Global LTE: Verizon dominates today, but which operators will lead in 2016?
The wireless industry is returning to its roots: The world is coalescing around LTE technology, creating a shared, global standard for the first time since the days of analog. And the global move toward LTE comes as little surprise, since the technology promises more efficient and faster networks, lower equipment costs through economies of scale, and broad support from suppliers and carriers. Already, as of February, there were 52 fully commercial LTE networks in operation and more than 300 LTE-enabled devices available in the market, according to consulting firm Signals and Systems Telecom.
Which operators are on the forefront of deploying the technology? And how many LTE subscribers and devices are currently in the market? Most importantly, where are things heading?
Signals and Systems Telecom has provided FierceBroadbandWireless with specific numbers for the LTE market, and forecasts for the future. These numbers help highlight both the nascent nature of the industry today and its growth potential.
Thanks to Verizon, North America dominates the global LTE industry
LTE device shipments market share in 2011
North America accounted for a whopping 83 percent of LTE device shipments in 2011, according to Signals and Systems Telecom. As for the number of global LTE subscriptions (which is a slightly different figure), Signals and Systems Telecom reported 6.4 million LTE subscriptions at the end of the fourth quarter of 2011. The firm said the United States and Japan accounted for 72 percent and 23 percent of the total subscriptions, respectively. Germany came in third place in the fourth quarter with 150,348 LTE subscriptions, representing over 2 percent of the total LTE market, driven by early launches of Vodafone, T-Mobile and Telefonica O2.
Of course, LTE in the United States to date has been driven primarily by Verizon Wireless, which in 2007 announced plans to deply LTE network technology via the 700 MHz spectrum it purchased during an FCC auction for around $10 billion. Verizon launched LTE at the end of 2010 and has been steadily building out markets since. Today, Verizon's LTE network covers more than 200 million people.
LTE subscriptions market share by operator
"Verizon's technology neutral pricing strategy is a reflection of the operator's aggressive strategy for taking up as many subscriptions as possible in order to alleviate congestion on its 3G infrastructure," noted Signals and Systems Telecom analyst James Bennett. "Not only has this played a critical role in maximizing the operator's subscriptions, but this is also helping the operator improve economies of scale that arise from procuring more LTE equipment."
Indeed, Verizon seems almost desperate to move subscribers from its aging 3G network and onto its LTE network--the carrier is offering LTE smartphone buyers twice the monthly data allotment of 3G smartphone buyers, and doesn't plan to release any more new 3G smartphones from here on out.
But LTE will bloom in Asia Pacific and elsewhere in the coming years
LTE device shipments market share in 2016
Though the United States has dominated the LTE market so far (and will continue to be important due to AT&T Mobility's LTE launch and the pending launches of LTE by Clearwire, Sprint Nextel, T-Mobile USA and others) other regions are poised to boom.
According to Signals and Systems Telecom, the Western Europe and Asia Pacific Regions will see the highest growth rates during the next five years. The results were obtained as part of SNS Telecom's study "LTE and LTE Advanced Devices - Market Share, Key Trends, Vendor Strategies, Shipments, Revenue & Forecasts by Region and Country Q1'2012 " and the "2G, 3G & 4G Cellular Network Subscriptions Database Q1'2012 Update" that are part of Signals and Systems Telecom's LTE Insights Service. Details here.
"The next 5 years will witness a considerable shift in the market share to major operators in the Asia Pacific region as TDD LTE deployments gain momentum," wrote Signals and Systems Telecom's Bennett in a recent report. "2012 will see subscriptions increasing to over 22 million, with the U.S. still expected to lead the market share. However, It is expected that by 2016, China Mobile will represent over 15 percent of the total LTE market, with its TDD LTE deployment."
And how big will the LTE market grow?
LTE subscription forecase, 2011-2016
"Initial growth of LTE networks is expected to be somewhat unhurried until 2013 as a number of worldwide operators are presently recovering from recent capex investments on 3G/HSPA infrastructure, and regulatory authorities have not yet fragmented sufficient spectrum," Bennett wrote. "A rapid increase in the number of deployments is expected in 2014 and 2015 in all regions, with demand growing in the years to come. Overall the industry is set to grow at a compound annual growth rate of over 150 percent, taking the total number of subscriptions to 600 million in 2016."
And what of LTE device shipments?
LTE device shipments forecast, 2011-2016
According to Signals and Systems Telecom, LTE devices generated revenues of more than $2.1 billion in 2011, but that massive figure accounts for less than 1 percent of the overall mobile device revenues. The firm forecasts revenues from LTE devices will reach $82 billion in 2016.
It's all about LTE
LTE is clearly the future, such that a preponderance of WiMAX carriers (like Clearwire and Yota) are now moving to the standard. In the United States, virtually all wireless networks, big and small, are headed toward LTE. Regional carriers like U.S. Cellular and Leap Wireless are deploying the technology, as are bigger operators like Sprint and Clearwire. Even the nation's planned public safety network will rely on LTE technology.
There are a range of factors driving this rapid evolution, including carriers' desire to remain competitive with rivals and a smartphone market eager to install LTE into their products.
Whatever the reason, most agree: It's all about LTE.