized for HSPA. It also seems most likely that LTE will prevail with refarming of the 1800MHz band that is currently used for GSM. Many of the bells and whistles being added to LTE will never find their way into HSPA Evolved.
Keith Mallinson is a leading industry expert, analyst and consultant. Solving business problems in wireless and mobile communications, he founded consulting firm WiseHarbor in 2007. WiseHarbor is publishing an annual update to its Extended Mobile Broadband Forecast in May 2011. The new forecast will include network equipment, devices and carrier services to 2025. Further details are available at: http://www.wiseharbor.com/forecast.html