Pre-launch bickering over devices not helping LTE
We are just months away from Verizon Wireless' (NYSE:VZ) impending launch of LTE and the scrutiny of the technology seems to be accelerating. Like any major technology upgrade, there are lots of unknowns about how early LTE deployments will perform in real-world scenarios and how quickly the LTE device ecosystem beyond USB dongles and aircards will develop. But instead of coming together, the LTE ecosystem seems too divisive on several things--particularly device availability and adoption.
Of course, the very public bickering between AT&T Mobility (NYSE:T) and Verizon Wireless about LTE's commercial readiness seems to be fueling the fire. AT&T executives have repeatedly implied that Verizon is pushing LTE before it is fully mature. In March, AT&T Mobility CTO John Donovan told the Wall Street Journal that it will be 2012 before "you'll have decent handsets, decent quantity of handsets, and decent choice of handsets." That sentiment was repeated again earlier this month when AT&T Operations CEO John Stankey claimed that the LTE ecosystem is not mature enough for a commercial rollout, and that Verizon's first LTE phones will be clunky.
Meanwhile, Verizon Wireless executives have tried to deflect AT&T's negative comments with assurances that consumers will have a choice of LTE devices when the company launches its network later this year, and those devices will be sleek, not clunky. Just yesterday Verizon Wireless CEO Lowell McAdam urged investors to come to the 2011 Consumer Electronics Show to see Verizon's LTE devices. "I think you will be surprised at the number and variety of [LTE] devices that we bring to the table," McAdam said.
The uncertainty about LTE's commercial readiness is also prompting several analyst firms to release conflicting predictions. WiseHarbor Research recently announced that it will be 2016, or five years after the first LTE devices (USB dongles, aircards, etc.) make their debut, before LTE accounts for more than 25 percent of mobile broadband device sales. In addition, the report predicts that it will be 2019 before LTE device sales are equal to CDMA-based technology devices, such as those using EV-DO, and HSPA/HSPA+. WiseHarbor Founder Keith Mallinson explains that although the market is getting bigger, the lifecycle--or time it takes between the inception of a technology and demand--doesn't change. "LTE will take years before it gets to its peak as well. That's a sign of a healthy market."
But Strategy Analytics' new mobile broadband market outlook report says that sales of new devices with integrated mobile broadband connectivity, along with external USB modems, will top 100 million in 2010 and grow to 200 million modem sales by 2014. Of those, the company says that 42 percent will be LTE modems.
Meanwhile, research firm Current Analysis (which doesn't make market predictions) says that for the next year data cards and USB dongles will dominate usage because of the lack of device diversity, and that most of the early subscribers will be focused on laptop and netbook data access.
Of course, this isn't the first time that carriers and research firms have had conflicts over how quickly sleek, next-gen devices will be widely deployed and affordable. Remember how long it took for 3G UMTS devices to achieve widespread availability? --Sue