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Deloitte: LTE rollouts won't satisfy data demands

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Technology is failing to keep up with the demand for broadband data, and that will lead to worsening spectrum shortage issues, according to a researcher with Deloitte.

Spectrum problems will likely get worse before they get better, said Stuart Johnston, Deloitte Australia's lead telecommunications partner. More efficient use of a limited spectrum can help ease data congestion, but "demand is outstripping technology innovation," he said.

Johnston noted that LTE is 16 times more efficient that 3G when it comes to moving data. However, during the seven years it took to develop and deploy LTE, wireless traffic has increased 30 times.

Deloitte predicts that more than 200 operators in 75 countries will have launched LTE by the end of 2014. "LTE subscriptions should exceed 200 million--a 17 fold increase in just two years," said Johnston.

"We are likely to see lower prices initially to encourage use, but this won't be sustainable. Despite LTE spectral efficiency, it will still cost carriers $5 to $10 to carry 1 GB of data, sufficient for streaming one to two hours of HD video," he said.

As LTE networks attract more users, speeds may decline from 20-30 Mbps to 10 Mbps or less. "In some markets HSPA speeds may exceed LTE speeds, but in many cases this will be temporary: in the medium term, LTE should be faster than HSPA, because providing equivalent speeds on HSPA requires two to three times more spectrum," said Deloitte.

The firm said that at the beginning of 2012, actual average LTE speeds recorded in the United States were three to seven times faster than 3G.

The cost of LTE chipsets should continue to fall this year, according to Deloitte. "At year‑end 2012, the incremental cost of adding LTE to a chipset is likely to be in the region of $10 and in the range of $5-$10 range by mid‑2014," said the firm.

Deloitte also forecasts a record 1 billion smartphones will ship this year. "Out of this growing number of smartphone owners, close to 2 billion by the end of the year, some 400 million will rarely or never connect their devices to data. This is an important consideration for those organizations developing a 'mobile centric' customer strategy," said Johnston.

Companies around the world have purchased about 30 million tablets, said Deloitte. The company predicted there will be almost 300 million tablet owners by year's end. Deloitte said tablets are replacing paper rather than PCs, and 80 percent of Internet traffic measured in bits will come from PCs, while 70 percent of hours spent on computing devices will be spent on PCs.

The mobile device share of Internet traffic will be no more that 15 percent worldwide by the end of 2013, said Johnston.

For more:
- see this Deloitte release

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